How to accept Bitcoin, for small businesses.
#1
This guide is intended for small business owners who wish to help promote Bitcoin by accepting it as payment for goods and services. I am going to type/write this with the assumption that you have a small business selling goods and services and simply wish to accept Bitcoin as another legal way to pay, and that you intend to pay taxes on your Bitcoin income just like any other income be that cash, eft or card payments.

With Bitcoin being touted as a way to conduct anonymous transactions and as way to compete with government currency, many small business owners wonder what's the right way to accept and account Bitcoin, or if it's legal or ethical, or whether and how they should pay taxes on income received through Bitcoin.

As far as I know, Bitcoin isn't yet formally recognized by governments and authorities as a "currency" (http://www.treasury.gov.za/comm_media/pr...encies.pdf). But in practice, Bitcoin is likely no different than accepting payment in other forms, such as cash, or gold, or gift cards or foreign currencies.

Starting to accept Bitcoin for transactions

JSE Finance Forum Attachment - Filename: WeAcceptBitcoin.png   
If you expect that the number of people interested in using Bitcoin is small, you might simply start by posting a sign or a note: "We Accept Bitcoin", and ask people to contact you directly in order to make a payment. Even if hardly anybody uses Bitcoin as a payment method, you're helping Bitcoin in two ways: one, by increasing awareness, and two, by making your customers more willing to accept Bitcoin as payment from others in the future, because now they know somewhere they can spend it.

Utilize a merchant solution

If you sell things on your website (goods or services), you'll want to use a Bitcoin merchant solution to accept the Bitcoins, I would suggest payfast if your margins allow it due to payfast being completely automated and tailored for South Africa. 

If you are or have a developer that runs your website, it would be most ideal to use the API from blockchain.info (https://github.com/blockchain/api-v1-cli.../wallet.md) that way you do not have to pay additional transaction fees that traditional merchant solutions have.

If you operate a traditional brick and mortar shop your clients can pay either via QR codes directly into your companies wallet or you can register for a Bitx.co account and have a tablet or smartphone at the business linked to the bitx.co app and accept payments on the fly whilst having a detailed audit trail of each and every transaction. Although I personally suggest using bitX.co it should be noted that I had tremendous success using https://airbitz.co/bitcoin-wallet/ as a Bitcoin Point-Of-sale application in some of our brick and mortar shops. You will still need a Bitx.co account since that acts as an exchange that enables you to convert your bitcoins into ZAR and then you can declare that money to Sars.

Accounting

When a customer makes a payment, you might simply issue a credit to their account. Ideally, you want to enter it in a way that suggests you received a payment. You could consider entering it as a "discount", but you may want to consider whether this inappropriately disguises the nature of the transaction. If on the other hand, you're giving "discounts" for Bitcoins, but then you are selling the Bitcoins for currency and then counting that as income, then chances are good that your calculation of income is making up for it. Ask your accountant.

Businesses that offer gift cards

If your business sells gift cards or gift certificates, you may find that the easiest way to accept Bitcoin is to accept it only for the purchase of gift cards, and then require the gift cards to be used for actual purchases of goods or services. This way, the accounting practices you already have in place for processing gift cards can be put to use. The accounting for Bitcoins would then be minimized to tracking sales of a single SKU.

This method is also ideal for retail food establishments and convenience stores, where the payment of Bitcoins through a mobile phone for a small daily food purchase might be cumbersome or disruptive, especially in front of a line of other customers. Bitcoins in this case would be best used to reload prepaid cards that can then be swiped at point-of-sale.

If you don't accept gift cards, but you already accept credit cards through a swipe terminal, consider the possibility that you could add a retail gift card system through the swipe terminal you already own.

Setting Prices

Some shops set prices based on the current market rate (bitx.co has South African rates) at the time the price quote is presented to the customer. Personally I would suggest to use some form of moving average that way your price does not fluctuate too much considering Bitcoin is quite a volatile currency at the moment. 

Paying taxes on Bitcoin income

Tax compliance is a topic of concern for small businesses. I am not an accountant nor a lawyer, and can't give legal or accounting advice.
But in many respects, Bitcoin transactions work very much like cash. Just like Bitcoin, cash is anonymous and doesn't leave a paper trail, yet is widely used in commerce every day.
Ask yourself how you would handle a cash transaction. Do you accept cash transactions? Do you normally pay taxes on cash transactions? The answer for Bitcoin should probably be the same.

If you opt in to use bitx.co then the accounting would be easier in my opinion since you can convert the bitcoins into ZAR in your bank account and that can then be declared with your income, if you instead opted in to use an anonymous wallet and never convert your bitcoins into ZAR again then the onus is on you to declare your bitcoin holdings just like you do with cash.
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#2
Good informative article! Thanks

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