Decide how the business will use crypto
Write down the purposes: accepting payment from customers, holding as an investment, paying vendors or contractors, or receiving rewards from activity. Each use creates different records and different questions. Mixing personal and business holdings in one wallet makes everything harder, so use separate wallets and exchange accounts.
Ask your preparer before starting, since the answer may affect how you record sales and what forms you receive.
Record each transaction with its facts
For every receipt, payment, trade or transfer, record the date and time, the asset, the amount, the value in dollars at that time, the counterparty or reason, the wallet addresses or exchange account, and the transaction ID. Dollar value is usually drawn from a consistent source such as an exchange price at the time. Note the source.
A payment received in crypto for a sale is recorded as a sale at its dollar value on the date received. Keep the invoice and the transaction link together.
Track the cost of what you hold
When you acquire an asset, note the cost, including fees. When you later sell, spend or trade it, the difference between the value then and what you paid may matter for tax. For that reason you need to keep lot records showing when each unit was acquired and at what price. Some software tracks lots for you.
Ask your preparer which method for identifying units is allowed in your case and keep it consistent.
Use exchange reports but verify
Exchanges may provide annual reports or tax forms, but these can be incomplete, especially when you move assets between platforms. Download full transaction histories as CSV files every year, because platforms can change access or close. Compare transfers between your own wallets so they are not treated as sales.
Reconcile balances at year end to the platform statements and wallet balances, and record any differences.
Bookkeeping entries
Set up separate accounts for digital assets as an asset, for fees as an expense, and for realized gains or losses as your preparer directs. Do not bury crypto activity in miscellaneous accounts. Many accounting systems have add-ons that import crypto data, but review the output before relying on it.
Keep private keys and recovery phrases secure and never share them with a bookkeeper. They only need transaction records.
Tax questions to raise
Ask how the return asks about virtual currency, how to treat payments to contractors in crypto, how mining or staking rewards are reported, and whether any information returns apply. Rules on reporting by platforms and payers continue to evolve, so check the current guidance with the IRS or a professional.
Common questions
Do I need to record small crypto transactions?
Generally each use can matter. Keep records of all of them and ask your preparer about small-amount questions.
Can I just use the exchange's summary?
It may help but is often not enough, especially across several platforms. Keep full histories.
Is a crypto payment to a contractor reportable?
It can be, because the value is measured in dollars. Ask your preparer.
This guide is general information, not tax, legal or accounting advice. Rules, fees and due dates change; check with the IRS, the NJ Division of Taxation or a licensed professional for your situation.