Can employees be paid in cryptocurrency?

Bloomberg

Can your small business clients start paying employees with cryptocurrency? In a short answer, yes. And companies are already doing it.

So what does that look like for the average employee? What can they do with these cryptocoins? How do they pay their mortgages? Do supermarkets take these currencies? Seriously, how do people live real life on digital coins?

Let’s find out.

When a company first approaches its employees about paying them in cryptocurrencies, like Bitcoin and Ether, employees might be a bit apprehensive. It might take some good, old fashioned education to get people on board with receiving digital coins instead of pay check or cash. And that’s fine. Change takes time to be accepted. It helps to know that there are other companies already doing this and it’s working out for them. What also helps is the growing list of corporations and businesses that actually accept cryptocurrencies, such as Bitcoin.

While there are many pros to paying employees with cryptocurrency, there are also a number of drawbacks for the employee.

Some of the pros associated with this practice highlight cheaper payroll runs, ease of implementation, and ease of international transfer without high conversion fees. Cryptocurrency can also be used to buy other cryptocurrencies for future profit potential.

Some of the cons associated with paying employees cryptocurrencies, however, include capital gains tax: Employees would have to pay tax on any profits they saw above and beyond what you paid them. While it’s great if the coins go up in value, the employee might not appreciate losing most of it to the taxman. Another con associated with paying employees with cryptocurrency is the risk of losing money. Sure, a lot of cryptocurrencies are stable and do well, but markets are volatile and employees could end up with less than what you intend to pay them.

Still, working for a living has always had its risks and there is no guarantee that your fiat currency is going to be worth the same amount tomorrow. If your client is a startup looking to draw out some really great talent, offering cryptocurrency payments might attract the tech-savvy applicant that is looking to break into a new and upcoming field. Cryptocurrency also provides startups with an easy way to pay people.

What’s more, ICOs (initial coin offerings) can fund companies to get their business and technology off the ground, freeing up cryptocurrency to pay employees with the digital currency. Operating capital is vital to the success of a new company, and certainly an ICO is a great way to build a nest egg for operations.

The bottom line? We used to talk in terms of decades when we would reference the future. But big changes, like paying employees with cryptocurrencies, are already happening. If business owners continue to think and operate like nothing is changing, they are going to find themselves left out in the cold, holding money that is worthless, and scrambling to change their ways when it might already be too late.

Source: Accounting Today