Could your small business be doing more with cryptocurrency?
Aside from the obvious route of accepting crypto payments from you customers, there are a range of different ways that companies can take advantage of everything blockchain has to offer. It’s a very exciting time to become part of the crypto market, and a great way to prove your credentials as a forward-thinking business that embraces the latest technology.
Raising funds through cryptocurrency
Here’s one interesting option for small companies that are looking for growth: create your own cryptocurrency token and then use it to raise cash through an ‘initial coin offering‘ (ICO). It may sound complicated, but the principles are pretty straightforward. The investor will buy your token in exchange for cash or cryptocurrency – money that you can then use to grow your business. Later down the line, they’ll be able to cash the token in and get a return on their investment.
If you’re interested in the potential of raising money through an ICO, there is a lot of information out there to help guide you through the process and the pitfalls. Take a look at sites like Investopedia to understand more.
One of the primary benefits to using an ICO for your next round of fundraising is the speed with which you can raise capital. This can make it a tempting proposition for companies that are looking to scale-up rapidly – and if your company performs well, everybody wins.
Invest using a company account
Businesses can also choose to invest in cryptocurrency, as popular crypto exchanges such as Binance and Coinbase allow you to set yourself up with a company account (on Binance this is known as the ‘enterprise’ option). You’ll need to have a number of documents to hand in order to verify your account – but once it’s done you can jump straight in and start investing.
The pros and cons for investing in cryptocurrency are similar for a business as they would be for an individual. It has the potential of offering an enormous return on your investment, but is also a lot riskier than investing in more traditional assets. A good option is to have only a portion of your overall investment portfolio in crypto. This way, you open yourself up to the benefits without putting all of your capital at risk.
If you do choose to invest in cryptocurrency through your business, make sure you fully understand the tax implications. The HMRC is clear about the tax obligations for companies making money through crypto, so follow their regulations to the letter.
Trading with cryptocurrency
Passive investment is not for everyone – and for business owners who want to be a little more hands on with their money, there’s also the option of trading. It’s possible for businesses to trade in cryptocurrency, which would involve making regular transactions in an effort to maximise profits. Again, there are a lot of tax rules that come into play once you start trading, but the potential ROI can definitely make it worth it.
You could also choose to take your income from the business and trade as an individual. Trading crypto can be a lot of fun, as you get to take advantage of the huge market swings. One of the best ways to start trading is through a trading app such as bitcoin method. This will analyse the market for you and help you understand the right time to make a trade.