Businesses around the world are discovering that they are paying to develop and use a Bitcoin strategy – just ask Overstock and Tiger Direct.
First, Bitcoin is easy to use, offering fast transactions with lower costs compared to credit cards, among other benefits. Announcing “Bitcoin is accepted here” simply attracts media attention. Bitcoin users will also seek to support any business related to Bitcoin.
But how can a family restaurant or small online retailer actually start processing payments using Bitcoin and have a good shot at this profitable venture?
1. Create your Bitcoin address
First, you will need a Bitcoin wallet. This is the address where customers will send their money, and the process is very similar to how email works: they enter your address (or, more likely, scan a QR code with their smartphone), enter the desired amount and press “send.”
As with a cash register, you may need to take out the money at the end of the work day and store it in a safe place. In general, it is a good practice to only keep small amounts of Bitcoin on your computer, mobile or server for daily use. You may need to store the bulk of your funds in a more secure environment.
You can easily find detailed tutorials on how to create a Bitcoin wallet online. Also, don’t forget to use some best practices to secure that wallet.
2. Use a cryptocurrency payment processor
If your selling process is a little too complex to fit direct Bitcoin payments into a wallet, or if you handle many transactions during your business hours, you may consider using a payment processor. BitPay, CoinGate and Coinbase Commerce are two of the best known examples.
Payment processing services will charge either a percentage or a monthly fee for their services, but their rates are still much cheaper than what credit card companies charge or PayPal fees.
Furthermore, payment processing services will offer a few technological applications of their own: you can email invoices, set up POS (useful if you run a restaurant or café, for example) or add a shopping cart component to your online store.
Finally, if you don’t want to keep your bitcoins (say suppliers and landlord want money in fiat currencies), these types of payment processing services can convert your money into fiat currencies instantly.
3. Announcing the acceptance of Bitcoin
It helps a lot if you indicate to your customers that you actually accept Bitcoin. If you have an online interface, insert this “Bitcoin Accepted Here” button and paste it clearly on your site, ideally alongside any payment service buttons you already have, whether PayPal, MasterCard, or Visa.
If you have a physical establishment built, place similar stickers on your door or cash drawer.
4. Accounts and tax management
Contact your accountant to determine how you will maintain records of your Bitcoin, Litecoin, Dashcoin, or other altcoin transactions. Some accounting firms that specialize in Bitcoin and other digital currencies have begun to appear.
Tax Ninja in San Francisco is a company that can handle Bitcoin-related tax matters. As Matthew Whatley, founder of Tax Ninja, told Businessweek in March, meeting tax obligations under IRS guidelines for US Bitcoin companies is fairly simple.
