Bitcoin CPA Accounting Taxes Florida

Using Bitcoin in Your Business with Brian Harrington and Joe Wood of Satoshi Pacioli Accounting


Everyone watching this one knows satoshi right and so the kind of the flip side of that is luka pacioli who essentially created modern accounting double entry bookkeeping and so what we saw from that was just a huge influx of better information flowing from business to business city to city really a communication tool that revolutionized how business is being done

It seems really simple today it’s like how else would you do it right but that was kind of a revolutionary change that was kind of the last great innovation in the county until you get to 2009 right where you have this new way to track payment flows from one entity another and it’s all out there in the open in real time accounting right now is moving in that direction of like hey we don’t want to do books closing once a year

Once a month we want to know every day and so bitcoin pushes you way down the line of like hey how about every 10 minutes right all right welcome back to bitcoin is hard this is a choice out production about bitcoin and personal finance and today very excited because we found our accounting guests guys we found the accounting guest we’re going to make

This just awesome fast and punchy for you we have joe wood of satoshi patchouli accounting and i’m not even going to let him give us our background or anything like that i’m going to completely skip over that we’re gonna come back to it we’re just gonna get right to the heart of it joe if a small business wants to put bitcoin on its balance sheet what should it do like what are the steps yeah thanks for having me um yeah he

Probably started at probably the easiest example there and that’s probably the easiest one to do of if you’re a small business you don’t have public filing disclosures and you really want to get that on your balance sheet most companies are going to be able to just go out there purchase you have to have a business account um but you can buy that and and handle the account on it internally uh it really gets a lot more complicated

From there as far as what you can do with bitcoin in a business but that that’s kind of step one i my business i have excess cash you know set up an account you can purchase bitcoin with that uh with your balance sheet perfect so even just starting right there like a business account do all in your experience do most of the exchanges have this or like how does an owner go about finding an exchange that will let them set up a business account and

What what should they know that’s different than setting up a personal account yeah i don’t know all the details on on which exchange required what i know it’s more complicated um just tonight if you think i guess compared to setting up a bank account right you’re an individual you have a social security number you have id all that businesses are just going to have more

Requirements more business documentation that they’re gonna have to provide to an exchange um it’s the same kyc aml requirements that the banking section has so you’re gonna have to follow those and businesses just have more documentation they have to provide perfect so and that leads directly into this is kind of a base level question i have as i’ve cause i’ve been meeting i’ve been meeting more and more like

Small business owners through through holding meetups basically is my my thing into this is meetups now across the country are looking for bars and restaurants and and we’re getting bitcoiners are getting into more and more conversations with bar owners and restaurant owners um that like are hosting these meetups and so there’s two things to talk about it’s like taking bitcoin as payment but then also just like bitcoin on the balance

Sheet and so just i’m trying to educate the audience also and educate myself i’m like what it’s like to be a business owner so that’s where this question is coming from what’s the difference between like a bookkeeper and an accountant like or and then a cpa so uh so you get the owner on the phone or they come to your meetup they understand there’s a lot they’re either a bitcoiner themselves or they understand there’s a lot of local

Interest in bitcoin somehow they get to this decision point of like hmm this makes total sense like let’s do it who what then happens they email their bookkeeper they email their account like who’s then going to the exchange and typing in the information yeah um that will certainly vary by uh by business what kind of expertise they have um kind of to answer your your first part like bookkeeper accountant cpa those are largely going to be

Interchangeable sometimes um certainly a cpas an accountant can do bookkeeping to bookkeep bookkeepers not necessarily a cpa um and so i wouldn’t get hung up on those kind of those titles things but certainly talking to somebody and and listening to their their background gonna give you a good insight there um but as far as what you need um to kind of get that account set up it

Really is gonna go back to kind of what’s your knowledge of not necessarily even accounting but your business right like did you set up did you do all the initial incorporation legal filings a lot of founders are going to have done that a lot of even if you just set up a non-profit you’re going to be familiar with that and so if you’re familiar with that you’re going to also be familiar with the documentation that they’re going to need to get you set up with

Your account and so certainly pulling in an accountant you can do it any point in time but if you are just starting up you’re likely familiar with a lot of the stuff that you need and so i would probably recommend starting the process you’re probably going to be able to get through it and if you run into a hurdle and then you say i don’t know what they’re talking about here a lot of this stuff ends up

Being terminology right of like oh i had that i just didn’t know that’s what it was called right so really getting that information across and so um i think as we go along more and more accountants will become familiar with bitcoin exchanges just like they work with banks every day um we’re just not there yet where your your cpa that’s in your town might not be an expert on it yup

I was talking to a bar owner just the other day who he so and this is for the audience also like i use the word bank in a very like neutral way like i agree with you that i think that’s going to be like you have a business bank account for your usd and then you have a bitcoin bank account for your bitcoin and then you can talk about custody and things down the line after that but it’s just encouraging to hear like my takeaway from even this initial first three

Minutes is like it doesn’t have to be hard like it’s just like anything else like just chunk it down one step at a time yeah exactly so yeah so with that like bouncing off of that now tell us about your background like tell us tell us about your accounting firm your background tell us about the name pacholi because i know that carries like a lot of history with it and uh then kind of segue into like who’s who’s your ideal client like what

Are you hoping to achieve yeah so briefly on my background kind of a typical accounting uh experience i started an audit which a lot of people do just gives you great experience working with a bunch of different entities especially right out of college where you don’t know exactly what you’re doing right so start analogy and then did some

Financial reporting at you know larger companies smaller companies general ledger reporting um and then just also on the operational side i think so how do you actually get the money out money coming in and so a broad range of experience there a lot of different types of organizations i think really helps give you a broad overview of what what are the particular difficulties and opportunities for each type of

Organization um as far as satoshi patrolling i started it roughly six months ago really with the goal to say like hey i have accounting experience i’m a bitcoiner i really want to get into this world um how can i immediately make an impact i’m not a coder i don’t have a tech background um it’s a really just kind of pulling on my experience and trying to

Apply that as much as possible and so um really kind of i think my ideal target is like how do i help businesses organizations that are just starting up and then potentially you know more established companies as well if they need temporary support that’s something that’s currently kind of a uh a really common thing for if you’re a large company medium-sized

Company you can go to a temp accounting firm and just say hey i need an account for two weeks i need to account for this one project um bitcoiners aren’t necessarily going to have that now so trying trying to create a space there as well knowing that there’s going to be accountants that really care about accounting can’t quit their day job yet but i could pick up 10 15 hours potentially a week to kind of help out with a project here and there

And so that’s kind of where i’m focused on where i really want to try to add value to the space um and to the question as far as patrolling so everyone watching this will know satoshi right and so um the kind of the flip side of that is luca patrolli who was not going to try to guess the year but it was in the 1400s um essentially created modern accounting double entry bookkeeping and so what we saw from that

Was just a huge um influx of better information flowing from business to business city to city really a communication tool that revolutionized how business is being done it seems really simple today it’s like how else would you do it right um but that was kind of a revolutionary change that i think was uh kind of the last inner great innovation in the county until you get

To 2009 right where you have this new a way to track money and payment flows for one entity another and it’s all out there in the open in real time um which is something that like you know accounting right now is moving in that direction of like hey we don’t want to do books closing once a year once a month we want to know every

Day and so bitcoin pushes you way down the line of like hey how about every 10 minutes right so kind of the the mashing of the names they are kind of trying to combine those two yeah no i love that what what is double entry accounting can you tell us what was that yeah so essentially it’s really just saying for every transaction

There’s two sides of it right and so i can’t do i can’t do anything without uh creating another uh transactions so if i’m going to purchase something right i am giving up some cash presumably and i’m getting i don’t potentially uh and so you know that that’s two sides of that transaction there’s always a debit and a

Credit and so it’s either going to be something that makes you more wealth in the future that you’re giving up for today so you’re reducing cash or potentially buying an asset that will increase your business uh kind of profitability and so there there’s a whole bunch of different ways i can work but it’s really just saying it to keep it simply there’s a debit and a credit for every transaction and how

That works essentially your your everything always has to be balanced and kind of relating that back to to bitcoin right is we know we can’t create things out of thin air there has to be proof of work there and so it goes back to that conservative side of saying there’s no way to kind of there’s no transaction that you can get

For free right there’s always a counteracting force to it yeah perfect and so that leads into like so after you go through the process of setting up the business account at an exchange the usd moves from the business usd account either via ach network or via wire to the exchange and the exchange helps you like you give up your usd receive the bitcoin then what happens so then you have a lot of options right

Uh and so that probably gets into what’s the size of your business what’s your um what’s your risk tolerance um and what’s your technical confidence right and so you could probably start with the easy example i’m a sole proprietor right and i want to go buy some bitcoin i can go buy it and then i can say thank you pulled off the exchange in custody that myself right

Um and so i have the ability and all the rights within my business to be able to do that if i’m a sole proprietor um from there it gets more complicated right let’s say i have a five person business and we have five owners right what am i going to end up doing there if i want to do self custody that gets more complicated and that can find people hold keys there’s multi-sig there which is probably your next level up right so

There’s probably options there as far as a medium-sized business and then you get even more complicated with let’s say microstrategy be traded um they can’t have michael sale or hold the keys to billions of dollars of bitcoin right so that’s where um i don’t know what their solution is but custody is you know out of exchange it’s

Going to be much more common and it’s going to be much more much harder to be able to say hey there’s this new thing called bitcoin we hold it on our balance sheet there’s five people at our organization we make sure they don’t collude and you can do all that um that’s going to be a big hurdle for people to get over it though totally so pulling it back to the sole

Proprietor with they make the uh exchange at the exchange what happens at the accounting level like what then when they are closing their bucks once a month or closing their books once a week or whatever their schedule is what how how is it treated yeah so this is a again where uh publicly traded companies have kind of a different

Set of accounting guidelines where you have the pcaob that kind of gives a lot of guidance there which public county we’re going to fully tackle that i want to tackle that and i want to get your opinion about fasb and all of that 100 percent uh yeah yeah answer your your initial question though they can adjust that on as much as often as you want but really i would say monthly basis to be able to

Say i bought you know one bitcoin it was worth 20 000 it went up to 25 at the end of the month when you’re doing all your reconciliations for your month whether you want to see where you’re at as a financial position you can adjust that as based on the current value and so your balance sheet is going to adjust based on the

Um the value of the bitcoin at the time at the end of the month so and what about this how would a what a business be able to a pro so a private business small to medium would they be able to track like they have it within their right to also like to track in usd and to track in sats right so i kind of want to break apart the units wise also like if they

Talk to us about that and if it’s helpful to talk about foreign currency i did want to kind of bring that into of like if it’s helpful to just toss bitcoin out of the example for a second and just say how do multi-currency businesses work in general i’m totally happy to dive down that also yeah so that’s where it will get interesting more complicated um i don’t have a ton of experience on the forex side necessarily

Um never worked with the business i actually had multiple currencies um but kind of to your point of bitcoin um i think probably taking a step back is saying a business can prov like do their accounting the way they want to i mean we have gap and those are our generally accepted accounting principles and the goal there is to say how do i best tell you what the current financial state of my company is how is it

Operating what is it doing and so you’re kind of your base everyone that external to you is probably going to say like what’s the us dollar amount right and so that’s going to be gap that’s what you’re going to be based on that’s what your economy if the bank wants to know about something that’s what you’re going to be reporting on or if you go to list on like base by cell like you saying that our books are according to gaap is like a helpful thing for the

Broker right it all just yeah that doesn’t mean that you can’t look at your business the way you view your business right and so that’s where i’m saying if i want to be able to if i have a really bitcoin based business and i’m receiving money in bitcoin i’m paying bitcoin um and i hold bitcoin it’s personally logical to say when i’m doing my financial savings and how i want to look at it from month to month

I’m reviewing it in satoshi’s versus u.s dollars um and so that’s a mindset change and i think we’re we’re probably a ways away from most businesses being able to do that but it will become more common i think to your point it starts with yes i have usd but i also want to know satoshi’s um and then can i ask the question can i ask a question at the software level on that

Also like i i want to hear more on the myself but then even at the software level or like at your ex like excel sheet level what tools is the is the only solution to do it on excel by yourself if you want to also do it in in sats or what what stuff is out there yeah so i’m not aware of anything right now that tracks nsats um i know you had on john from zap right who’s working on a solution there

Um that i think has a lot of promise where everything’s built in in us dollars and sets um which gives you all the information the foundational structure to be able to create that um but nothing exists today where bitcoin is built in as a foreign exchange amount where you could just show them side by side um so unfortunately i think that’s the way

You do it and then then you get into issues of how often am i doing that right where if i am doing it every month it’s easy kind of do but if i want to see it more often than that then i’m doing a lot more accounting yeah do you think that forex is the most helpful analogy to make or is like

Or is another way to look at it like i’m trying to drop analog what are other examples of items like or like what’s the most helpful analogy is it the helpful analogy to think about the bitcoin at the exchange as oh that’s our bitcoin bank account or is it more helpful to think about it as like oh like we also own this building or we own this fleet of car like how often is the building you know marked to whatever it says

Yeah or like your pizza maker your like hood oven how often is that marked to market i guess yeah so i i think it’s tough to make the forex conversion and that forex really is i’m a us dollar business but i do some stuff in another currency what we’re really talking about is looking at your balance sheet in a different way in two different currencies right and so um i think for your your oven example right

If you’re a pizza maker you bought the you bought the equipment for twenty thousand dollars you depreciated over time that’s kind of the gap way to do it over you know whatever it is ten years it depreciates you know it gets lower and lower on your balance sheet um that’s i mean you can do all that the same way um with bitcoin in that i purchased the uh

I purchased the stove for ten thousand dollars it’s gonna depreciate over time right but then also what i paid for in satoshi’s it’s gonna change over time um and so it wouldn’t really make sense logically in my head at least to say like oh i paid ten thousand dollars for it and then bitcoin you know 10x and now i actually paid a hundred thousand so but but that also is kind of the

It does get to you to that point of thinking critically to say like how much do i actually need this item is it going to create that much more value for me today that it’s worth purchasing if the potential down the line of just holding this bitcoin becomes exponentially greater and so that’s really where the thinking through the mind games of like how do i truly analyze this if i’m

Thinking about bitcoin as my basis of an account yeah no we’ve been tackling this on episode after episode about how will cash flow like be value or sats fell like how will safflow be valued like if this if for a small business if this pizza oven is creating x amount of usd in revenue per month but then that usd revenue per month is going down as measured in sats units but the purchasing unit purchasing power of those stats units is going up

Like this whole ability to view your business in bitcoin and in usd i think is super important that’s how i do it personally so that’s how my my wife and i do it personally we have an excel sheet that we constantly tweak like week after week after week to continue to show us new things of tracking our like income and net worth like in both currencies yeah um right to your point as well though i

Think one one thing you do overall as a business what you’re always trying to do right is say is my business more valuable today than it was yesterday and so naturally that’s you know if i’m working i have ten thousand dollars i i got revenue a thousand dollars didn’t spend anything my business worth more right um similarly i think you can do that with if you look at it on a bitcoin stand you

Say like do i have more sats at the end of this month than i did at the beginning um and if i don’t why is that is it because i i made a good purchase and i’m confident that because i i i gave up some bitcoin or potential bitcoin right if you use usd um i’m confident i’m going to create more of that in the future i think a good example of this kind of the way i

Would think about is is that’s a lot of what bitcoin mining essentially is like the calculation there like i might have to give up a bitcoin to buy some miners and then my thought is oh over time those bitcoin are going to be i’m going to get more sets than what i paid for it right so that calculation that bitcoin miners are doing i think we’re talking about that actually applies to all businesses if they’re under a

Bitcoin standard dude that makes me so excited hearing you say that like i fully agree the way that you just said like usd is just bitcoin you could have had like and the way you said correct mining pizzas is mining bitcoin like it is and this is i’m very passionate like bitcoiners need to own things we need to own things there needs to be economic activity flowing in and through the bitcoin network like and so no very passionate about that which is why

So the like say the bitcoin so the bitcoins on the balance sheet i want to talk about i want to talk about an owner or a set of partners pulling their share from the business like what is the pros and cons of the excess profits or the profits going into bitcoin on the balance sheet of the small medium-sized business or the owner is taking the distribution and then

Those excess distributions being on their own personal balance sheets like in whichever unit they want what’s your pros and cons there yeah so this is probably outside my direct area of excreting that you get a lot of tax implications involved um and so obviously it’s gonna vary but i think to kind of your question pros and cons it really does go to if i’m pulling that out how am i doing

It is it via salary or or dividend distribution there’s tablet tax implications there and also when you’re doing it i guess as well right so if you’re a company and you made a bunch of bitcoin last year and bitcoin is at 20 000. it might be a good time to distribute that to people and that if you’re going to do it eventually anyways it’s going to be at a lower rate

Um so directly to the kind of the individual owners it’s a lower tax burden to them alternatively though potentially you need that you need that bitcoin more if you’re using it for an indian so you might not have the flexibility there when it’s down and so there’s going to be a whole bunch of implications there it really does i

Think have to go back to do you see the business as kind of needing a certain um what’s your kind of your certain base that needs to be on the business and for a kind of a consulting independent contractor assets in a business are going to be much less important and somebody’s kind of doing more kind of infrastructure retail that type of thing where they’re going to have

Kind of constant cost uh things they need to rebuild i think yep yep um the gap is gap set down by the fasb uh financial accounting standards board also or is gaap another thing um so yes kind of gaap is your overarching structure the faasb is the one that would make any changes to

It okay um and so it is kind of going to the the generally accepted accounting principle it is a framework and so you’re not going to get it 100 answer to every question it really does try to provide principles like it’s saying in there to say if we apply these principles fairly and accurately this is how we should treat these businesses so yep

Perfect okay one more flow on this on the small medium size and then i want to flip over to the public side and get a little bit deeper on that um let’s talk about the let’s talk about we talked about balance sheet treatment i want to talk about transaction treatment uh just briefly say the business um the restaurant like is running opennote at the counter like does have their like bitcoin bank account whether it’s custody or an exchange like set up say

They have their flow and they have the meet up at the exchange or at the bar you know once a week so they get you know 250 worth of bitcoin through the counter you know every single thursday all right and then i’m even going to throw one more curveball at it because we’re dreaming big right now say say one of the breweries that delivers a keg once a month also is getting paid in sets okay so say we like really orange

Killed this town we got the meet up meeting at the bar once a week with the flow uh and then we have one other brewery from one city over delivering a keg and they want a little piece of it so it goes all the way talk us through what’s happening for that bar owner with that flow yeah so that’s i think really just where

Your your tracking of your transactions becomes really important um and that what you did at which times it really ends up being important but it kind of essentially to you your question of what kind of happens throughout that process you buy the bitcoin right you have a cost basis you have to attract that um you’re receiving that those bitcoin

In um on a weekly basis so you’re valuing that bitcoin at the time it’s received so it could go up and down but if i sold somebody a ten dollar beer that’s what the bitcoin is going to be priced at so that’s money coming in um add that to your cost basis right so you kind of end up adjusting your cost basis as you go along i have x amount of

Bitcoin at x amount cost and then you’re you’re then paying some out right um and so that price that you you value that bitcoin going out at um it’s going to be at the time but then you have this third factor of what’s the gain or loss on the what i paid to the distributor right yep so i don’t know that there’s any hard rules

In place right now what you need to do i think your first step is do i have all the documentation and records complete so you can get to an answer um and then you have a how do i want to deal with it from my gap standpoint which is i think the easier side of it to say what logically makes sense to me value at the time purchase receive pay that’s straightforward

Um more complicated is going to be the tax side and that there’s less well there is guidance there but it’s somewhat vague it doesn’t point you in a certain direction all the time as far as which bitcoin you need to use for your cost basis um and so

I’m sure that will change over the years i don’t know if it will change in our favor but that there will be some certainty around it um but i think from before you get to that tax side of things at the end of the year where you need to report your taxes i think from a business owner standpoint you can say hey as long as i have a a good record of all my transactions right staying on top of it so you don’t have

Hundreds of transactions to do at once and a good logic for why your your value in the bitcoin that you’re paying out the way you are you’re going to be safe there from a audit review standpoint even if someone comes back and says hey this is all wrong we’re doing it differently now you’re going to be able to say well i was doing it this way let’s just say we do it based on average cost right i did it this way because this made

Sense logically this is the way i think about my business if you’re doing that and you have records of it you’re going to be in good shape perfect no i’m i’m just it’s just awesome that we ran through that i’m just pumped up okay let’s swap over to every episode we ask someone to explain a tweet so yours is going to be you we you have tweeted it was a retweet of michael saylor talking about congratulations to the bitcoin community

This morning by this is michael saylor sweet by unanimous vote 7-0 financial accounting standards board agreed to add a project to review accounting for exchange traded digital assets and commodities satoshi pacholi quote retweeted and says fundamentally accounting is about providing an accurate and consistent picture for investors and stakeholders of the financial health and performance of a business valuing bitcoin at the lower of

Cost or the market distorts the value of a company holding bitcoin versus non-holders talk us through all of this start at the high level of just i love how you laid out like this is the purpose of accounting to just like lay the lay the framework and then talk about what sailors getting into and why bitcoin’s treatment on public balance sheets is frustrating right now yeah so starting with kind of sailors

Point there and potentially a change that i think would be good is saying what he’s trying to get at is and trying to get pushed through is we’re gonna value bitcoin on a fair market basis which is real straightforward basically how everything else that you clown as an investment at least is is tracked and so to back to your stove example for the the

Uh pizza factory they’re gonna they’re not gonna value that revalue that on a monthly basis but you are for any investments right and if you’re a publicly traded company buying bitcoin that’s probably how you look at it right and so it makes perfect sense just like if you were to buy stock or mutual funds or whatever you’re going to value it monthly on revalue it monthly as it goes along it’s going to change on

Your balance sheet because it’s worth something different to you if you were to sell it that’s what it’s worth right that’s a logical way to look at it where they kind of initially put it and the kind of the reason it really is just a terminology thing which is really weird the way it worked out where they put it was within tangible assets which kind of makes sense just verbally right of like is

Bitcoin tangible no i can’t touch it oh let’s put it in intangible assets um where that gets really weird is intangible ads is just something like goodwill um where if i’m uh you know if i’m a business i purchase another business they have ten thousand dollars on their you know as assets and i pay 15 because i think it’s worth more than that we’re gonna value the the five thousand

Dollars is good will um and so the rules of that around that is once i i put that five thousand dollars on my balance sheet that i paid more for it i’m not going to actually increase that which is they’re putting bitcoin under i can reduce it if i say i overpaid and it’s not worth that anymore so that is the current structure that bitcoin’s getting treated under now which just doesn’t make logical sense besides the only way

I can kind of wrap my head around it is if you just call it intangible assets that kind of sounds like bitcoin that’s kind of the current structure i’m sure that will change just logically it makes sense that it would how long it takes going through the process but i mean i i forget the um it was unanimous though as far as the kind of initial review of it which makes sense

Yeah yeah um who what other so what other problems are there out there i guess that’s really broad but are there any other things related to like this area of just like treatment of it on public balance sheets that that you think like fazbee is gonna kind of uncover while they’re doing this review like who

Are these seven people like what what have we i i i’ll throw this in the mix also i replied to the sailor tweet also and i said i reject the entire framing i don’t think we should be congratulating fasbi like or i think fazbee should be congratulating us like our like i’m congratulations for like entering the future like you you know usd speak about intangible assets like is there any accounting treatment for

Marking down like the purchasing power of usd losing like there’s no ability to do that currently right i think that’s a really good point like there’s actually i mean we talked about what’s the purpose of accounting right how do i accurately gauge the performance of my business when you have a money that doesn’t really retract truth all the way when i present my balance sheet it’s not

Going to give a great accurate picture all the time and so that’s an interesting way to look at it i i guess to your point of like who are these seven people um it’s gonna be people that have worked for a long time in the accounting industry and they’re used to what they’re looking at right and so um bitcoin has a industry is very kind of

Conservative or sorry accounting as an industry is very kind of conservative like don’t make changes quickly really think through things um just as far as treatment as well like you don’t recognize something until you’re 100 certain of it or you know 95 whatever the case is and so that’s kind of the mentality and the thought process a lot of people that are in that that position um

But it is kind of it is a logical and uh uh i think uh at least uh i guess what’s the right word for it a truthful profession right like you’re trying to get to the truth and so that will come but it’s a it’s a mindset shift to say like yeah you presented your your balance

Sheet in u.s dollars and you said you had five percent more cash than you did last year but actually your business might be in worse shape um that’s not something that anyone’s kind of thinking through at this point the closest you kind of get to it was is if you’re doing kind of discounted cash flows when you’re valuing things right

There are there are interest rates baked in there based on assumptions of interest free rates and all that and that gets all thrown up in the air if i’m trying to value a lease based on discounted cash flows and try and decide what should i do if i think inflation’s two percent versus nine percent versus twenty percent those calculations are completely different and they completely change the

Uh the analysis that you’re going to do and the decisions that you’re going to make so i think that’s a big gap right now in the current system yeah so i wouldn’t ask this also because i don’t part of the reason why i want to have this conversation want to do this podcast about like the intersection of bitcoin and personal finance whether it’s for individuals or like businesses is that

I don’t just want to be that like armchair quarterback you know throwing out tweets of like no fasb like bitcoin we’re away ahead of blah blah all stuff like i i recognize that i have to ask even the basic questions like how does even a business bank account work like how does mechanically the money get to the bitcoin exchange like i’ve never signed payroll checks like i’ve never been a part of that under so it’s like what other

Like putting what other kind of what do you think what’s what are more things that do you think non-business owners kind of like misunderstand about like being on the side of like analyzing business balance sheets i’m like trying to make decisions and like being producers in the world like what do you think do you see like a miscommunication there of just like what it’s like to run a business and like what can people understand more that have never done it

Before um that’s a good question um i think kind of your your bitcoiner that’s really familiar with bitcoin that hasn’t i mean everyone’s kind of worked in a business right but minimal kind of contact with the accounting side of things um i think there’s going to be some [Music]

Some just misunderstandings of the way things work today um i don’t think that’s always necessarily a bad thing and that you know if you’re working a system for 15 years you’re going to be kind of used to it and that’s kind of your default you’re going to pair everything to it um but i think it is important to i think it’s really important to know the trade-offs right and so bitcoiners

Know all the advantages of bitcoin um but inherent in that is um kind of one example is ach payments right and so we know that bitcoin is much cheaper and faster than achs which can take you know three days potentially from when i send it to when it gets to the next business um the flip side of that is

There are really good controls and efficiencies around achs and so if i’m a business and i have ap that i’m paying that week i might pay 500 vendors at once right with one ach payment that cost me 30 dollars and i have controls to know that those 500 payments are going to the right place how we duplicate that and how we generate that in a bitcoin world whether it be a lightning or something um

Is is something that’s not set up today right and so that’s to the point of you know i’m a individual i’m not going to be making 500 payments but a medium size and certainly a large company is going to be doing that and so if we’re saying we’re getting ready the system all together and achs aren’t part of it what’s what do you have to build to make it so i can make 500 bitcoin payments know that they’re going to the right

Place um and feel really good about that and so that’s just kind of one of the examples where i’ve dealt with it on the traditional side yeah it’s not perfect but it works well um and it’s not building the bitcoin yet dude talk to us talk to us more about the ach network like i’ve been trying to tweet out more about this and i’ve been thinking about because so pay me in bitcoin we pay me in bitcoin trend took

Off now more than one exchange has go you go on the back end of your adp type in your checking and routing number from cash up from coinbase from from the thing and then boom like your paycheck is bitcoin now the next logical step of that now is okay now like that is the ach network like when you’re typing in when when your bitcoin exchange now gives you a checking account and a routing account

Number that’s now a bitcoin exchange that speaks bitcoin and speaks ach so we have inbound ach and same thing with uh cloud when i type in my plaid credentials and give my checking account right access to the exchange to send the ach to the exchange we have this flow of ach uh talk to us about ach network in general and talk to us about what do you think about outbound from bitcoin balance to my

Mortgage or to my vendor yeah so this is one that i i probably need to dive into more and that i i see it working and i don’t know 100 how it all works on the back end but if you take strike for example right they’re kind of in the forefront of this to say i can link my bank account to strike they’ll pull money out of my account and i can buy bitcoin right away right but the money’s not at strike yet and so

There’s something happening there where there’s obviously they can cover risk and everything but i’m getting bitcoin and they don’t have my money yet um and so that’s an interesting way i think about it um to be able to say we essentially you have wire or you have routing number and account number um there’s wires and there’s aches sometimes they’re the same number

Sometimes they’re not um but just kind of those are the only two ways to send usd that just popped into my head are wire and ac is that the only two options what are the other options that’s the only that i’ve really done yes and so wires they’re more expensive 20 30 um they’re easy for a business but you do them one at a time

Um for i’ve never even done one personally um just as an individual so they’re just more complex but they they get there you know instantly 20 minutes whatever the case is however long the bank takes but it gets there right away um it’s a different routing flow versus aches where they’re cheaper um there’s there’s probably reconciliations between the bank going back and forth um but they’re also reversible right um and so

I mean i’ve done this in business before where you send the wrong payment to the wrong person or whatever and there’s ability to pull it back right which is there’s benefit there for a business that’s certainly a nice uh nice safeguard to a current system um but it it’s not it’s not kind of it doesn’t work the

Same way as bitcoin does right it’s a i guess it’s it’s a the debt system versus moving assets so i send out a whole bunch of money right and it goes from my bank account it’s going to get to your bank account eventually but really there’s a whole bunch of debt between banks that are going back and forth so that really they’re saying we’re going to get you the money it’ll get there eventually um but in between

Times there’s kind of risk between the banks so that’s kind of what their hand only versus bitcoin they’re saying i’m going to send this payment it’s going to get there in 10 minutes or you know instantly enlightening um and everything’s finalized yep so i don’t know if i got to the original question there but no i mean that’s it i just think i i’m continuing to try to get my brain to like roll over the ach network a lot

Right now also because i think it goes all the way back to the flow that we talked about of like i of a restaurant you know taking one night’s worth of bitcoin payments paying out one keg i don’t think that’s that far away like i think there are business owners potentially listening to this or like um just on bitcoin twitter that are ready for that stage like today right now in america like i think there are small business owners that are ready for

That stage and they have enough bitcoiners that now know each other in one place so i that means that then we’re xyz short amount of months to needing to understand more about the ach like um like connection so yeah i think the big opportunity there is to be able to say to somebody

Hey if you’re accepting bitcoin and not paying a bitcoin we just go right in bitcoin right and so i think that’s an easier gap to cover i think i guess the other part that we didn’t cover which is also factored in here as far as payments is credit cards right um and there’s huge incentives there to be able to say hey we’re not going to go through the credit card network it’s faster consumers know credit cards are easy you swipe them it happens right away um any

Any vendor is going to know hey these get bashed up and sent to me and sometimes they’re charge backs and so there’s there’s big uh incentives there for um vendors to start saying hey bitcoin’s a better alternative for me and them actually pushing consumers in some way potentially yeah do you um

Two more questions my last question is just like if you have any other thoughts on kind of how inflation or just concurrent the current economy is like making it hard on on small medium size like accounting and then the last question we try to ask every guest is what’s a bitcoin product or service that doesn’t exist yet that you wish did exist so let’s cover both of those and then we’ll just talk about

Just kind of your business and who your ideal client is so yeah any other thoughts on just kind of inflation or just like struggles with like small to medium accounting right now yeah i think it’s something that a lot of people were caught off guard on um previously to just kind of starting my own thing i worked at a trade association where we had you know small medium-sized uh construction industry

Businesses um all around the country and so for them it was really tracking like hey how how is building how are new projects and that was kind of all tracked through a pandemic and things were better than anyone thought right and so it was like oh things are good things are we’re still kind of hesitant cautious um but no one was saying what happens when my materials go up by

10 20 how do i price that in and so that was i left at the end of 2021 but that wasn’t part of the conversation at that time it wasn’t saying like how do we protect ourselves um and so i think if you’re a business that’s going along potentially you’ve been doing for 20 years you kind of know that the landscape and then all of a sudden you get hit

With inflation that you don’t expect and then you go to your customers and you say hey we have to raise our prices and they don’t understand they i mean they’re seeing it everywhere as well right but they’re saying i was gonna pay five hundred thousand dollars for this house now you’re telling me it’s gonna cost six hundred thousand i don’t have

An extra hundred thousand right and so that’s just that kind of that rolling effect where it happens at the creator level where if you’re in construction you’re building the house it rolls on the consumer and so there’s just a rolling effect there where you don’t see it all at once but in 2022 to 2023 you kind of get these rolling effects that will probably last longer than people think where you know cpi might go down to five percent but

There’s still a bunch of people struggling yeah yeah what um any thoughts on a bitcoin product or service that doesn’t exist yet that you wish existed yeah i mean i don’t i think there’s a bunch of good stuff being built uh that i i wouldn’t try to to be an expert

And say hey there’s something that’s missing out there necessarily uh there’s just a ton of people working on you know fedement stuff came out yesterday um that people are really excited about it’s just like there’s a whole bunch of stuff being worked on that i’m not even aware of right so i think people are working on a bunch of things whether everything’s right we’ll get through it and if there’s some stuff that will work and there’s something

That won’t right but i think we’re headed in the right direction i mean i think for me kind of thinking of it as an accountant one of the things that we don’t have a ton of in bitcoin for good reason is kind of trust throughout the industry right where we’re we’re a group of people that say like i want to see everything verify it um and so you have like kind of don’t tell me about it prove it um and i think

That’s a good mentality have but like how as we go along and mature as an industry do we build whether it’s it’s tools or relationships to be able to say like this person has been in the industry for a certain amount of time they’ve been a good actor how can we kind of build up that trust especially as you’re going to bring more and more new people in right you know the bear

Market is like seeing you know companies do well companies fail so a lot of that happens over time um but how do we kind of build that quicker so there’s fewer people that kind of get hurt by it um without kind of overplacing things and and shutting off innovation so i don’t know what the answer is there um but kind of trying to build that trust would be really valuable i think i think that’s a good word and i think

You’re a part of that i think you’re like satoshi patrolling is an answer to previous previous answers to this question so yeah cool man tell us so wrap up on where can people get in touch with you and like who your ideal client is right now yeah so satoshi patrolling patchouli is p-a-c-i-o-l-i or sorry oh um still getting used to the name uh so you can get satoshi or satoshi petroleo on twitter either one you get in touch with me um any any bitcoin or i just say that’s either you know building a bitcoin company or it’s just kind of a personal business that might have questions um additionally i kind of one of the things i’m kind of working on and i’d love to get kind of market feedback on it is building just kind of a real brief accounting 101 for founders or or you

Know new businesses to be able to say like you might not need me full-time or even part-time but there’s some kind of fundamental things that we can walk through um and kind of packaging that up to spend two hours five hours with people that educational side we really i think is really valuable in bitcoin i think we can do a lot of that in accounting as

Well where we say accounting is not complicated you know hundreds of years old right like we talked about um there’s some fundamental things that everyone especially bitcoiners can easily grasp um and so providing that for people packaging up so that they can run 90 of the way there before they’re ready to bring on a full-time accountant or whatever the case is so early you know founders bitcoiners any established companies that just need

A little extra support um temporarily feel free to reach out i’d love to dive in um it’s just me right now kind of a broad background experience but i’d love to bring on some tax experts finance experts uh based on really the needs of the community love it love it hey thanks so much for your time today hey everyone listening hit the thumbs up button hit the follow button drop a comment below and send this to a small business owner a bitcoin

Or small business owner in your life very thankful for your time today joe yeah thank you thanks for having me hey all this is brian you can reach me on twitter at brain harrington shoot me a dm with any feedback from today’s episode this has been a choice app production bitcoin is becoming centric to personal finance and we want to help you learn how to better engage with bitcoin financial services none of this is financial advice and it’s for Education and entertainment only

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