Cryptocurrencies shot to fame in 2017, and after this, millions of accountants across the world got heavily involved with this market. Cryptocurrencies are a growing financial system, and it doesn’t look to be slowing down anytime soon, so there are countless tax and audit implications involved, so without learning all of the basics of a decentralized system, digital coin risks falling behind on worldwide trends.
As a crypto tax CPA, you need to know all that can be to know about cryptocurrencies and how they affect your clients. If you are not keeping up with this new trend, and a client comes to you asking for help and asking questions about their cryptocurrency wallets, you need to be able to answer them. What are the tax implications? What does tax and cryptocurrency mean together if it’s a decentralized system? These are questions that you need to be able to answer, and here are some of the biggest reasons that you really should learn about cryptocurrency as a CPA.
- The financial market is growing… and it’s not slowing down. The first and most important reason that any accountant has to understand cryptocurrency is because of the new financial market. It’s always been the case that banks and large financial institutions such as building societies have always played an authoritative role where it comes to financial concern. They control all debit and credit cards, they oversee mortgages and loans, and they make sure that the numbers in the machine matched the numbers they’re lending. Lending is a business, but the introduction of cryptocurrency has changed that. This is introduced to neglect the banks as the middlemen that buyers and sellers utilize. Instead, buyers and sellers could directly work with each other through blockchain technology. There is a huge advantage to this system, and a CPA needs to understand exactly how assets are being moved. If you want to be able to grow your own practice, then you need to know how to be versatile and include cryptocurrency knowledge in your arsenal of tools.
- For tax purposes. Cryptocurrencies hold an unimaginable amount of power right now, but they also have roles in the investing world. Every single cryptocurrency that has ever been invented has a digital coin or token that can be used as a store of value. Think Bitcoin, they used to be $1000 per coin and now it’s over $19,000 per coin. Investors that purchase this asset would have seen a drastic increase in value, which means if they sell their coins they pocket a large amount of money. The tax implications of this can be drastic if they are not considering it. It means that you have to consider it. Digital coins have to be taxed just like any other trading gain, so you need to consider cryptocurrency-related games for tax purposes while you are studying and building your practice.
- For auditing. Most of the annual revenue that comes through accounting firms comes from auditing engagements. Where you would review corporations financial statements and verify the accuracy of the numbers, you need to ensure that auditing is still going to be just as smooth with your clients. If everything is reported correctly, you then sign off on the statements that the investors used to invest in the company in question. When it comes to a cryptocurrency based venture, the number of companies needing audit services also grows, which is going to help your CPA business to grow, too.