How QuickBooks Online Can Empower Clients to Use Bitcoinby
For many of your small business clients, the prospect of accepting bitcoin feels about as far-fetched as space tourism. Indeed, there is a correlation here, as Virgin Galactic has already had at least one customer book space passage by paying with bitcoin.
For the uninitiated, Bitcoin is a virtual currency that has existed solely online since 2009. As you might expect, there's even some nuance involved with the name. The agreed-upon convention is that Bitcoin with a capital â€œBâ€ connotes the concept, protocol, software, and community that surrounds this virtual currency. Conversely, bitcoin with a lower-case â€œbâ€ describes a unit of currency, much like the word â€œdollarâ€ describes a unit of US currency.
Unlike the US dollar, though, no government has direct purview over bitcoin. The price of the virtual currency rises and falls much like a stock. Bitcoin transactions occur peer-to-peer, meaning that payments are typically immediate and nonreversible. Businesses are keeping an eye on bitcoin simply because unlike credit card receipts, bitcoin transaction fees are often negligible.
The nascent method of payment has had a tumultuous history. At one point, a single bitcoin was worth more than an ounce of gold, but the currency then crashed. Governments have tried to ignore bitcoin, and in fact, it took the IRS several years to issue any guidance on the tax treatment of bitcoin. It settled on an approach that was supposed to strike a death knell: bitcoin is currently taxed on a capital-gains basis.
Think of this as having a pocketful of $20 bills that are constantly fluctuating in value, and when you spend any of those $20 bills, you have to not only record the amount the $20 was worth when you procured it, but also when you spent it so that you could record a capital gain or loss. Despite all of this complexity, bitcoin continues its march forward to the extent that QuickBooks Online users can now accept bitcoin within their accounting software.
You'll need to establish a Bitcoin account for your client with BitPay or Coinbase before setting up the Bitcoin feature in QuickBooks Online. Once you've set up the account with one of the processors, follow these steps to enable the Bitcoin feature:
- Click on the Gear icon, as illustrated in Figure 1.
- Select QuickBooks Labs.
Figure 1: Follow these steps to open the QuickBooks Labs screen.
- Scroll down until you see the PayByCoin section, as illustrated in Figure 2.
- Toggle the button to display ON.
- A prompt appears that the plugin has been activated.
- Click Done.
Figure 2: Follow these steps to activate the PayByCoin plugin.
7. Click the Gear icon again, as illustrated in Figure 3.
8. Select Company Settings.
Figure 3: You will enter your Bitcoin Processor information from the Company Settings window.
- Click on PayByCoin, as shown in Figure 4.
- Select your Processor from the drop-down list.
- Fill in the API key.
- Fill in the API Secret.
- Click Save & Validate.
Figure 4: Fill out the information on the PayByCoin tab to finish setting up the use of bitcoin payment in QuickBooks Online.
You are now able to check the Bitcoin checkbox if a customer is paying with bitcoin, as illustrated in Figure 5.
Figure 5: Clients' customers can now pay using bitcoin.
David H. Ringstrom, CPA, is an author and nationally recognized instructor who teaches scores of webinars each year. His Excel courses are based on over 25 years of consulting and teaching experience. His mantra is “Either you work Excel, or it works you.” David offers spreadsheet and database consulting services nationwide.