The complete guide to cryptocurrency accounts for small businesses

IMPORTANT NOTICE: This article does not constitute financial advice and is for informational purposes only. Businesses should be sure to do their own research before opening a cryptocurrency exchange account.

As corporate accounts with traditional banks continue to pay ultra-low yields, many businesses have struggled to find ways to store their capital that protects it from losses and generates strong passive income. As such, in recent months we have seen a number of prominent companies turn to cryptocurrencies such as Bitcoin to improve their returns. 

For example, in 2020, cloud software company MicroStrategy made headlines by purchasing $425 million of Bitcoin, topping this up with a further $500 million this month from an oversubscribed corporate bond offering. To date, the firm now holds $3.3 billion in Bitcoin. In October 2020, its CEO Michael Saylor tweeted that he personally owns 17,732 BTC, which he bought at an average price of $9,882 each. At the current price of $30,799 (as of July 19, 2021), this amounts to a profit of around $370 million. 

MicroStrategy CEO's BTC holdings

MicroStrategy’s success with Bitcoin clearly demonstrates how large businesses can profit from cryptocurrencies. However, small businesses can also take advantage of the high yields available from cryptocurrencies while reducing the risk of direct investment by opening a high-yielding crypto business account. 

For example, YIELD App is a high yield business account that leverages the power of cryptocurrencies and decentralized finance (DeFi) to provide annual percentage yields (APYs) that are unheard of in the traditional finance space. Business account holders can earn an APY of up to 20% with YIELD App - 40 times the APY offered by the highest yielding traditional business savings account in the US, for example, which only pays 0.5%.

A crypto business account allows businesses to leverage the power of stablecoins in particular to store their assets. Stablecoins are cryptocurrencies pegged to “real life”, or fiat currencies, such as USD Coin (USDC) and USD Tether (USDT), which are both pegged to the US dollar. With the high yields available on stablecoins, small businesses are able to minimize risks while reaping the rewards of a crypto business account.

How to start the crypto account journey for a small business

In order to take advantage of these opportunities, a small business owner will have to first open a cryptocurrency business account with a cryptocurrency exchange or DeFi protocol that offers that option. Comparing the market can help small business owners find the corporate account with the highest yield. 

Some of the top accounts on offer include: 

  • YIELD App, which offers up to 20% APY on USDC and USDT, up to 17.5% on Ether (ETH) and up to 12% on Bitcoin (subject to fund availability)
  • Nexo, where users can earn up to 10% APY
  • Celsius, which has APYs ranging from 2% to 18%
  • BlockFi, which pays up to 7.5% APY and offers card services 
  • Linus, which converts all deposits to USDC
  • YouHODLer, which offers a wide range of cryptocurrencies

READ: What are the best high interest business cryptocurrency accounts?

For reasons including tax and business operations, it is important to open a business account rather than a personal account for business needs. Often, this will also provide a small business owner with higher funding limits and better customer support. For example, YIELD App has a dedicated corporate team for business clients to facilitate B2B onboarding and answer any questions in a timely manner. 

Once the crypto business account is registered, the next step is to add funds. If these are already in crypto, this will make the process much smoother. If these funds are in traditional assets, then you will need to “on-ramp” them into cryptocurrency through an exchange or through your chosen business account provider, depending on your options. 

READ: How to buy cryptocurrency for the first time with the lowest fees 

Keeping your crypto business account safe

Safety is naturally a big concern for any business and especially when it comes to cryptocurrencies, which are unregulated globally and therefore do not fall under mainstream financial protection schemes. However, there are ways to both protect your capital and mitigate the volatility associated with digital assets.

Crypto business accounts usually employ several layers of security. This can include dividing funds between hot (online) and cold (offline) storage, while for additional safety there is also DeFi insurance. Various providers offer different types of insurance against hacks and other dangers of the DeFi world. This blog can help users get a better handle on how DeFi insurance works, whether it’s worth it, and which provider might fit their needs. As ever, researching and comparing the market is the best way to find out what suits the specific small business.

Tax implications for crypto business accounts

Any business thinking of opening a cryptocurrency account must also take into account the tax implications of holding, trading and receiving income from digital assets. Different countries treat cryptocurrency differently in terms of tax, so it’s important to be aware of the rules in the country where the business is incorporated.

Businesses must be particularly aware that not only the income made from the sale of cryptocurrencies, but moving from one cryptocurrency to another (exchange) may trigger capital gains tax obligations. In some countries, such as the US and the UK, cryptocurrency is taxed as property, rather than as a currency or a security. This means tax rates could be higher than income tax.

However, holding cryptocurrency in a wallet does not usually incur taxes. Holding digital assets for longer than a year can also help reduce the tax burden in some jurisdictions. For example, in the US, short-term capital gains made by buying and selling an asset within a 365-day period could incur up to 37% in tax, while the headline capital gains rate for long-term assets is 20% or lower.

Business owners may consider incorporating in a different country to minimise their crypto tax obligations. For example, in Malaysia, cryptocurrencies are not considered to be assets or legal tender, so they are not subject to capital gains tax and don’t incur taxes on transactions. However, business owners must carefully research a jurisdiction they are interested in to ensure it fits their needs, while also keeping in mind that many countries don’t have clear rules on cryptocurrencies as yet and much is likely to change in the coming years.

READ: What are the best tax planning strategies for businesses investing in cryptocurrency? 

Calculating the taxable gains from cryptocurrencies can be tricky since there can be a high volume of transactions taking place within a reporting period. Luckily, there are a number of tax calculators and cryptocurrency accounting tools that can help small business owners understand their tax liabilities. These tools connect directly to cryptocurrency business accounts to help track the performance of assets, with this information then used to generate reports for tax filing purposes. Accounting tools like SoftLedger and Cryptio also convert crypto transactions into usable data for accounting purposes.

It may seem daunting for a small business owner to venture into the world of digital assets, but the low savings rates available from traditional banking make crypto business accounts with APYs of up to 20% look particularly attractive. With a growing number of online tools and information available to help them get started, small businesses can begin earning passive income in no time. 

Are you interested in a business account that can return up to 20% APY? Sign up for a YIELD App account today!

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