5 Tips For Using Cryptocurrency In Your Small Business

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If you’re a small business owner, you might be wondering if using cryptocurrency makes sense for your personal or business finances. A survey by Finder.com showed that around 23% (59 million) of American adults have invested in crypto. And according to Skynova, 32% of US small business owners and senior executives said they accept crypto as payment.

As crypto grows in popularity, think about how it could improve various aspects of your business and help you achieve results. We’ll go over tips for using crypto in your business, whether you’re just starting out or you’re a seasoned entrepreneur.

Related: 4 Ways Your Small Business Can Benefit From Blockchain

What is Cryptocurrency?

Crypto is a digital store of value and medium of exchange that uses blockchain technology to record transactions on a global, decentralized ledger. So, instead of needing a bank or middleman to process payments, buyers and sellers can transact directly using crypto wallets or digital exchanges.

There are many reasons small businesses might want to own, accept, and pay with crypto. This can help you attract new customers, partners or employees or even prevent fraud. Another is that crypto can be a good investment or provide you with innovative ways to take out business loans.

Here are five ways to use crypto in your small business for greater success.

1. Accept crypto from customers.

Adding crypto to your list of accepted payment methods offers several benefits, including lower fees. Compared to traditional credit card payments, which typically cost businesses 2-4% per transaction, accepting crypto could reduce your fees to less than 1%.

Crypto payments cannot be charged or reversed by merchants, unlike credit card payments. And since no third parties are involved, crypto transactions are final and protect businesses.

Since crypto has become common in many countries, accepting it could help your business grow with international customers. Making your products or services more convenient or safer for a new market could be the key to expanding and increasing business revenue.

To accept crypto, you can receive it manually using a digital wallet, using a payment gateway like PayPal, or a crypto payment service like Coinbase Commerce. Although a gateway or service charges a fee, it simplifies the process and allows you to exchange crypto for USD immediately.

2. Take out a crypto loan

According to the World Economic Forum and the World Bank Enterprise Survey, lack of access to finance is one of the main obstacles to the growth of small and medium-sized enterprises. If you are looking for alternatives to traditional loans, a crypto loan can be a good funding option.

To get a crypto loan, you need to own a certain amount of it and maintain a certain loan-to-value (LTV) ratio. Instead of selling your digital assets, you can use them as collateral to receive cash or a stablecoin.

Your loan amount depends on the amount of crypto collateral you want to put up. For example, if you stake $20,000 worth of crypto and need an LTV of 60%, you could receive a loan of $12,000.

However, as with any new financial service, crypto lending comes with potential risks. If the value of your collateral drops due to price volatility, you may be required to increase it or repay the loan. If you cannot meet the lender’s requirements, some or all of your crypto collateral could be liquidated, depending on the lender.

Before taking out a crypto loan, always do your homework to find a lender with a good reputation and reviews. Beware of red flags, such as a lender saying they can take possession of your collateral or dispose of it at their discretion.

Stay away from crypto lenders with bad track records, such as suspending services without notice, suing customers, or completely failing to comply with regulations.

The Digital Asset Advocacy Group, a nonprofit consumer education and protection organization, offers many resources on its website, including more red flags when choosing a crypto lender and details on who to contact. in every state if a crypto lending platform has harmed you.

3. Investing in Crypto with a Retirement Account

A smart way to buy and sell cryptos that don’t trigger capital gains is to hold them in a tax-efficient retirement account, like an IRA (Individual Retirement Account) or SEP-IRA (Simplified Employee Pension) for the self-employed. .

With a traditional crypto IRA, your contributions are tax-deductible and you pay ordinary income tax on amounts withdrawn in retirement. Contributions to a crypto Roth IRA are taxable; however, your withdrawals (including account investment growth) are completely tax-free in retirement.

For 2022, the annual contribution limit for a regular or crypto IRA is $6,000 or $7,000 if you’re over 50. Anyone with at least that much earned income is eligible for a traditional IRA; however, there are annual income limits to qualify for a Roth IRA.

4. Invest in crypto with a Health Savings Account (HSA).

Using an HSA to save for current and future healthcare expenses provides you with the following tax advantages:

  • Tax deductible contributions.
  • Tax-free investment growth.
  • Tax-free withdrawals (if you spend them on eligible healthcare expenses).

While you generally can’t invest your HSA balance in crypto, self-directed accounts allow it, like Directed IRA. Note that to qualify for an HSA, there is no annual income limit, but you must be enrolled in an HSA-eligible health plan.

For 2022, you can contribute up to $3,650 for an individual plan or $7,300 if you have a family health plan. And if you’re over 55, you can contribute an additional $1,000 per year.

5. Using a Risk-Free Crypto Rewards Credit Card

If you’re not sure if you want to accept or invest in crypto in your business, you can earn crypto using a crypto rewards credit card. This allows you to leverage your personal or business expenses to accumulate crypto or points that convert to crypto.

While cards vary, look for ones with no annual fee that allow you to earn unlimited cashback of 1% or more in crypto on every purchase. It’s a simple and risk-free way to get started with crypto in your business.

Related: Regulation is coming to the crypto sector

If you are currently using crypto products or loans in your business and have had an unsatisfactory experience, sharing your information is essential. Use the following resources to write reviews or complaints that let regulators, consumers, and other entrepreneurs know about any bad performers in the crypto industry:

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5 Tips For Using Cryptocurrency In Your Small Business


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