A guide to creating a crypto division in your accountancy practice
Things to consider when getting your accountancy firm crypto ready.
Thu Nov 10 2022
10% of UK individuals now own crypto and regulation is on the rise making it a great specialist service to add to your accountancy practice. Because crypto is new it's constantly evolving so you should consider your approach to becoming crypto ready carefully…
Introducing the next generation of client
Crypto users tend to be younger and more tech savvy than your traditional investor so it’s likely that they will appreciate a different experience. They're not likely to be suited and booted and might favour more relaxed online meetings over in person meetings with a formal feel. On the plus side, this means you can open up your doors to a broader range of clients without any geographical limitations.
Crypto investors are also less likely to be educated in taxes or accounting, they may never have filed a tax return before so they’ll need some guidance and you should be prepared to do some hand holding. There are a lot of myths surrounding the taxation of cryptoassets so you should expect to clear up some of these with the true facts. You may face some resentment, our tax guide is a great place to direct your clients if they have questions.
Gaining expertise in crypto and staying up to date
You might understand how crypto is taxed but you also need to be knowledgable on and thoroughly understand crypto and how it works in order to apply the correct tax treatment and assist your client effectively. You’ll need to find reliable resources to educate your team and as crypto is still evolving, the specialists in your firm need to be open-minded to change and have an interest in keeping up to date with the latest trends/developments.
If any employees already have an interest in or experience of cryptocurrency then it makes sense for them to add to their knowledge and skills in the area. Depending on their seniority they could take the lead and act as a central source of guidance for other members of staff. Crypto regulation and tax is extremely complex and rules are constantly changing so it’s important to have someone on the pulse.
Do you have the right software to tackle cryptocurrency taxes?
The nature of crypto means there is a lot of historical data to trawl through, some users have millions of transactions so Excel and traditional accounting software simply do not cut it. Crypto users trade on multiple platforms and record keeping within the industry has never been properly regulated so the biggest problem is that their trading data comes from multiple sources with no consistency. Crypto tax software like Recap solves this by bringing together all accounts, streamlining the data and providing accurate and consistent pricing valuations. Recap also automatically calculates capital gains and income taxes based on HMRC guidance applying the same day, bed and breakfast and pooling rules.
How will you structure your accounting team to deal with crypto?
Consider if you just need to assist a few clients with crypto or if it would be viable to develop a specialist crypto team that can be marketed to attract new business. With the rapid adoption of crypto you can expect to see a rise in crypto clients so ensure that your plans are future proof so that your practice holds its own against the competition.
Marketing your accountancy practice as crypto ready
Don’t just rely on traditional advertising or your website and LinkedIn - most crypto enthusiasts spend the majority of their time on Twitter and Reddit so become active in these places and be available to answer questions.
It’s important to realise that tax is a concern for crypto investors, you’ll likely be delivering bad news and they will be stressed and looking for reassurance. Avoid scaremongering and fear tactics - you’ll come across like the tax police; instead position your firm as approachable professionals who can get things sorted.
Community participation is a big thing in crypto - so you could even consider specialising in a specific field to cater for a niche audience. Reputation is highly valued by crypto users - word of mouth and referrals play a big role in advertising, so provide one person with a good experience and it’s likely you’ll be recommended to their peers.