Businesses around the world are discovering that it pays to develop and employ a Bitcoin strategy — just ask Overstock and TigerDirect.
Firstly, Bitcoin is easy to use; it provides fast transactions with lower costs than credit cards, as well as other benefits. Simply announcing “Bitcoin accepted here” brings with it news media attention. Bitcoin users will also go out of their way to support a Bitcoin business.
But how can a family restaurant or a small online retailer actually begin processing Bitcoin payments and get a good seat on this bandwagon?
Step 1a: Creating Your Bitcoin Address
First, you will need a Bitcoin wallet. This is the address where customers will send their money, and that process works a lot like email: they input your address (or, more likely, scan your QR code with their smartphones), enter the desired amount and hit “Send.”
Like with a cash register, you will probably need to take the money out at the end of the business day and store it somewhere safe. In general, it is good practice to keep only small amounts of bitcoins on your computer, mobile, or server for everyday use. You may want to store the bulk of your funds in a safer environment.
On the Internet, you can easily find tutorials on how exactly to set up the Bitcoin wallet. Don’t forget to use some best practices for securing that wallet, too.
Step 1b: Using a Payment Processor
If your sales process is a little too complicated for direct Bitcoin payments into a wallet, or if you handle many transactions during your business hours, then consider using a payment processor. BitPay and Coinbase are two of the best-known examples.
Payment processors will charge either a percentage or a monthly fee for their services, but their prices are still far cheaper than what credit card companies or PayPal charge.
Furthermore, payment processors will offer a few applications of their technology: you can send email invoices, set up a POS (useful if you are running a restaurant or cafe, for example) or add a shopping cart plugin to your online shop.
Finally, if you don’t want to hold onto your Bitcoin (say your suppliers and landlord want cash in fiat), these kinds of processors can convert your money into fiat instantly.
Step 2: Advertise Bitcoin Acceptance
It helps a lot to indicate to your customers that you do, in fact, accept Bitcoin. If you have an online storefront, grab this “Bitcoin Accepted Here” button and paste it conspicuously on your site, ideally beside wherever your PayPal, MasterCard, Visa and whatever buttons you already have are.
If you have a brick-and-mortar establishment, grab similar stickers for your door or cash register here.
Step 3: Bookkeeping and Taxes
Reach out to your accountant to determine how to keep records of Bitcoin or Litecoin or Darkcoin or whatever altcoin transactions. Some accountancy firms are beginning to emerge that specialize in Bitcoin and other cryptocurrencies. Bitcountant is one such example.
Tax Ninja in San Francisco is another firm that can handle Bitcoin-related tax issues. For American Bitcoin businesses, meeting tax obligations under the IRS’s guidelines is fairly straightforward, Tax Ninja founder Matthew Whatley told Businessweek in March.