Tracking Bitcoin as a Business

The goal of this tutorial is to enable the owner of a small business, ideally a store, a street vendor, or any other commercial activity, to accept Bitcoin as payment and live with it in a simple way. The target audience is the business owner, who manages the commercial activity autonomously and relies on some employees.

In some areas of the world, there are communities that can be defined as "circular", where Bitcoin is both accepted and used widely by the population to pay for services at commercial activities. Even merchants, after being paid in Bitcoin by their customers, have entered into agreements with their suppliers to pay for goods in Bitcoin.

The next step is to accept Bitcoin directly within your business; the simplest way to do this is to install and configure a Lightning Network (LN) wallet to receive instant payments, allowing customers to pay reduced transaction fees at the same time.

For simplicity, we will use Wallet of Satoshi as an example. Follow these steps to install and configure it:

After following the guide, you will be ready to accept Bitcoin as a payment method: simply open the mobile app and click on the "Receive" button, then enter the amount (usually in your local currency) to generate an invoice payable by the user.

Pro Tip: adding a note to the invoice before creating it allows for easy association of the payment with a specific event (e.g. selling 1 kg of apples for 900 sats). Notes inserted manually are not visible to the counterparty, so they will be confined to internal use only.

A slightly more advanced configuration is using Wallet of Satoshi's Point of Sale feature, accessible from the app by clicking on the hamburger menu in the top right corner:

This is one of two ways to access the Point of Sale feature. The other method is through the dedicated Wallet of Satoshi PoS app

The benefits of using the Point of Sale feature are three-fold:

For more information, see the dedicated tutorial on Wallet of Satoshi - Point of Sale:

The regulation of Bitcoin varies greatly from one country to another. Some countries have clear and strict regulations, while others are more ambiguous and vague. Many countries require declaring Bitcoin in your possession (both as an individual and a business) for tax monitoring or taxation purposes.

Regardless of the regulation in your country, the simplest action for a small business owner is to convert the received Bitcoins into local currency immediately after receiving them. This way, you can avoid complications in accepting, declaring, and accounting for Bitcoin within your commercial activity.

Note: In some types of businesses, there may not be any paper documents related to the transaction between the customer and vendor, so for the business owner, it will be even easier and more immediate!

Let's look at some advantages and disadvantages of this solution:

This simple approach allows you to avoid several problems: it removes the need for KYC (Know Your Customer) procedures on those Bitcoins received as payment, which is a very damaging practice for individual privacy and security; and keeps accounting activities unchanged, since there is no need to record those Bitcoins.

You will not need to invest additional time and money with your tax consultant to track these earnings, as they will be equal to all other earnings.

As the volume of Bitcoin transactions increases, inserting cash into the till may become impossible, for example, available cash may not cover all Bitcoin receipts. However, this is an unlikely scenario for most business owners who start accepting Bitcoin. Another potential issue in some European countries is that the type of your business may prevent you from accepting cash as a payment method for goods and services provided to customers. In such cases, the proposed solution will no longer be sufficient.

As we have seen, it is easy to accept Bitcoin without introducing new accounting procedures harmful to individual privacy; however, it would still be advisable to maintain a parallel accounting system to keep track of your Bitcoin flow. Don't worry, it can be as simple as you like, as long as you understand how many Bitcoins are entering and leaving your wallet.

Attention: filling in the Note field when creating the LN invoice for the customer will make updating the Bitcoin accounting much easier. The same goes for making an LN payment to suppliers. Ideally, each transaction is associated with a payment note.

Accepting Bitcoin is just the first step. For commercial activities, it's essential to keep track of your operations without sacrificing individual privacy and freedom. And as we've seen, a simple solution resolves many problems and satisfies all parties involved in the transaction - both the business and the customer.