How To Find A Good Crypto Accountant
- Wagmi Tax
- Jan 12, 2023
- 2 min read
Supply Shock
There exists a need, and that is "cryptoaccountants."
According to Pew Research Center, 16% of Americans say they have invested in, traded, or used a cryptocurrency.
With 209 million people over 18 in the US, that's 33.4 million people who need to report cryptocurrency on their tax return, and that number is increasing with adoption. In comparison, according to the AICPA 2021 Trends report, the number of new accountants entering the field is on the decline, the lowest it's been in 13 years, to make matters even more dire, the AICPA estimates that 75% of todays public accounting CPA's will retire in the next 15 years. Thus, demand for accountants in general will increase significantly over the next decade.
If you've ever tried to find an accountant who's familiar with crypto, you'll know they are far and few between. With only 624,000 registered tax preparers in the US, assuming 16% of them have also ever invested in, traded, or used a cryptocurrency, that leaves less than 100,000 tax preparers who have any real idea about crypto. There simply aren't enough knowledgeable accountants out there to handle the demand.
Because of this, crypto friendly accountants and CPA's are able to charge massive premiums for their service and, unfortunately, the juice isn't always worth the squeeze. Many accountants billing themselves as able to handle cryptocurrency actually have no idea and rely heavily on software that doesn't fully work. The end result? Large accounting bills, followed by incorrect figures and unnecessary tax burdens.
Finding A (Good) CryptoAccountant
So how can I spot a crypto accountant that actually knows what they're doing? Here's a list of questions to ask when interviewing a potential accountant.
1. What chains do you handle?
If they stumble here, or only mention bitcoin and ethereum, there's a good chance they dont know as much as they may think they do. If they spit off a few different chains, especially some more obscure ones, then you know they follow the industry pretty closely.
2. Do you accept crypto as payment?
If they don't, or only accept USDC, that's not necessarily a red flag, but it is something to look out for. A crypto friendly accountant should be willing and able to accept crypto as payment.
3. What software do you use?
If they don't use software, run. They'll spend far more hours than they need to, and run up your bill. Take note of whatever software they do use, and do some research on it to see if its a good software. The difference between a good software and a bad software is multiple billable hours and potentially incorrect figures.
4. What is your fee?
Accounting fees can vary pretty widely, but your average small to mid sized accounting firm will bill about $250-$350/hour for partners and $100-$150/hour for staff accountants. Crypto accounting is specialized, and niche, but $1000/hour quotes are outrageous. If your accountant quotes you over $500/hour, I would shop around. Of course, if you're Yuga Labs, or some similar caliber of crypto company, expect to pay a higher hourly.
5. When can I expect you to finish?
It's important to understand the timeline the accountant has in mind. Many times I've heard groans of accountants taking months to finish a job, or even worse, taking months just to deny the job with days before the deadline. Because of massive demand, it's easy for some accountants to become overwhelmed and take on more than they're capable of. Get a commitment upfront on timeframe so there's no misconceptions.
6. Will you go over it with me when you're done?
The answer here should always be a resounding "yes, of course." If not, keep looking. If they're doing it right, they'll have questions anyway.
7. What kind of audit protection/assurances do you offer?
Your accountant should be able to reassure you that you will have accurate records to support your tax positions, of course there's no way to guarantee you won't get audited, but the preparer should be willing and able to provide assistance with any notices or audits.
8. Do you own any crypto/NFT's?
If they don't really participate in the ecosystem, I find it hard to believe they really know hot to navigate it, of course, that's not necessarily true, and you don't have to be a degen or developer to be a good crypto accountant, but it's a good sign if your accountant is also familiar with more niche tools like NFTTrader or BendDAO.
The Importance of Planning
No two people are alike, and neither is their transaction history or tax situation. If you do a lot of NFT trading on Tezos, for example, look for accountants who specialize in Tezos. Understandably, there may not be many out there that do, so it's important to keep good records regularly on your own, so when you do work with your accountant, whether they're familiar with Tezos or not, they can have a clear readable transaction history. The less time your accountant has to spend gathering and interpreting data, the lower your bill should be, and the more comfortable everyone will be with the numbers you're reporting.
The Good News
Luckily for you, if you're reading this, you've already found a highly capable group of cryptoaccountants and your search is over. Now all you need to do is schedule an appointment with one to get started on taking control of your accounting and taxes.
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