We’re being asked with increasing frequency to help businesses considering setting up a business, how it would work in the crypto space.
Although we are entering a brave new world, many of the considerations are the same, whether a business is started up and run under DeFi or more traditional Centralised Finance.
Let’s take a look at what you need to consider.
Taking advice
The failure rate of new businesses has always been high, and seeking the advice of an experienced business advisor will help you to focus on whether your business idea has a chance of working, and if so, how you can give it the best chance of success.
Planning ahead
Before starting up your business you will need to consider:
- Business structure which may include company incorporation
- Business plans, forecasts and cashflow
- Funding requirements
- VAT registration and advice
- How to minimise direct taxation
- Method of payment of goods, services and wages – in crypto or traditional currencies?
- What expenses can be claimed against tax
- Business or private vehicles
- Record keeping, including software
- Other related issues such as legal requirements, pensions, insurances etc
Do you really have to pay tax on a crypto business?
If you’re planning on operating a business wholly or partly in the crypto environment, your venture must still be legal and tax compliant. The penalty for non-compliancy or tax evasion can be high, and there are fewer and fewer shadows in which to hide from HMRC.
Because this is a new area, HMRC have only issued limited guidance so to determine the tax position for any crypto related businesses we must refer back to traditional tax rules and apply these accordingly.
However, because crypto is not recognized as a currency for tax purposes it is not always easy to know which rules to apply. That is why you need to use a specialist crypto accountant.
Find a specialist crypto accountant
Get in touch with us – we have specialists in crypto taxation, business advisory and tax compliancy, so we can help you to stay on the right side of the law. If you’re reading this, you’re hoping that your business will be around for a while, and it’s better to start off correctly than clearing up the mess later.
