Cryptocurrencies are a form of money that exists only in the digital world. They use blockchain technology to bring a decentralized and private form of transactions to people. As cryptocurrencies like Bitcoin and Ethereum become standard forms of money across the world, employers and employees are beginning to incorporate them as forms of income.
If you are considering this form of payment, you should first establish a way to send and receive the funds.
Decide How to Pay
Though crypto funding and payments are becoming more popular, the process to transfer them within a workplace takes some preliminary decisions. First, employees and employers must figure out how they will transfer funds — through the help of a third-party organization or through direct payments.
Bitwage is a common resource for workplace crypto payments. It creates a payroll system for a company that utilizes both crypto and fiat currencies. For instance, if your business chooses Bitcoin as its primary cryptocurrency, then Bitwage can help with paying employees quickly. The company can also aid in converting crypto to fiat currencies like the U.S. dollar.
One tip to keep in mind is that your workplace should focus on a more popular crypto asset — lesser-known ones may not have the support systems and exchange abilities employees need.
The next option is direct payments, which are similar to direct deposit. Without a third-party company, employers can work alone or with accountants to transfer crypto funds. This process revolves around getting crypto wallets and sending money through them, which is common on sites like Bitcoin and Ethereum. However, watch out for fake wallets and scams — they're a danger to assets.
Remember the Little Things
With fiat currency payments like the U.S. dollar or euro, small details are often automatic, like withholding taxes. With crypto funds, however, it's not always inherent.
As a workplace incorporates crypto payments, everyone will need to focus on the same details they would with other currencies. For taxes, the employer will need to calculate and convert the fiat currency's equivalent to the cryptocurrency before payment. Then, the employee will also need to calculate the taxes they owe to the Internal Revenue Service (IRS).
Invoices are helpful for taxes. Platforms like Coinpayments, Piixpay and Blockonomics help workplaces create invoices for crypto payments. These are crucial for keeping track of it all.
Invoices may be especially helpful for paying employees internationally, which can be a hassle with standard currencies. Instead, crypto payments are critical to cross-border payments since they can transfer without remittance fees. Then, employers can focus on adhering to international taxes instead of fees. No matter where employees work, paying them crypto is becoming the smoothest, simplest option.
Additionally, employers and employees will need to decide on the percentage of the paycheck that's crypto-based. Often, it's smart to start small and work up from there. Understanding the fluctuation of crypto values is critical, too. Employers must make sure employees get adequate compensation for each paycheck.
Why Pay With Crypto
Cryptocurrencies are becoming more popular among consumers. Some businesses are now allowing customers to pay with crypto funds. As the trends change and evolve, workplaces should as well. Incorporating crypto into payroll setups is critical for staying modern.
The Securities and Exchange Commission (SEC) has been considering cryptocurrencies like Ethereum for more regulation and reviewing. Once this regulation happens, crypto will become normalized, expanding its reach and user base.
Further, the decentralized nature of cryptocurrencies offers a beneficial level of personal control and privacy. Having no central bank or institution overseeing transactions appeals to many people, as they have more say in their finances. Since blockchain is secure and private, too, employees may opt in for crypto payments.
For now, the IRS considers cryptocurrency a property instead of actual money. However, with normalization and increased use across the world, regulations and policies could change that in the future. One way to do so is to offer this kind of virtual currency as a viable payroll option at your business.
A Crypto-Based Payroll
Cryptocurrency is reaching new heights. From businesses accepting these funds to workplaces using them for income, digital currency is now the path to the future for payrolls everywhere.