Accounting Aspects of Crypto Currency

 

As we float in virtual space ever more than before, there is no way to go away from the humdrum of virtual currency, braving the cyber world which humans will in course of time accept and move on, now in midst of all the cryptic codes which was a while ago only in good read fiction books of famous writer, has now become reality and the famous cryptocurrency bitcoin is all based on cryptography as it is highly secured, and cannot be counterfeited.

Any transaction taking place has to be accountable somewhere in your mind, books and in case of an organization, in your balance sheets, how Do I account for the new virtual transaction? The accounting fraternities are up to handle the accounting for the new set of challenging transactions digitally.

What are Bitcoins?

Publically available digital money which is created by Miners: who with the use of very high power computer networks and complex mathematical permutation have created the currency which has a string of cash or equivalent value. In the United States, they are highly regulated and are monitored keenly owning to the involvement of black money pumped into the system and crashing the exchanges worldwide. The bitcoins move from the online mobile wallet which is either stored in the computer, cloud or the storage space in the mobile phones and are valued higher than gold and physical; money with the price of 1 bitcoin touching as high as $ 2000.

How to account for?

For tax purposes and Federal law, certain guidelines are in place, which may seem confusing to account for at first; however, once it falls in the radar is accounted and considered as:

  • the market value is always considered for the cryptocurrency and, is a taxable income when it is used as a mode of payment for goods and services
  • there is no gain or loss in the currency as it is done in traditional physical money
  • the fair market value of the cryptocurrency arrives at the date when it is acquired in terms of US dollar value in the exchanges
  • Bitcoins are treated as income in the 1120 Form and all the expenses incurred during the financial year are deducted to arrive at a taxable income, all the regulatory compliance has to be compiled and adhered to while treating them as income
  • virtual loss can be incurred when the bitcoins are purchased at a very high rate during the peak markets, which cannot be considered for taxation purposes,
  • The value at which the cryptocurrency is received and the spent could be different which is recorded as a gain or loss.

The receivables part in the cryptocurrency world has to be clearly sorted to avoid recording the transactions and keep track of the dual accounting impacts on the set of transactions.

Market fluctuations and its impact

 

 

Stock market fluctuation has a deep impact:

If you were to ask ten people if they could tell the first word that came to their mind when they hear the stock market, I am too sure that the majority of them will say “fluctuations”. The word is synonymous with the market almost as much as school is with discipline.

The fluctuations can be rapid:

The stock prices keep fluctuating throughout the day increasing and decreasing. Sometimes, the fluctuations are so rapid that it is unbelievable that so much change can happen in so short a time as a day in the market.

Have you ever wondered why the stock market is subject to so many changes and that also so quickly? Why is it that some stocks go up in prices of some come crashing down? Do you know if there is any reason for such volatility in the markets?

In order to understand and appreciate the fluctuations and the impact that it has on individuals, small companies, big corporate and society at large, we must, first of all, have a clear understanding about the working of the stock market. We shall present the facts in pointers. Some of the facts are probably overly simplified but it is important that even the layman understands and that is why the language is kept nontechnical.

  1. Behind the primary stock market, there is also a secondary stock market where the buyers and sellers are actually like bidders in an auction.
  2. On any given trading day, there are buyers and sellers who are ready to buy or sell their stocks;
  3. The buyers and traders could be anyone like individuals, companies, institutions, mutual fund etc.
  4. Whenever there is excess buying than selling the prices skyrocket and people tend to start selling their holding;
  5. The vice versa is true when there is a decrease in demand the prices fall and that is when the people rush in to buy stocks in large numbers if they think that the company will perform well;
  6. The fluctuations as such are a result of a demand-supply curve just like any other economic process.

 

The effect of such fluctuation on the economy is widely felt. Even small changes in the economic, political or the social fabric of the countries or in the world economy can have a lasting impact on the market and subsequently on businesses. When the stock market performs well, the people get on to buying spree but when it is bearish and the prices of the stock start falling, people start pulling back their money and start saving instead of spending.

 

The flush or the pullback of money in the economy is what are the first and perhaps the most significant impact of the fluctuations on small businesses. The manufacturing and the trading sector may see a boost in sales during the bullish times and a lull during the bearish time.

Have you heard about PayPal working capital yet?

 

 

A little about us first!

Hi, I am Shauna. My daughter and I run a home-baking business. Elisa, my daughter was diagnosed with mild cerebral palsy and partial Down’s syndrome and I was worried sick what she would do after I was gone. So, I left my fledgling law practice to be able to help her set up something so that she is not just confident in life but is also economically independent.

You see being financially independent is the crux of living with dignity:

Very early on in life, I had learned that there is no dignity that you can catch on to apart from the one that you get when you earn your own bread and that philosophy has stayed. Elisa had to be made confident and when I realized that she was a natural baker it was easy to mold her passion with entrepreneurial skills.

And she was doing great!

Elisa had the eye of an expert and she could churn out wonderful recipes. She was hardworking and passionate about succeeding. However, we had to find a source to start funding our business. We were looking at expanding our bakes and cakes repertoire and we were planning on a logo for the business and cards and packaging and looking out to create a distribution chain for the products that we churned out.

And we bumped on to PayPal working capital:

Since we used the social media to spread the good word about our business, a lot of our customers were from out of the area that preferred to pay us for our goods and services online.

When we were scouring the internet for a little help on our working capital, PayPal came out with this brilliant idea of funding small businesses like us who do business via their payment platform. This was nothing short of our prayers being answered.

The benefits that we got with this awesome platform:

  1. The payment terms were flexible:

The repayment of the loan was in consonance with the sales that we did on the platform. Cash flow was so easy to manage that at no point in time did we even feel like a liability of a loan on us

  1. There is only one fee that we needed to pay:

The platform made it clear right from the beginning that there was going to be only one fee and hold your breath, no hikes and no hidden costs whatsoever!

  1. No credit history required!

What a boon this was. It was perfect for us!

  1. Funding was literally a piece of cake!

The process of applying and sanctioning took nothing less than one hour. The approval happened in a matter of minutes. I am so glad that we found what we were looking for. And you?!

 

Embrace CSR And See Your Business Grow

Corporate social responsibility is not just a fad but it actually has much more to it than can be seen on the outside. Businesses want to be relevant, get customer trust and at the same time make profits and for them, CSR is a great way to go about the objectives.

There are some key reasons why CSR should be taken up by companies.

  • Engaging in CSR activities means a good word about the organization – When the company does something for its customers or for its stakeholders then this helps to instill trust and confidence. It also helps the company grow and see long-term success.CSR is important for your brand because it makes it popular. This is true and you gain popularity not just in front of the media but also with your customers. And is not this needed for your business to prosper and grow? When consumers have a positive feel for a particular brand they stick to it. However, make sure that you do an activity not because you see profits hidden somewhere. Do it for a social cause and profits will follow.
  • A company could engage in a CSR activity to protect the environment. And how does it help the company finances? It helps the company to save on costs. By installing meters that let the company calculate the wastage cost it not only lets it contribute to the environment but at the same time lets the company cut down on the expenses.
  • CSR activities keep employees happy – Doing and actively participating in the CSR activities make the employees feel worthy and they also start having a bond with the company. It instills team building and working towards an initiative together. This also helps to create loyalty towards the company and they start respecting the company more. This leads to lower attrition and better productivity which in turn improves the employee performance. And this is definitely needed for any corporate to grow.

These are some of the reasons why a company should engage in corporate social responsibility activities. In reality, most companies do not like the idea of engaging in social causes but history shows that companies who have embraced CSR end up doing better.

CSR is not a way to solve all the problems in the world but it is definitely a good start to engage employees in thinking about the social cause.

 

Popular Types Of Mutual Funds

A Mutual Fund is a popular investment choice that pools the money from various investors to invest in the diversified assets. The associated investors also have the liberty of enjoying the professional assistance, in where the dedicated portfolio manager, takes care of the investment actions on behalf of these investors in such a way as to offer the needed benefits to them. That is why the mutual funds are still favored by the people, especially the following 5 popular varieties of them.

Fixed Income Funds

As the name implies, these funds buy such investment types that offer a fixed rate of return, such as like the government bonds and the high-yield corporate bonds. The idea is to offer a steady cash flow, which means the investors associated are conservative ones, who wish to stay from annoying risks. This mutual fund type is also suitable for retired people, as they could enjoy some fixed amount without much complications and tensions.

Equity Funds

One of the popular choices preferred by the investors, where the associated funds concentrate on the stocks. Unlike the fixed income fund that offers, a slow, yet, steady benefit, the equity funds are capable of offering some quick results that can also be comparatively larger in value but, not without including higher risks! Again here, you have so many choices to choose from such as, growth stocks, income stocks(stocks that pay dividends), large-cap stocks, mid-cap stocks and so on.

Money Market Mutual Funds

If you are an investor, who prefers to play safe rather playing profitably then, this is the right choice of mutual fund investment for you, undoubtedly! Usually fixed income short-term securities such as the government bonds and certificates of deposit are the choices of investments, which means without having to worry about the risks you can enjoy a decent amount of benefit more than what you could gain from your regular savings account, satisfactorily!

Index funds

These funds aim to replicate the performances of a specific market index and therefore, according to the value of the index the value of the mutual funds also fluctuates. The benefits of choosing this mutual fund type are lower operating costs, broader market exposure, and, less complicated.

Balanced Funds

As the name implies, when you choose these funds as your investment choice, you can enjoy a balanced mixture of output, which means without compromising your safety you can enjoy better returns. They do this by investing in the portfolio of both equities and fixed income funds, where the aggressive balanced funds hold more equities than the fixed income ones and the conservative funds, the opposite!

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