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Invoicing in cryptocurrency
Are you an entrepreneur or freelancer considering accepting payments in cryptocurrency? In this article, you will learn everything you need to start invoicing in cryptocurrency.
We will look at why you want to accept crypto payments, how to receive them, how to send a crypto account, as well as some important points that you should pay attention to.
By the end of this article, you should have all the necessary processes and tools to start accepting cryptocurrency payments.
Why accept crypto payments?
There are good reasons to accept crypto payments. Most likely, you have already had clients who asked you to pay them in cryptocurrency.
Firstly, you can receive payments almost instantly from customers from anywhere in the world without high fees for currency conversion or bank transfer. Although some cryptocurrencies may charge a transaction fee, it is usually much lower than banks or card processing companies usually charge.
Another important reason for accepting crypto payments is the growing number of cryptocurrency clients. There are many cryptocurrency companies that want to hire freelancers and service providers. These companies often have large budgets and will pay you a premium. However, they prefer to work with companies and freelancers who are ready to accept payments in cryptocurrencies.
Last but not least, cryptocurrencies provide excellent returns on your liquid cash. Margin lending, stacking and other options for increasing profitability allow you to receive interest rates 2-3 times higher than bank deposit rates for storing cash reserves of your business.
How to accept crypto payments
All you need to get started is a crypto wallet. Your wallet will have a unique deposit address that you can share with your customers. Different wallets are used for different cryptocurrencies. Choosing the best wallet depends on which cryptocurrency you want to receive money in. To learn more about which type of wallets to use, check out this handy comparison of the best cryptocurrency wallets.
Full control over your own wallet is the safest way to accept cryptocurrency payments. However, if you are new to cryptocurrency, for convenience, you can start by using an exchange wallet, for example, Binance or Coinbase. This will allow you to generate deposit addresses for any popular cryptocurrency. Once the cryptocurrency is in your account, it is easy to cash out or exchange it for other crypto assets.
How to send a crypto invoice?
If you have a deposit address on the exchange or a crypto wallet, you can issue an invoice to the client by specifying the wallet address instead of bank details.
The easiest way is by email.
1. Copy and paste the deposit address of your wallet into the invoice
2. Send the invoice to the client along with the amount owed.
3. Your client opens his wallet
4. Copy and paste the address of your deposit and send the amount of debt.
5. As soon as they reply to your email to confirm that they have made a crypto payment, you should check the corresponding blockchain explorer to confirm that the payment has been made.
This can be confusing and fraught with administrative errors. Remember that transactions on the blockchain cannot be canceled or debited. It’s too easy for an administrator to make a typo that will irrevocably empty your company’s crypto assets.
Fortunately, there is a better way…
Introducing Request Finance
With Request Finance, you can send a professional crypto account in just 8 seconds. Payment in 1 click simplifies the payment process for your client, and for you – tracking the payment status of invoices sent by you. Payment confirmation is verified via the blockchain, so no one needs to send follow-up emails. Your accountant will be thrilled too, as they are fully compatible with accounting tools like Xerox.
What really sets Request Finance apart from other billing solutions is that it offers cross-currency support. This means that you can issue invoices in the currency that your client prefers (for example, USD), and receive payment in any cryptocurrency (for example, ETH). This simplifies the work for everyone. You know exactly how much you are being paid, and this simplifies your taxes.
Important considerations when getting paid in crypto
Good job. Your crypto account has been sent and the client has paid you. What’s next? Although cryptocurrency has its advantages, there are other considerations that need to be taken into account when accepting crypto payments.
Taxation
The country of residence plays a huge role in how much taxes you need to pay. First of all, you need to calculate the income tax. To do this, you need to determine exactly how much you have earned in the local currency. If you have used the services of Request Finance, then it’s simple – everything is recorded, and you can consider it as foreign income. In addition, with the help of Request Finance, you had to denominate your cryptocurrency accounts in local currency, for example, in US dollars or euros, in order to simplify the accounting of cryptocurrencies without having to manually exchange currency yourself.
You also need to know about the capital gains tax policy in your country. Imagine that you receive an ETH payment in the amount of $100. If the value of ETH increases, then your $100 will increase in value. Capital gains tax is paid on this added value. In different countries, it varies widely – in some it is 0%, in others it is up to 42%, depending on your growth.
Converting crypto to fiat money
Most stores currently do not accept cryptocurrency payments, so you will have to think about an “over-the-counter” method. This is how you change your cryptocurrency for money that you can spend at a local store.
The first step is that it should be on the stock exchange. If you have received a payment to your personal wallet, you will need to transfer it before moving on – this will entail a transaction fee, so we recommend receiving payments directly on the exchange.
When your cryptocurrency is on the stock exchange, it’s time to exchange it for the local currency. The withdrawal of funds to your bank differs in complexity.
In some countries, it’s as simple as pressing a button. However, some banks adhere to an anti-cryptocurrency position and will not allow you to withdraw money directly. There are workarounds for this, but they depend on the specific country.
If you are a freelancer looking to maximize your income, perhaps you should think about a digital nomadic lifestyle? Some countries make cryptocurrency very attractive for businesses and freelancers. Check out our 8 best cryptocurrency countries for freelancers.
Transaction fees
The last thing you need to think about is transaction fees. When you receive a cryptocurrency from a client, he pays a small percentage as a fee for updating the blockchain. The percentage varies depending on the cryptocurrency. These are so-called “gas fees” – they are usually paid to miners who maintain the network.
If you use the Request Finance system, then your client must pay a small additional commission. It is 0.1% of the total transaction amount and does not exceed $2. This means that when paying an invoice in the amount of $100, the transaction fee will be $0.10. With an account worth $50,000, the transaction fee will be $2. Compare us with Paypal to understand why freelancers love Request Finance.
Final thoughts
Cryptocurrency for business is gaining momentum, and smart companies and freelancers are positioning themselves to benefit from it. We told you why you should start accepting cryptocurrency payments, how to receive them, as well as a simple way to send and manage cryptocurrency invoices for your customers.
Request Finance removes all the hassle of invoicing your customers. It allows you to create fully compliant professional invoices in seconds. You save time, gain access to the best customers and avoid high transaction fees.