A guide to creating a crypto division in your accountancy practice
How to ensure your accountancy firm is equipped to support crypto investors as the demand for tax compliance grows.
Wed Apr 19 2023
First published: 10th November 2022. Most recent update: 19th April 2023
The growing popularity of cryptocurrency presents an opportunity for accountancy firms to expand their service offerings and tap into an additional revenue stream. With 10% of UK individuals now owning crypto and the recent reduction to the capital gains tax allowance, the demand for specialist tax advice in this area is set to increase. By providing dedicated crypto services, accountancy practices can not only attract new clients but also increase client loyalty. Additionally, the introduction of the Crypto Asset Reporting Framework and updates to the UK self-assessment tax form aim to bridge the crypto tax gap, increasing compliance making now an ideal time to add crypto expertise to your practice.
As the crypto landscape continues to evolve, careful consideration and preparation will be key to ensuring your firm is well-equipped to meet the demands of this growing market.
Create an experience to make your client feel comfortable
Introducing the next generation of clients - the crypto users. These clients are typically younger and more tech-savvy than traditional investors, so you may need to tweak your typical service approach to provide 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, by catering to these preferences, you can open up your doors to a wider 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. You should be prepared to guide them through the process and dispel any myths or misconceptions about the taxation of cryptoassets. By doing so, you can establish trust and credibility with your clients. At times, being the bearer of bad news, you may face some resentment, our tax guide can help clarify any doubts or questions your clients may have.
Gain expertise in crypto and keep updated on the latest developments
You might understand the tax implications of crypto, but it is also imperative that you and your team have a good understanding of how crypto works in order to provide comprehensive assistance to your clients. Given the constant evolution of the crypto landscape, your crypto team needs to be receptive to change and have an interest in keeping up-to-date on the latest trends and developments. You will need to find reliable resources to educate your team, this will not only enhance your client offerings but also establish your accountancy practice as a thought leader in the industry.
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. It may be worthwhile for them to expand their expertise and play a leadership role in guiding their colleagues. Crypto is such a rapidly changing and complex field, having a team member who is on the pulse with new regulations and tax rules will be highly beneficial for your clients.
Do you have the right software to tackle cryptocurrency taxes?
As the adoption of cryptocurrencies continues to grow, it is becoming increasingly essential for accounting firms to have the appropriate software to handle crypto tax reporting.
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 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.
The high volatility and value of crypto assets means that it's crucial to protect the personal and financial information of clients. Recap's end-to-end encryption ensures that users have complete control and self-custody of their data. By using Recap, accounting firms can ensure the utmost security and protection for their clients' assets and information.
The structure of your team
To effectively handle clients with cryptocurrency, it's important to assess the structure of your team. Determine whether you only need to assist a few clients or if creating a specialist crypto team that can be marketed to attract new business is viable. With the increasing adoption of crypto and the increase in compliance pressure from tax authorities you can expect to see a surge in crypto clients. Therefore, it's crucial to ensure that your plans are future-proof and that your accountancy practice can remain competitive. Additionally, as the high value and volatility of crypto means that client information and assets are at risk, it's important to have a team that prioritises security measures.
Marketing your accountancy practice for crypto investors
To build a strong reputation and attract new clients to your accountancy practice, you need to have a proactive approach in marketing your practice as "crypto ready." While traditional advertising and social media platforms like LinkedIn can be useful, it's essential to tap into where crypto enthusiasts spend most of their time - Twitter and Reddit. Actively engage with them and provide useful answers to their queries.
It's important to note that tax is a major concern for crypto investors, and they can be stressed and anxious when receiving bad news. Therefore, avoid using scare tactics or fearmongering, as it can create a negative impression. Instead, provide reassurance and position your firm as approachable professionals who can help resolve their tax concerns.
You can also consider specialising in a particular field to cater to a niche audience, as community participation is a significant aspect of the crypto world. Reputation matters a lot to crypto users, and word of mouth and referrals can be a powerful tool for advertising. By providing a good experience to one client, you're likely to be recommended to their peers, further building your reputation in the industry.