Not to mention the fact that you’re throwing away 3 percent or more of every transaction to Visa and Mastercard. Isn’t it even sweeter when someone pulls out their American Express card? Who doesn’t despise such surcharges? Yes, you are correct. Would you be willing to provide your consumers with a payment option that avoids those transaction costs? Continue reading if this is the case.
Whether you sell donuts, repair mowers, or have small hair, the Lightning Network will work for you. If you can generate an invoice, your client will pay it using their mobile phone. Before moving further in our guide, please register yourself on the bitcoin trading and Invest in Crypto before it’s too late.
What Is the Benefit of Accepting Bitcoin?
“Why should I accept Bitcoin as a payment method?” is most likely your first query. You’re probably already aware of the disadvantages of taking credit cards if you’ve been doing so for a time. Then there’s the per-transaction cost, which essentially determines the very least you may charge a customer. If your introductory price is $0.45, don’t you shudder when a client wants to pay only $1 on your product or service?
Bitcoin Alleviates or Completely Removes Each of These Aches and Pains:
The costs associated with the Bitcoin Lightning Network are considerably cheaper. You may anticipate paying between 0.2 percent and 0.3 percent. That represents a charge reduction of more than tenfold. What would you be able to do with an additional 2 percent to 3 percent of income?
Furthermore, although transaction fees are frequent, they are typically less than one cent in amount, and this charge includes in the due payment shown above. There are no monthly costs, regardless of how much business you generate. Aside from that, Bitcoin transactions are irreversible. There are no chargebacks at any point in time. The sequence will be as follows:
- A customer requests a particular item.
- Lightning invoices create using a tablet computer.
- A QR code is scanned by a customer using your iPad.
- You will get a bitcoin.
- Later, you will send that bitcoin to a cryptocurrency exchange to convert it into dollars.
- It is your responsibility to transfer funds from the sale to your bank account.
Several cryptocurrency exchanges support lightning. Although you will only need to deal with one of these two businesses, viewing two different alternatives should better understand what is required. The following is a walk-through of the process using either Strike or River Financial as examples. An additional feature of this tutorial is covering how to operate with something known as an Umbrella. It’s sufficient to tell at this point that you’ll be purchasing a low-cost computer to serve as the brains of your new payment system and that this will be the only information you need.
Paying the proper amount of income tax, if only to get the government off your back, must be something you look forward to doing. You’ll be reporting sales in dollars for both income tax and sales tax purposes; yet, you’ll be receiving payments in the cryptocurrency bitcoin. The sales and the conversions from bitcoin to dollars will need to be tracked down and documented.
Keeping Records of Sales
You’re already keeping track of all of your sales, maybe via the use of a point-of-sale (POS) software system. After that, proceed as instructed below to receive your bitcoin. For tax reasons, this will preserve all of your sales data in one place, but your bank balance will divide between cash register revenues and your bitcoin value on your Umbrel.
Tax On Capital Gains
When you get the bitcoin, you should record the transaction as if it had been in dollars. It is a one-time purchase of bitcoin using the dollars received from the previous sale of bitcoin. While it would be wonderful if this were not the case, each time you change bitcoin into dollars, you will generate a taxable event in your financial records. You could record every Lightning Network sale separately, but using your average cost basis (which you can justify in any audit) will be a much more straightforward method (and one that you can defend in any audit).
I am not a certified financial planner. I am just a commoner attempting to educate others about Bitcoin and the Lightning Network. Because I am not a tax expert, please consider this post hearsay from a successful company owner who also happens to be a self-filing taxpayer.