Organizing digital assets is an important factor of investing in cryptocurrency. Not only is this important for individuals who are buying or selling Bitcoin and other digital assets, but it’s also important for businesses. There are many small and midsize companies that conduct business in cryptocurrency; maybe they accept crypto as a form of payment from vendors or use it to pay for certain areas of the business.
The bottom line? Every time crypto is spent, a gain or loss is recognized. Using cryptocurrency accounting software is a streamlined way to track gains and losses, but how can you choose the best one? We’ve outlined some criteria to help you make your decision.
The Ability to Track
Whichever software you choose, make sure that it has the ability to automatically track all of your crypto transactions regardless of the wallet or exchange being used. Top-of-the-line software options operate using automatic APIs that remove the need to manually track all of your transactions. This is especially helpful for businesses who need to track transactions in a scalable way.
Bulk spreadsheet uploads are another helpful part of the top cryptocurrency accounting software. Many software offer the ability to import new transactions and even automatically connect to exchanges and wallets. Simply import a CSV or Excel file to keep track of your transactions in one place. Blockchain scanners are also helpful in tracking the movement of your various crypto assets.
Validation & Error Alerts
One of the main qualifications when tracking your transactions is to ensure accuracy. For example, does the cryptocurrency accounting software that you’re considering have automatic spot price calculation? This is the exchange rate between your fiat currency and the cryptocurrency at the time of transaction. While it’s possible to do this manually, it is a tedious process and prone to errors. Instead, using software means you’re using the same source and method, part of the IRS’ guidance for filing such taxes.
Duplicate transactions is another possibility when tracking things by hand. Entering the same transaction twice should be automatically flagged by the software that you choose, pinging you with an error alert that notifies you to make a change. Ensuring accuracy is one of the main benefits of using software in the first place.
Consolidated Transaction View
Accountants are likely familiar with programs like QuickBooks or Xero. They’re helpful in consolidating business activities into financial metrics. Before cryptocurrency accounting software, it was challenging to see all of your incoming and outgoing transactions in one place. Software allows you to view all of your transactions, regardless of where they took place, in one easily digestible view. This makes it easy to see and keep track of all transactions in one place, allowing you to see an accurate view of your portfolio.
Software We Recommend
Although there are many software options on the market, they each have unique strengths and weaknesses to consider. Our personal recommendation is CoinTracking, an all-in-one solution that has over 1 million active users and 13 years of historical data.
If you’re hoping for assistance, you can always rely on our team at Founder’s CPA. We have an experienced team that is always updated on the latest regulations and trends to help you get the most out of your cryptocurrency portfolio. Reach out to us to see how we can help!