How to Get Paid (or Pay Salaries) in Cryptocurrency
As cryptocurrencies become ever more popular, there is a rising demand for the ability to pay with, and get paid in, digital currency. People often wonder how one gets paid in cryptocurrency and how one uses cryptocurrency in payroll. This is not surprising, considering the benefits that come with crypto payments and payroll.
Thankfully, several platforms have risen to meet the needs of professionals looking for cryptocurrency invoice services. These platforms specialize in the benefits of using cryptocurrencies while mitigating the downsides of direct peer-to-peer settlements.
Use of Crypto Payroll Services
Companies looking at using cryptocurrency payments have several options to help manage their payroll. The use of the following services can drastically simplify the payroll process when it comes to paying salaries and employees receiving their crypto pay directly in their wallet or the exchange based in US
Bitwage is a full-service payroll and invoicing platform that also offers Bitcoin 401(k). Setup for employers is as simple as signing up and funding their account through ACH credit, ACH debit, SEPA, credit card, or digital assets. They then invite their workers to the platform, and their employees can set their desired payout preferences. The payout can be either a direct deposit or transfer of digital currency to employee’s wallet.
Payroll funding through Bitwage currently supports Bitcoin, Ethereum, and fiat currencies such as USD, CNY, RUB, and EUR. Employees can choose from digital currencies, fiat currencies, or a combination of the two when it comes time for them to get paid.
For U.S. companies, Bitwage can also settle payroll taxes through a partnership with Simply Efficient HR and fund employee benefits such as health insurance.
Bitpay initially launched in 2013, with its main focus being enabling businesses to accept Bitcoin payments. As of November 2020, they founded a payroll service allowing companies to pay employees, contractors, and vendors with cryptocurrency.
This new service allows a company to run payroll without owning any cryptocurrencies themselves. To be paid via this new service, employees need to have a Bitpay ID and pay a 1% fee to process any payments that cross borders.
Bitpay offers payments in Bitcoin, Bitcoin Cash, Ethereum, XRP, and a few stablecoin options. Companies that use Bitpay only need to fund their payment accounts in fiat and then send pre-tax amounts without managing any digital currency.
PaymentX is a service that solely focuses on payroll, allowing companies to quickly, inexpensively, and safely offer cryptocurrency salaries. Currently in beta, it is entirely free to use, though it only supports Bitcoin, USD, and RUB at this time. As far as taxes are concerned, PaymentX only has support for after-tax, or net, pay.
Allowing for fully automated payroll, PaymentX enables businesses to set up regular payment dates and accept and pay invoices. PaymentX’s minimal interface is easy to use, so companies can set it up with minimal friction. They also offer a mobile app for even easier access to payroll.
Generate Crypto Invoices to Get Paid
When it comes to getting paid, there are multiple services available for freelancers, contractors, and other business professionals to generate invoices for customers who wish to pay their bills in cryptocurrency. The benefits of these include fast payment, low fees, and no chargebacks.
Gilded’s platform allows for full integration with Quickbooks and offers stablecoin payments. Fees are only 0.5% and the currencies supported include:
- Binance USD
- Paxos Standard
- USD Coin
Gilded is an all-in-one solution containing accounting software to make bookkeeping easy and manageable with cryptocurrencies. With their automated spot pricing, all manual labor of calculating exchange rates are a thing of the past. Those who still want to accept traditional payment methods, such as credit cards, ACH, and wire transfers, can set up payment options using them as well.
A point-of-sale system, Anypay can also generate cryptocurrency invoices to accept Bitcoin, Bitcoin Cash, Bitcoin SV, Dash, and PayPal and Stripe payments. The only thing a merchant needs to set up an account is an email address and a public address for any digital currency they wish to accept.
Invoices sent from Anypay contain the amount displayed in a chosen currency, a receiving address, and QR code. It is also possible to set up invoice payments via text message via integration with Cointext. For those using Woocommerce, an Anypay plugin is available to make cryptocurrency payments even more straightforward.
Blockonomics is a service designed around making the tracking and payment of Bitcoin and Bitcoin Cash payments easier. Not only do they help accept Bitcoin and Bitcoin Cash payments in e-commerce stores, but they also have invoicing functionality with options to pay invoices in Bitcoin, Bitcoin Cash, or fiat.
The most simplistic of the three services covered, Blockonomics keeps things reasonably barebones. Invoices display a payment address as well as a QR code. They also keep track of Bitcoin and Bitcoin Cash prices to make sure you are always paid the correct amount at payment time. A simple tracker lets you keep an eye on multiple wallets with a notification when payments are received.
Tax Implications of Getting Paid in Cryptocurrency
With cryptocurrencies in the public eye now more than ever, agencies like the IRS are starting to take more notice. In the U.S., any convertible virtual currencies used to pay for goods and services are taxable as income. Any convertible virtual currencies held on to for longer are taxed as property. Even those who mine convertible virtual currencies must report their earnings as income.
According to the IRS, convertible virtual currencies are any virtual currencies that have an equivalent value to real money. That said, some virtual currencies do not fall under that definition. Just recently, the IRS removed Ether from its list of convertible virtual currencies. It is not very clear which digital currencies are considered taxable and which are not.
To be safe, anyone paid in any cryptocurrency should prepare to report their earnings and holdings to the appropriate financial institutions come tax time. US Crypto Exchanges are regulated and are bound to report to the IRS. IRS is well aware of your crypto assets and might issue Form 1099-K or Form 1099-B through the crypto exchange.
Services such as TokenTax, CrytpoTrader, and ZenLedger can help you calculate, prepare, and file your cryptocurrency taxes to ensure compliance with federal laws.
Each of the cryptocurrency tax preparation services allows you to import your transaction histories, review them, and then download forms such as Form 8949, Schedule 1, Schedule D, Tax-Loss Harvesting, and Grand Unified Accounting reports. Other features such as exchange integration help to keep all information reported as accurately as possible.
With historical records and help from professionals, keeping track of your tax implications when it comes to cryptocurrencies should not have to be a headache. Just know that no matter what digital currency you deal in, you will have to answer to the appropriate tax institutions when the time comes. As long as you keep this in mind, you should be able to pay, and be paid, in any digital currency you desire.