Is it Safe To Outsource My Crypto Accounting?
- Written by Shan Ge
Almost every trader has heard how hard it can be to calculate crypto taxes on their own. After all, if you have hundreds or thousands of cryptocurrency trades in a given year (on top of various accounting methods like FIFO and LIFO), it only makes sense that it would be a bit difficult. However, when it comes to taxes, you're never alone.
Many turn to accounting firms to handle regular tax returns and beyond. But strictly in regards to your crypto trades, is it safe to outsource your financial needs to an individual or organization offering accounting services? To better answer this question, let's take a closer look at the benefits of relying on a bookkeeper or accountant rather than doing it all on your own.
1. It ultimately saves you time that you would spend doing it yourself.
Taking care of your own financial reports and sifting through transactions through multiple crypto exchanges can be time-consuming. Whether you work a 9-to-5 or run your own small business, this time could be better spent taking care of other essential tasks. Outsourcing your financial needs helps you get your time back and eliminates the stress of trying to calculate your taxes on your own.
For example, let's imagine that you decided to buy BNB (Binance Coin) over the past year. The Binance token allowed you to earn money through staking, reduce your trading fees, and get more from the Binance exchange. Trying to figure out how much you've earned in staking rewards and the profits you earned from selling BNB on this cryptocurrency exchange can be difficult for you to do on your own.
Instead, you can create a tax report through Binance for your BNB token trades and other coins (Ethereum, Litecoin, etc.) and hand these transaction reports to your accountant. Then, they can use the proper accounting methods to get you the most savings on your taxes!
2. You can always double-check the work of your accountant later.
When you enlist the help of high-quality, experienced outsourced accounting firms, you can rely on them to provide you with the accurate financial services that you're turning to them for. This is especially true if you're enlisting the help of an outsourced accountant that handles payroll, budgeting, and advisory services like forecasting.
Of course, the most important thing is that you can always double-check the work of your accountant. If you decide to do the work yourself, any mistakes you make likely will slip past you, costing you money in the future. If it involves your finances, it's always best to work with a professional and get the work done right the first time around.
3. Remember, you're not actually giving your cryptocurrency to an accountant.
It would be a major security concern if you were giving your accountant access to your Coinbase account or hardware wallet. However, all accountants need are the financial documents that detail your trading activity. Of course, even if you did give your accountant access to your wallet, you could always transfer your funds to another wallet for safe-keeping. The bottom line is that there are no major security risks when you let someone else handle your crypto taxes.
Seeking out a bookkeeping service or accounting firm can be slightly nerve-racking. However, it's a good option for those without extensive tax knowledge regarding Bitcoin and other altcoins and may not be able to properly report their capital gains and losses. Even more importantly, enlisting the help of an accountant is completely safe. If you're debating on whether or not to outsource your crypto tax needs, use the guide above to better understand the benefits of doing so!
