Bitcoin has broken down many barriers to usability since its launch, it has become easier to purchase, easier to own, easier to spend and easier to convert into local currency. This has driven and increase in the number of businesses who accept the digital currency as payment for their services or goods. However, bitcoin has remained difficult to manage in terms of integrating into income regulation for tax purposes for those businesses with little in the way of advancement in that area. Until now, as a new tax compliance software has been launched by Avalara that allows real time tax calculations for bitcoin transactions.
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Bitcoin has made remarkable progress since 2009, and with new options available such as ATM cards, is relatively straightforward in many countries to both buy, use and convert to local currency as needed. From that initial starting point it is a huge advance, and one of the main reasons so many businesses, from freelancers to large organizations, are accepting Bitcoin as payment for their services. However, this advance has not been even, and there are still areas that need a more user friendly approach, and for those taking in Bitcoin as payment, one of those is accounting for that income properly with regard to taxation.
This has just changed with the announcement by Avalara, the Seattle Washington based company that specializes in tax compliance automation software, that their newest compliance engine will include a Bitcoin module. The module will enable automated calculation and accounting of sales tax and VAT for bitcoin transactions in real time. This means that retailers and the bitcoin industry itself can accurately track and manage digital currency transactions easily, and the full reporting system allows all businesses to comply with tax legislation much more efficiently, removing yet another barrier for take up of cryptocurrency. As the product offered by Avalara covers worldwide markets and their local tax regimes, this is a significant step in allowing businesses around the world to take full advantage of the trade benefits that come with digital currency.
For the industry as a whole and bitcoin in particular, this can be another boost to adoption, with the wider ability to use bitcoin itself for purchases of services, goods and so on, the greater the incentive for new users to use bitcoin. In this respect, having automated tax reporting is a very important step in the journey of digital currencies becoming fully usable currency right across the globe. In many ways, this move cements bitcoin as a viable currency format for businesses and will perhaps even raise awareness of bitcoin for businesses in some markets.