How crypto accounting tools help streamline bookkeeping
Updated: Feb 13
Cryptocurrency has grown in popularity as a means of investment and payment for many businesses. With the rise of DAOs and NFT projects, there are more crypto transactions occurring at a business level than ever before. This increase in crypto transactions also increased the demand for accurate and efficient accounting methods. With the use of crypto accounting tools businesses can automate and streamline their cryptocurrency transactions.
The growing importance of crypto accounting
The importance of accurate accounting and tax compliance grows as more companies accept cryptocurrencies as a form of payment and as more people invest in them. The decentralised and digital nature of crypto transactions can make them difficult to track and categorise, and the lack of integration with traditional accounting software can make the process even more challenging.
As the crypto industry continues to evolve and mature, the use of crypto accounting tools will become increasingly essential for businesses and individuals looking to stay compliant and organised in their financial operations..
The challenges of traditional bookkeeping for crypto businesses
Cryptocurrency transactions can present several challenges when it comes to bookkeeping and tax compliance. Here are a few of the most significant challenges faced by businesses and individuals trying to keep track of their crypto finances using traditional methods:
Difficulty tracking multiple types of cryptocurrency
One of the biggest challenges in accounting for cryptocurrency is the sheer number of different types of tokens and coins that are available. Each type of cryptocurrency may have different transaction formats, different exchange rates, and different tax implications. Keeping track of all of this information manually can be time-consuming and prone to errors.
Complex tax regulations
Another major challenge faced by businesses and individuals dealing in cryptocurrency is navigating the complex and ever-changing tax regulations surrounding the industry. The tax treatment of cryptocurrency can vary depending on the jurisdiction and the specific type of transaction, and keeping up with the latest regulations can be difficult for those without specialised knowledge.
Lack of integration with traditional accounting software
Finally, traditional accounting software is not designed to handle the unique characteristics of cryptocurrency transactions. This can make it difficult for businesses and individuals to integrate their crypto finances with their overall financial picture, resulting in a disjointed and incomplete view of their financial health.
How crypto accounting tools can help
Crypto accounting tools are designed to help businesses and individuals overcome the challenges of traditional bookkeeping for crypto transactions. Here are a few ways in which these tools can help:
Automated tracking and categorisation of crypto transactions One of the key benefits of crypto accounting tools is the ability to automate the tracking and categorisation of transactions. These tools can scan the blockchain for relevant transactions and automatically categorise them based on things like the type of cryptocurrency, type of transaction, and tax implications. This eliminates the need for manual tracking and can save hours and reduce the risk of errors.
Integration with popular accounting software Another way in which crypto accounting tools can help is by integrating with popular accounting software such as QuickBooks, Xero and others. This allows businesses and individuals to easily bring their crypto transactions into their overall financial picture, providing a more complete view of their finances.
Compliance with tax regulations Crypto accounting tools can also assist businesses and individuals with compliance with tax regulations. These tools can help with tax reporting and can assist businesses with compliance as per different jurisdictions.
Crypto accounting tools can also provide specialised accounting and tracking for NFTs (Non-Fungible Tokens). NFT accounting remains a challenge, this is because NFTs function differently from regular fungible crypto tokens, making them difficult to use or divide fractionally. Further, NFTs are non-fungible and can’t be exchanged for one another like cryptocurrencies. Therefore NFTs have to have different accounting processes in place to their cryptocurrency counterparts. To know more about NFT accounting check out our previous blog Automated bookkeeping
Crypto accounting tools can also help with automatic bookkeeping that can save time and reduce human errors. These tools can automatically record and update the financial information and can be easily exported to different accounting software.
Automated Cost basis calculation
Finally, crypto accounting tools can also assist businesses with automatic cost basis calculation, which can help to identify the cost of acquiring a particular crypto asset, and it can also help with tax compliance as per different jurisdictions.
To know more about Cost Basis calculation check out our previous blog
These are just a few of the ways in which crypto accounting tools can help businesses and individuals streamline their bookkeeping and stay compliant with tax regulations. These tools can make the process of tracking and managing crypto transactions much easier and more efficient.
Want a consultation to understand how you can automate your crypto accounting and bookkeeping? Book a demo with Mensari. Our team has built a crypto accounting tool for web3 organisations & NFT projects, streamlining day-to-day bookkeeping and accounting and directly linking with your on-chain wallets.