Staying on the right side of the taxman just got a bit easier for businesses dealing with bitcoin and other digital currencies. On Tuesday, Libra, makers of LibraTax accounting service, introduced two new products in their suite of tax-reporting services. They also announced a new partnership with Bitpay, the world’s largest bitcoin payment processor, designed to help merchants stay on top of their bitcoin-related payment transactions.
Libra Business and Libra Pro
LibraTax has been offering tax-reporting solutions and helping to educate accountants and tax professionals with digital currencies since early in 2014. With the addition of Libra Business and Libra Pro, both businesses and tax professionals alike can keep track of all their digital currency transactions.
With regulatory bodies in the US and elsewhere classifying virtual currencies as capital assets and taxable as property (rather than currencies), it has become increasingly important for individuals and businesses to track every transaction event.
“Essentially, any transaction involving Bitcoin is a realization event that triggers a reportable gain or loss,” says Jake Benson , founder and CEO of LibraTax.
LibraTax interfaces with the blockchain — Bitcoin’s public ledger — to provide accurate capital gain/loss reporting and reconciliation. Plans to integrate with traditional accounting platforms like Xero and QuickBooks are in the works.
Bitpay + Libra
BitPay will be offering Libra Business to merchants who use BitPay to accept bitcoin. Offering Libra Business will enable merchants “to keep track of transactions efficiently, as well as [encourage] wider public adoption of the platform by simplifying the process of Bitcoin accounting,” said Bryan Krohn, BitPay’s Chief Financial Officer, in a blog post on the Libra website.
Both BitPay and Libra have been active advocates of mainstream adoption in their respective fields: Libra has partnered with Danetha Doe to produce the #FutureofMoney, a weekly video chat designed to demystify digital currencies for accounting and tax professionals; BitPay has sponsored many events including the recent St. Petersburg Bitcoin Bowl football game to spread the word about Bitcoin to merchants and mainstream consumers alike.
“Digital currency tax reporting can be a daunting task. As property, digital currencies (the IRS calls them “virtual currencies”) are treated in much the same way as stocks and bonds: every purchase and sale/exchange must be recorded and taken into account at tax time.
Where a casual user could have dozens, if not hundreds, of taxable events to report in a given year, imagine how many events a business accepting bitcoin would have.” – Libra
By offering Libra Business to its customers, BitPay hopes to make the task of reporting bitcoin “events” less daunting for merchants, and thus, less of a barrier to adoption. Similarly, Libra Tax expects that Libra Pro will encourage tax and accounting professionals to help their clients see that using Bitcoin will not result in a reporting nightmare.
“A huge step forward for the legitimacy of this world changing technology will be the day when it earns respect among professional accountants and auditors,” says Benson. “My mission is take us there.”
Christie Harkin is the contributions editor at Bitcoin Magazine.