How and Why to Use Bitcoin for Your Small Business

Is your small business accepting Bitcoin yet? For many companies, this is one of the next big changes of the financial sector. Accepting Bitcoin could help you increase your customer base, improve your global reach, reduce some risks, and even help you keep clients happy. What is it? How does it work? And, perhaps most importantly, why does Bitcoin matter to your business? Let’s break it down.

What is Bitcoin?

Bitcoin is a type of new currency. Even if you are a small business that’s mostly local, you probably have seen your customer base reach around the world or perhaps you’ve purchased supplies and materials from someone located internationally. Bitcoin works to reduce the stress and strain of these types of international transactions by streamlining the currency. And, it’s grown to be one of the most important new currencies not just for international business, but for day to day purchases in many areas.

Bitcoin allows for people to purchase products and services anonymously. And, unlike the high fees associated with credit cards, Bitcoin doesn’t have this level of cost. It’s not tied to the movements of any other currency either, nor the government regulation that most other currencies have. It works much like any other currency in terms of buying and selling, and it’s one of the biggest trends we’re seeing within the financial, global marketplace.

Why Should Your Business Use Bitcoin?

Bitcoin provides a number of key benefits to small businesses. Take a look at why you should be using it:

#1: It costs less to use. If you hate paying those fees to credit card companies each month, don’t do it. With Bitcoin, the fees are much lower. Every time a customer swipes their credit card, you likely pay a transaction fee as high as four percent. Because there isn’t a middleman present with Bitcoin, the fees are much lower often less than one percent. You can immediately cash in your bitcoins for cash at the current exchange rate or keep them on the server for use later. If you currently require a minimum purchase for credit card use, you can do away with it. And, when selling high priced items, this can be a significant savings for you.

#2: It’s easy to use and process. Don’t get hung up on the process and worry it’s too much to pull together. You can create an account quickly, fund it fast and then use it in your location right away. Another benefit is simplicity. You do not have to purchase credit card machines (or upgrade equipment on a constant basis to keep up with industry demands.) That’s a cost savings in itself.

#3: Protect against chargeback fraud. Another key benefit to Bitcoin is that there’s no transaction that’s reversible. In other words, each transaction is final and that means you can be protected from chargeback fraud. Unlike credit card companies that may only listen to the customer, that’s not the case here.

#4: Your business can easily go global. If you are a merchant, artist, or a retailer of any other product, imagine if your customer base grew to include not just your customers locally but an international base. This digital currency isn’t tied to a physical location. It makes making purchases and selling internationally less expensive, easier to do, and far more effective. Rules for credit cards differ from one country to the next and fees can be incredibly high. Bitcoin is accepted worldwide.

Sounds Good, But How Do You Use It?

This is the easy part. To get started, you open a Bitcoin account. Then, you can use a smartphone, tablet computer or other Internet-connected device to do the work for you. There’s no special processing equipment or complicated method to use this method.

In general, Bitcoin is easy to use. And, because it is becoming more mainstream than ever, it’s also becoming  more easy to manage with various software programs and merchant services tools available to make the process easier.

Accounting Considerations

If you use Bitcoin, should you just account for it in the same way you would cash or credit cards? It’s a different type of currency and for that, you’ll need to make a few changes to your accounting methods. The good news is, it’s easy to do. Here’s what you need to know.

  • Many modern accountants have the tools and resources to help you. Discuss with your accountant what he or she recommends in terms of accounting methods.
  • It’s important to note that Bitcoin is a real currency, but it’s in the infancy stage. That means that regulations can occur in the future. More so, the IRS isn’t out of the loop. It fully monitors and can spot fraud here, too. Keep things on the up and up to avoid complications.
  • In day to day transactions and bookkeeping, your job is easy. You’ll record your transactions as you normally do. Pay specific attention to transaction fees and currency exchange rates which will differ from one transaction to the next.

But, Is It a Fit for Your Business?

There are some drawbacks to Bitcoin. First, it’s a new currency and changes are likely to come. It’s an Internet-based currency, which means, like anything else you do online, there’s some level of security risk involved. And, tax rules on this currency are still changing.

However, if your customers are asking you about Bitcoin or you want to reach more customers, even globally, now is the time to take action. In short, Bitcoin is easy to install in most small businesses.

It doesn’t have a lot of overhead, complex training, or even high fees. It’s one of the best payment methods available for those who want simplicity and are tired of paying high credit card rates. And, it’s easy to establish. If you try Bitcoin and don’t seem to find success with it, it’s easy to remove from your business. However, chances are good you will not have to or want to do so.

 

Is your business using Bitcoin? Tell me about your experience (let me feature you on the blog!).