More people every year are accepting Bitcoin in their business, and combining it with your traditional accounting methods can pose some difficulties. Let's discuss how to integrate Bitcoin into your QuickBooks Online account.
Here are a couple methods you can choose from:
Home Currency Method
Convert the Bitcoin value into your home currency (ex: 'USD'), and manually create transactions with those values. This is a simple choice if you don't have many transactions to include, and you just want to quickly insert your Bitcoin data into QuickBooks.
You will need to take care when you exchange the Bitcoin back into your home currency, by taking into account the new exchange rate. A journal entry can be used to show the capital gain/loss received from the change into exchange rates.
Inventory Item Method
Create an inventory item called 'Bitcoin', and use asset purchases/sales transactions to show the exchange into and out of Bitcoin. This has the advantage of showing your actual Bitcoin value in QuickBooks, while side-stepping some limitations of treating Bitcoin as a currency in QuickBooks.
If you want complete control over how your Bitcoin is accounted for, this method will give you plenty of flexibility.
Finally, QuickBooks Online now offers a multicurrency mode where you can natively use a BTC currency type, alongside your other currencies. This is great, because it makes handling exchange rate calculations simpler, you just need to specify the exchange rate at the time of each transaction.
This method will show your Bitcoin sales in USD within your normal USD sales. However, at the time of this article, the BTC exchange rate does not receive daily updates to the BTC/USD rate, so you will need to manually update this rate when you want to see the current state of finances.
Handling exchange sales/purchases can be done with a transfer to a USD account, or through a custom journal entry. Accounting for capital gains will still need to be done manually, because typically foreign currencies do not require capital gains calculations like Bitcoin does.
One small issue with this method: QuickBooks currency values can have at most 2 decimal places of precision. So you'll have to decide on your own work-around for this issue :(
Automatic Bitcoin Data Sync
Any of these methods can work perfectly fine, but they require manual data entry and calculations, which can take a few hours per week for most businesses.
If you would like to automate this process and have it solved today,
Blockpath has built a complete integration that automatically syncs your Bitcoin transactions into QuickBooks Online for you. Just provide your addresses/xPubs, and we will handle the rest. The tool also tracks your capital gains, and places them directly into an Income Account, so you can monitor them at anytime.
Learn more about the app here
Sort your addresses/xPubs into QuickBooks accounts
Get a report of your capital gains in QuickBooks
Learn more about the app here
Find our app in the QuickBooks App Store here