Announcing a Return to our Roots: The All-New Bitcoin Magazine

Using Bitcoin With QuickBooks- Part 3: Paying Vendors


         Using Bitcoin With QuickBooks- Part 3: Paying Vendors

This is the third part of a multi-part series that will explain how to integrate Bitcoin as a payment method using your existing accounting software package. This procedure will allow you to properly account your Bitcoin expenses and integrate those expenses into your business records as if they had originally been made in your home currency.

QuickBooks’ workflow model allows you to track accounts payable by vendor, reminds you when your bills are due and provides an easy to understand way to enter payments. If you are fortunate enough to identify a vendor in your supply chain that accepts Bitcoin, then you may choose to do this instead of converting to dollars. However, you should ensure that your vendor dynamically updates the Bitcoin exchange rate so that prices remain relatively stable in your functional currency.

1. Enter a bill into Quickbooks using the “Enter Bills” function on the home screen. Update the vendor name, address, and payment terms and assign an expense account to the expenditure. This will most likely be a cost of goods sold (“COGS”) account if you are purchasing items for resale. Be sure to enter the amount of the bill in your functional currency; QuickBooks will not allow you to enter bills in other currencies unless the multi-currency function discussed in Part 1 of this series has been activated. Also, don’t forget to enter the due date.

2. At this point, your only options are checking account or credit card account to pay bills. QuickBooks will not allow you to pay using the Bitcoin account that you created previously. When the bill comes due or when you decide to pay, you will need to work around this by creating a general journal entry.

3. Select “Make General Journal Entries” from the “Company” menu. This will open the Journal Entry window. Your entry should look like this:

Account Debit Credit Name_______

AP Amount Vendor

Bitcoin Wallet Amount

This entry will post a credit balance to the sub-journal in your accounts receivable ledger for the vendor that you want to pay. Note that this will not work if the vendor is not set up in your QuickBooks file or if you forget to select the correct vendor from the name box.

4. Select the “Pay Bills” option from the home screen. Select the bill that you want to pay by checking the box next to it. Near the bottom of the screen, you should see the amount you just posted for “Total Credits Available.”

5. Click the “Set Credits” button, then check the box next to the credit amount to apply the credit as a payment and click “Done.” Two things should happen – the credit amount you entered should zero out and the bill should now show as paid.

QuickBooks automatically numbers journal entries in the order entered, not by date, so be aware that your entries may appear out of order if you post-date them to reflect a future payment. Also, you may need to revalue your wallet before or after you use it to pay bills to ensure that you don’t end up with an incorrect ending balance for that account. See Part 2 for instructions on how to do this.

As always, this is one of several ways to account for this kind of transaction in QuickBooks. Other procedures may work equally well. Feel free to contact me with feedback, questions, or requests.

Cover photo by flickr user BTCKeyChain. Used under Creative Commons license at:


Bitcoin Price Analysis: Blowing Through Support Levels on the Way to $3,000

Bitcoin continues to tumble lower and lower as it struggles to claim any footing in the market. It’s down almost 50% in three weeks and it’s showing very little sign of stopping. It’s currently clutching onto the $3,500 values but it doesn’t look like it can hold on much longer.

Bitcoin Schmitcoin

Op Ed: SEC’s Latest Declaration Creates Legal Minefield for Digital Assets

This broad, authoritative declaration is not unexpected, as, to date, the SEC has stated that all digital assets — regardless of whether they function as alt coins or utility tokens — are securities at least initially and, thus, subject to its jurisdiction.

Huhnsik Chung and Nicholas Secara

Op Ed: Cryptocurrency’s Unrealized Opportunities for U.S. Tax Professionals

Tax accountants and firms that specialize in cryptocurrency will emerge to capture and service this market. The first movers will be the ones who stand to capture the oversized profits.

David Kemmerer

Op Ed: Anatomy of the Tether Attack: Are Stablecoins Vulnerable?

Last month's attack on Tether contains a cautionary tale: Only those coins that can survive such attacks have the slightest chance of becoming the “holy grail" of stablecoins.

Henry He