In 2013, bitcoins peaked in value. As of 2016, in spite of relatively lower exchange rates, the currency continues to be popular. Many consumers love using this type of currency. By accepting bitcoins or similar digital currencies, you diversify payment options for your shoppers and potentially open yourself up to new revenue streams.
Benefits of Bitcoin
Bitcoin fraud is rare. That reduces your risks as a merchant, and chargebacks are impossible with bitcoins. Once you are paid, the merchant cannot reclaim the funds unless you issue a refund. Additionally, when your company accepts bitcoins, it puts you on the radar of shoppers who prefer to use bitcoins.
Bitcoin payment processors tend to only charge about 1% of each transaction, which is lower than the fees charged by many credit card processors. Over time, those savings can add up. For example, if you earn $2 or $3 extra from every $100 in sales, you increase your profits by $600 to $900 per year based on $30,000 of revenue.
To accept bitcoin on your website, you need to work with a company such as BitPay or Shopify that processes bitcoin payments. If you want to accept bitcoin in your brick-and-mortar shop, BitPay offers apps that sync its services to a range of point-of-sale programs. If your POS system cannot be synced with BitPay, Bitcoin Checkout allows you to accept these payments in person with your mobile phone.
If you cannot set up bitcoin processing and you have clients who want to pay with bitcoins, you may want to refer them to a service such as Bylls. This company makes it possible for Canadians to use bitcoins to pay a range of bills. Alternatively, apps such as Invoiced let you to send invoices and set up subscription billing, and the program works with digital currencies as well as traditional types of payment.
In most cases, bitcoin payment processors convert the funds to Canadian dollars immediately, and they dispatch the money to your bank account, just as most credit card processors do. However, if you prefer to keep the currency in bitcoins, you need to understand how shifting exchange rates may affect your income tax obligations.
As of 2017, if you earn more than $200 in a currency exchange, you must report the excess amount as a capital gain on your tax return. For instance, if you accept 2 bitcoins with a value of $2,040, but they’re worth $3,040 when you convert the funds to Canadian dollars, you have a capital gain of $800 – the $1,000 you earned through the exchange minus the $200 threshold.
When you accept bitcoins for business sales, you must report the revenue as usual to the Canada Revenue Agency. You should convert the bitcoin value to Canadian currency using the exchange rate on the day of the transaction. If you spend bitcoins on business purchases, you also need to convert the amount to Canadian dollars before noting the expense on your tax return.