Best Practices for Being Paid in Crypto as a Freelancer
Have you ever been offered a job in the blockchain industry? You may be asked to accept Cryptocurrency for your work more often than not. Many businesses in the scene are utilizing Crypto. Paying their employees or freelancers in Crypto is becoming more of a common practice.
Marketplaces are becoming more widely available for the use of Crypto for purchasing products and goods. However, basic cost needs, like paying rent or buying food at the grocery store, still require the use of your local countries currency (fiat).
Even when being paid in crypto, there are important steps you need to take to make sure you account for taxes and properly convert your crypto into fiat to pay for the required necessities.
In this article, we will dive into how to properly receive, sell to fiat, and account for your taxes.
Receiving Crypto Browser Extension
There are many options to receive and safely store Crypto. We will be showcasing some of the more popular choices people use today. So let’s begin:
Metamask is available to use from the desktop as a browser extension for all Ethereum based tokens. Once you install the browser, you will go through their process to safely protect your wallet. This will involve creating a password and writing down a seed phrase and private key to backup your wallet.
Just follow Metamask instructions and make sure to write down both your seed phase and private key on a piece of paper, and keep it safe. Putting this on your computer or mobile increases the risk of someone hacking your device and stealing it.
Waellet is a browser extension compatible with the Aeternity blockchain. Similar to Metamask, it allows you to receive AE tokens via the extension and has you take steps to make sure you are secure. If receiving AE as a payment, look to use this browser extension via your desktop.
There are many options to choose from here. Some of the most popular are Coinbase Wallet, Exodus, Coinomi, Jaxx, and AirGap. These are great options to handle Crypto via mobile. Again, make sure to follow their security process and store your private key and seed phase. Lastly, do your homework for which wallets are compatible with the Crypto your employer will pay you in.
Metamask & Waellet or a mobile wallet is an easy way to receive Crypto. But if you plan to hold a lot of Crypto, look into getting a Trezor. Trezor is a physical device that plugs into your computer via USB. Trezor is considered one of the safest options because you are storing your Crypto offline. Therefore, it is not connected to the web.
If you want to save time, receive Crypto directly to your exchange wallet to liquidate all at once. You can always have the employer send it directly to this account. With Crypto often very volatile, being swift with converting Crypto is smart. When you are set up on an exchange, you are given a deposit account public key. This is where you send your Crypto to trade and withdraw to your bank account.
Keep in mind, most exchanges are centralized, thus they are vulnerable to being hacked. It’s not recommended to hold your currency in one of their wallets. This should be just used to convert your Crypto into fiat or to make a trade.
Accounting for Taxes
Not every country is particularly clear yet on how to handle Crypto with taxes. However, when looking at countries that have laws in place, such as the UK and Estonia, taxes go into effect after you liquidate your Crypto into fiat.
Remember countries are taxing what you receive in fiat. Therefore, once you liquidate your Crypto via an exchange into Euro, the amount of Euro that goes into your bank account is what you should account for your taxes.
Until countries begin setting up legal accounting practices for Crypto, this is the best and most honest way to show you are a citizen who is paying taxes from the fiat you receive. Documenting fiat payment for taxes is your best approach here.
Need help? Ask us!
So there you have it. Anytime you have questions regarding how to handle your Crypto as a freelancer, make sure to join our Telegram chat and we will be happy to answer.
What is Cryptotask.org?
CryptoTask (CT) is a decentralized freelance market ecosystem skipping 3rd party fees by directly connecting hirees and applicants peer to peer. CT uses a commercially scalable consensus mechanism with a reviewer board selection built into the blockchain. This means job disputes are resolved much faster and cheaper, while your reputation is stored on the blockchain. There is no arbitrary censorship or hidden tampering, such as hidden boosting, something that centralized platforms are infamous for.
Regarding today's subject, additional advantage is that CT gives a simple, user-friendly option with no plugin installation! CT users will have a wallet by default that is controlled from a private key generated from an email and password combination. Earning crypto has never been easier.
Note: This article has been updated since its original publication on Medium.