How To Introduce Cryptocurrency Payments To Your Employees
January 23, 2023goSmartMedia
Cryptocurrency is becoming an increasingly popular form of payment. Businesses all over the world are beginning to realize the potential benefits of paying for services with Bitcoin and also getting paid in Bitcoin for web design services as well as SEO and digital marketing.
Can web design companies in Canada really get paid in Bitcoin or any other cryptocurrency? Sure they can! It is happening right before our very eyes web design Halifax. Go Smart Media is one such web design company in Canada that is accepting Bitcoin for payment of webdesign, SEO, and digital marketing services.
From cost savings to convenience, introducing cryptocurrency payments as an option for employees can be a great way to stay ahead of the competition and keep up with modern trends.
In this article, we’ll look at what you need to do to successfully introduce cryptocurrency payments into your business operations. We’ll cover everything from choosing the right platform and educating staff on how to use crypto.
Let’s dive right into the article.
What Is Cryptocurrency?
Cryptocurrency is a type of digital currency designed to work as an exchange medium. It can be used for purchasing goods and services. This new form of money offers users the promise of lower transaction fees when compared to traditional online payment methods — as well as more anonymity.
Cryptocurrencies like bitcoin and etherium operate on a decentralized, immutable blockchain network, enabling all participating parties to process, verify, and store transactions securely.
As the popularity of cryptocurrency grows, it has become increasingly attractive for individuals wishing to make secure financial investments without having to rely on national governments or banking systems.
Is Paying Employees With Cryptocurrency Legal?
Paying employees with cryptocurrency payments is not necessarily illegal, but there are a few points to consider.
Firstly, the Fair Labor Standards Act (FLSA) requires employers to pay regular and overtime wages in “cash or negotiable instrument”.
Historically, this has been interpreted to include only fiat currency — money backed by a governmental authority. In other words, paying minimum and overtime wages for non-exempt employees and minimum weekly salaries for exempt employees in cryptocurrency could violate the FLSA.
Secondly, the U.S. Department of Labor (DOL) allows businesses to pay employees in foreign currency as long as the amounts paid meet FLSA requirements when converted to U.S. currency.
This means that it may be possible to pay at least regular wages in U.S. dollars and pay compensation beyond that threshold in crypto. However, it is important to be aware that this arrangement must still adhere to the FLSA’s requirements regarding wage payment amounts.
While cryptocurrency payments may offer advantages such as convenience and secure payment monitoring over fiat currency payments, employers should always consult with legal advisors before implementing any type of payment system.
Make sure that it complies with federal labor laws and regulations and any applicable state or provincial laws in Canada. Additionally, employers should also be aware of potential tax implications from using cryptos for employee payments which could vary depending on jurisdiction and other factors.
How To Start Paying Employees in Crypto
If you decide to start paying your employees in crypto namely Bitcoin, the following tips can help you avoid negative repercussions down the road.
Use a Third-party Provider
Using a third-party provider when paying employees with cryptocurrency offers several advantages over buying and holding the currency yourself.
When you partner with a third-party vendor, you can benefit from their expertise in the cryptocurrency market and use their experience to support your own operations. This helps ensure that you’re making the most of your investment and getting the best return on your money.
Another advantage of using a third-party vendor is they provide secure transactions between employer and employee. As cryptocurrencies are still relatively new, there may be some security concerns associated with transferring funds directly between wallets without intermediaries.
By using a reliable third-party provider, employers can rest assured that their payments will reach the intended recipient quickly and securely.
Furthermore, these services provide additional features such as dispute resolution or customer service support if needed. This allows employers to focus on running their business rather than dealing with any technical issues that may arise during payments.
Third-party providers often offer lower transaction fees than would otherwise be possible when exchanging currencies directly between wallets. This can save employers significant amounts of money over time, as well as potentially increase profits by reducing overhead costs associated with payment processing.
Many of these providers also offer foreign exchange services for those who need to send payments overseas or in different currencies, which can further reduce expenses for businesses operating internationally.
Get Written Authorization
Getting written authorization from employees is important when paying with cryptocurrency to ensure employees are aware of the risks associated with using crypto as a form of payment.
Cryptocurrency is a relatively new and volatile asset class, and it carries with it significant risk due to its decentralized nature, fluctuating value, and potential for criminal activity. As such, employers should ensure that their staff is informed about the potential drawbacks before agreeing to receive part of their salary in this form.
In addition to providing staff members with an understanding of the risks inherent in receiving cryptocurrency payments, obtaining written permission also serves as both a legal safeguard for employers and a document for employee records.
By having their staff sign off on the authorization form, employers can protect themselves against any liability should anything go wrong during the transaction process.
Pay Regular and Overtime Wages in Dollars
Paying regular and overtime wages in Canadian (CAD) or U.S. dollars is the best option for employers looking to start paying their employees with crypto. It can help companies avoid any potential trouble from the U.S. Department of Labor (DOL).
The DOL oversees and enforces labor laws such as wage and hour standards, minimum wage, overtime pay, record keeping requirements, and more. These laws must be followed by employers or they could be subject to legal action. So, if a business wants to ensure that its payroll complies with laws and regulations, it should pay its employees in dollars for their regular and overtime wages.
Regardless, using crypto is a great way to compensate your staff for their hard work and commitment. This type of payment provides more flexibility compared to the traditional approaches like cash or check, making it an ideal choice for businesses seeking to stay ahead in this ever-evolving digital age.
In summary, you can pay regular and overtime wages in dollars to comply with labor laws and regulations and save cryptocurrency payments for bonuses and other employee incentives.
Consider Taxes
When paying employees with cryptocurrency, there are several tax considerations you should be aware of. The IRS still requires employers to withhold income taxes and FICA on any amounts paid to employees, even if the payment is made in crypto. This means you will need to track all payments made in crypto and report them accordingly.
Employees receiving payments in cryptocurrency will owe income taxes on the fair market value of the crypto at the time of receipt. If the employee decides to sell their bitcoin after its value has gone up, they will need to pay capital gains tax on their profits. Employers are responsible for helping their employees estimate and calculate these taxes correctly.
When it comes to reporting taxes, employers must ensure that all forms required by the IRS are completed correctly. Otherwise, you can face steep penalties for mistakes or omissions.
Final Thoughts
Cryptocurrency and Bitcoin is becoming increasingly popular as a payment method and businesses are taking notice. By introducing cryptocurrency payments, employers can save money on transaction fees while offering their staff more flexibility web design Halifax.
However, it’s important to keep in mind the potential risks associated with using crypto and the legal requirements like withholding income taxes and FICA when paying employees in this form. With proper planning and education, companies can successfully get paid in Bitcoin for services moving forward.
Reach out if you would like to find out how to pay with Bitcoin for web design or SEO Services — support@gosmartmedia.com
