Although cryptocurrency is in the process of becoming more mainstream and understood by the general public, much of its history has taken place in the shadows – away from the eyes and understanding of the vast majority of people. Indeed, crypto started as something that was comprehended by only a minority. As a result, cryptocurrency transactions were mostly unreported for quite some time.
Now, with increasing regulation and scrutiny from financial authorities, people are realizing that their cryptocurrency transactions must be reported in the same way as any other financial transactions. This transition from the shadows into the light has created an entirely new niche: Crypto CPAs.
If you’re reading this article, you’re likely considering hiring a Crypto CPA. Regardless of your current situation and the concerns that you may need a CPA for, though, there are 5 things you need to consider before hiring a Crypto CPA.
1. What is the Pertinent Regulatory Environment?
This first consideration is likely to totally dictate your situation as well as your choice in hiring a Crypto CPA. In order to determine what regulations you may need to comply with, there are a number of questions for you to answer. Some of the most important questions include:
- In the relevant financial situation, are you an individual, business, or other? With regards to many tax situations as well as otherwise, it’s important to consider what type of entity is being held responsible. For example, if your situation involves taxation, you should know that individuals may be beholden to different taxes than corporations.
- Where does the responsible entity reside? We use the word “entity” since we might be talking about a corporation, trust, LLC, etc. Regardless of what type of entity is responsible in your situation, the location that entity resides in will determine many of the regulations that must be complied with. The United States of America has totally different regulations for all things crypto than Brazil, for example. And if the relevant entity resides within the USA, the state matters, too.
Like any other profession, the Crypto CPA niche is filled with individuals that specialize in different areas. So before you hire a Crypto CPA, be sure to narrow down your specific regulatory environment and hire a professional that has appropriate experience and knowledge. This same theme carries over for consideration #2.
2. What is your Specific Situation?
Similarly to the ground we covered in consideration #1, the specific situation you’re in – the concerns that are leading you to hire a Crypto CPA – will largely impact your decision of who to hire. In the same way that some Crypto CPAs specialize in United States regulatory environments, some professionals will be better equipped to handle queries and issues in different niches.
To help you narrow down your specific situation, here’s a brief list and explanation of some of the more common things that Crypto CPAs handle:
- Crypto Tax Concerns. Many individuals have been shocked and devastated to find out that they’re responsible for paying taxes on crypto-related gains. A good Crypto CPA can help in situations like this by clarifying exactly what you’re responsible for and finding ways to lessen tax burdens, if possible.
- Financial Planning. If your concerns are related to looking to the future and structuring your finances in the best way possible, a skilled CPA can be extremely valuable. Crypto CPAs specializing in financial planning may be able to answer specific questions about how to handle your crypto holdings and how to structure your business, if applicable.
- Litigation Services. Should you find yourself in a legal situation that involves finances related to cryptocurrency, a Crypto CPA might be your best bet for securing the best possible outcome. Crypto CPAs can help you navigate complicated financial waters, prepare for any required litigation, and even provide testimony as expert witnesses in the event that you must appear in court.
- Consulting. There are many times, especially with complex subjects like finances, that you just need the advice or guidance of an expert. Crypto CPAs are happy to lend their assistance in situations like this.
The above list is not exhaustive; it is simply four of the more common situations that Crypto CPAs deal with. Whether your situation is included in the above list or not, you’ll want to do your best to understand exactly what you need help with before you hire a Crypto CPA. The more you know, the easier you’ll be able to vet the professionals you talk to and find the best one for your needs.
3. How Serious are Your Concerns?
Another way of phrasing the question contained in consideration #3 is, “How much is at stake in your specific situation?” The answer to these questions should determine things like:
- How much experience you require in a Crypto CPA.
- How much you’re willing to pay a Crypto CPA.
- How urgently you need to hire a Crypto CPA.
Ideally, you’d always want to hire the absolute best, most experienced, and most highly skilled Crypto CPA that you could find. Realistically, however, most of us are working with limited resources. As a result, it makes sense to try and gauge the severity of your concerns.
If you find yourself potentially responsible for an enormous tax burden, for example, the cost of hiring even the best Crypto CPA might represent a small fraction of looming financial costs. On the other hand, if you’ve got a rather simple query about regulations that will not immediately impact you, consulting with a less skilled and cheaper Crypto CPA might be perfectly sufficient.
4. What will your Vetting Process Consist of?
Especially when we hire professionals for things that we find ourselves lacking knowledge about, we can feel confused, out of our element, and disadvantaged. Before you hire a Crypto CPA, though, you need to consider the vetting process you’ll use to ensure that you hire the best professional for the job. It’s natural to feel overwhelmed; that’s the reason we hire professionals! But we need to be diligent at all times to give ourselves the best possible outcomes.
Vetting Crypto CPAs can involve a number of steps. Here are some examples to help you in your own vetting process:
- Research and Background Checks. Before you even contact a given Crypto CPA, it’s a good idea to find out as much as you can about them. Rather than waste your time by talking to someone who can’t help you, it’s advantageous to scour their online professional information and ensure they have the skills, experience, and knowledge you need. You might consider checking their:
- Social Media (especially LinkedIn)
- Google Reviews
- Interview. Helpful and dependable Crypto CPAs should be happy to answer some basic questions prior to being hired. Take advantage of this opportunity! Prepare and ask some specific questions that will help you be confident in your hiring decision. Some questions you might ask:
- Have you helped clients with my exact concerns? If so, how many? What were the outcomes for those clients?
- How many billable hours do you estimate it will take you to handle my concerns?
- What will your first steps be to help me?
- References. Especially when your concerns are serious, it’s a good idea to check up on professionals by contacting any references they provide. It may be particularly helpful if a Crypto CPA can point you to a past client of theirs that they assisted with similar issues to your own.
5. How Long Will You Be Working with Your Crypto CPA?
Is the concern that’s causing you to seek a Crypto CPA one that’s likely to be resolved in a short amount of time? Or is it likely that you’ll be hiring a Crypto CPA for a longer engagement? This last consideration will help you decide a number of things.
For example, if you’ll be working with a Crypto CPA for a longer period of time, his or her personality will matter much more than if you’re just asking a simple question. If you’ll have an ongoing relationship with the Crypto CPA you hire, you’ll want someone with:
- Excellent communication skills.
- Reasonable payment expectations that you can afford.
- Quick response time.
Just to reiterate, these are factors that may not be important to you if you’re hiring someone just for a quick call for advice about a simple issue.
The Goal is Security
Before, during, and after the hiring process, it helps to remember that the goal of hiring a Crypto CPA is safety and security. In addition to making sure that your finances are in order and that you’re complying with all necessary guidelines or regulations, a good Crypto CPA will help you feel that you’ve done everything in your power to protect yourself.
Remembering this goal will also keep you from second guessing your decision to hire a Crypto CPA. Too many people may consider hiring a Crypto CPA and then decide against it because of costs or other factors. The simple truth is that if you are considering hiring a Crypto CPA, it’s almost definitely worth it. Use the 5 things to consider above, make the best decision you can, and you’ll be in good hands.
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