Libra, provider of Bitcoin tax accounting service LibraTax, has released two new services to help businesses and CPAs account for digital currency transactions in 2014. The IRS gave guidance that virtual currency is classified as a capital asset and taxable as property rather than currency in 2014.
The services – Libra Business and Libra Pro, the latter for CPAs and accounting firms with Bitcoin clients – expands on capital gain/loss tax reporting by introducing familiar reports used for bookkeeping and monthly reconciliation.
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“LibraTax is used by both business and individuals, but it was mainly intended for the individual,” said Jake Benson, CEO and founder of Libra, in discussing the new services with CCN. “Businesses have other reporting needs beyond taxes. Bookkeeping and reconciliation on a monthly basis, for instance. We knew from the get-go that a more powerful solution was needed for them, and we took our time by building a lighter, simplified solution for individuals first.”
Business Needs More Complexity Than Personal Needs
The accounting needs of a business are much more intensive than those for an individual, Benson explained. “Individuals usually think of accounting as something they do once a year. Businesses are keeping their books in order all year round, and with a higher degree of scrutiny and diligence.” Libra Business offers exports and recording options that a business needs to keep digital currency on the balance sheet.
“Libra Pro is a version of our software that is specifically designed for the accounting and tax professional, or even an accounting firm,” Benson continued. “We give these accounts the ability to share access with either an individual or business user. If one of the users in our system clicks, ‘Hire a professional,’ they can get immediate help from one of our Pro users. We call that Libra Connect, and it’s a growing network of CPAs and accounting professionals that have gotten comfortable with digital currencies.”
Businesses’ main concern about cryptocurrency is its fluctuating value, Benson said. There are also reporting concerns. “While digital currency operates and functions much like a ‘foreign currency,’ it is taxed and accounted for like ‘property.’ It makes for a situation where a business might be willing to hold digital currency for whatever reason, but they ultimately decide not to because it doesn’t play nicely with their accounting platform and traditional methods. The administrative costs of dealing with it may simply outweigh its advantages at the moment. Our solution will help to lower that barrier.”
Accountants Slow to Accept Bitcoin
Benson said there is only a handful of accountants that are early adopters of digital currency. “Accountants are generally conservative in nature,” he said. “That’s not a bad thing at all. It’s one of the oldest and most trusted professions in the history of humankind. Accommodating this brand new technology, which is arguably a new asset class, is understandably a slow process.”
Benson believes the government has been very clear about reporting cryptocurrency income. “Income in digital currency is income like any other,” he said. “Digital currency doesn’t have any special treatment at the moment. Should it? Maybe, but I like what one of my advisors, Bob Derber, tells people, ‘be careful what you ask for.’ A lot of people are advocates for ushering in guidance specific to Bitcoin and digital currency, asking for clarity where there is still grey area, but it may be better if we let the technology mature before we define what it actually is.”
Libra Takes a Leadership Role
Libra is the only full-service and comprehensive digital currency accounting software on the market today, and the first to bridge the gap between distributed ledger technology to the traditional world of double-entry accounting. In addition to providing the tools for individuals and business with Bitcoin, Libra is beginning to educate the accounting and audit industry about Bitcoin technology. To that end, Libra has teamed with Future of Accounting co-founder and co-president Danetha Doe to produce a weekly video chat with accountants called the #FutureOfMoney.
Libra has also partnered with BitPay, the world’s largest Bitcoin payment processor. “BitPay adheres to extremely high standards of accounting and regulatory compliance, and we’re pleased to extend Libra Business to our merchants to enable them to keep track of transactions efficiently, as well as encouraging wider public adoption of the platform by simplifying the process of Bitcoin accounting,” commented Bryan Krohn, BitPay’s chief financial officer.