Acquiring Crypto Assets for Your Business: What to Ask Your Accountant

According to cryptocurrency data platform CoinMarketCap, the global crypto market capitalisation is currently sitting at roughly two trillion USD, or around three trillion NZD. With such a staggering amount involved, it’s only understandable that businesses as well as individual traders are starting to look into investing in crypto.

However, not every business owner is fully knowledgeable about cryptocurrency or knows how to potentially utilise it as an investment for their enterprise. With so much available information out there, it can also be hard to streamline one’s knowledge about cryptocurrency and what kind of impact cryptocurrency assets might have on a business’s investment portfolio.

If you want to ask in-depth questions about the financial impact your new crypto assets could make on your business, the best person to ask may be your accountant. Given their expertise on the world of finance, as well their grasp of your business’s financial situation, perhaps they’re in a good place to advise you about whether to acquire crypto assets and about how these coins will affect the rest of your business investments.

On the fence about whether you should get into the crypto market? Here are some things you may want to ask your accountant first:

1) Do You Have First-Hand Experience with Cryptocurrency?

Entrepreneurs often rely on accountants for advice when it comes to improving profitability and mitigating the business's losses. As you add crypto to your business’s current assets, your accountant should be able to factor that in and offer you more accurate guidance moving forward.

Ask them if they have first-hand experience dealing with cryptocurrency so that you can assess their expertise on handling crypto matters. Their first-hand insights will matter a lot if you want to be able to enter the crypto market with confidence.

If you’re interested in investing in crypto market but don’t have your own in-house accountant, this is the right time to hire one so that they can advise you before you buy your first crypto asset. Entrepreneurs based in the area should look for accountants Dunedin businesses trust to better guide them through this new financial venture.

2) Are You Well-Versed in Tax Laws and Regulations Surrounding Cryptocurrency?

Cryptocurrency in New Zealand is subject to income tax, as it is considered a form of property. Among the crypto-related transactions that are deemed taxable are selling and trading crypto, mining crypto, staking, earning crypto interest, and even giving a crypto gift.

With that in mind, your accountant should be able to determine how these figure into your tax as well as the rates they’ll be taxed at. However eager you are to improve your business’s bottom line with crypto, you should still commit to doing so according to the current regulations. Your accountant’s advice will be invaluable at helping you avoid legal trouble.

3) How Familiar Are You with More Complex Crypto-Related Activities?

The crypto market often involves more complex activity than simply exchanging coins from wallet to wallet—something you’d want your accountant to also be knowledgeable about. This is so that they can guide you in case these are relevant to your crypto investment plans and so that they can properly assist you when you’re filing tax for said transactions.

Crypto mining, for example, can be a highly profitable endeavour. It comes, however, with the caveat of being energy-intensive, and it also requires a significant investment in computing power to be able to sustain it. Your accountant can advise you, then, on whether this is a venture that’s suitable to your business given your current resources.

Other crypto-related activities such as those involving Decentralised Finance (DeFi), staking, and yield farming may or may not be relevant to your investment plans. But a knowledgeable accountant should at least be able to discuss these options with you and help you weigh both the benefits and the risks.

4) What Documents Should I Provide When Filing for Crypto Tax?

Part of the apprehension that comes with acquiring crypto assets is your concern about the lengthy paper trail. However, so long as you’re prepared and have the guidance of an accountant, complex tasks like filing your taxes shouldn’t be as stressful as you might initially think. 

Early into the process of acquiring crypto assets, ask your accountant what documentation they may need from you to accurately keep track of your transactions, both for tax and business advice purposes. In case you're confused as to how to secure your documents, don’t be afraid to ask them to walk you through the steps as well.

5) What Strategies Can You Suggest to Reduce Tax Liability on My Crypto Transactions?

You may also ask your accountant what plans or strategies they can employ to help you legally reduce your crypto tax liabilities. Among common strategies you might want to inquire about in particular are harvesting losses and deducting transaction fees or other relevant expenses.

Having an accountant who can help reduce your cryptocurrency taxes will allow you to avoid being unnecessarily tied down by high fees. This, in turn, will increase your chances of making good on your crypto investment. 

Your acquisition of crypto assets for your business can be an exciting and rewarding venture, but one that should be approached with much care and planning. You could definitely do the research on your own, but for answers to questions like the ones listed above, having a trustworthy accountant by your side will likely be the most preferable option.