The Best Practices for Crypto Payroll Management

‍Dedicate a self-custodial wallet for crypto payroll‍

Using a dedicated self-custodial wallet for crypto payroll allows you to keep different financial streams separate for easier tracking and reporting. 

It ensures that funds allocated for crypto salaries are not mixed with operational expenses or investment reserves. 

This separation provides you a clear financial picture and simplifies the reconciliation process–you don’t have to sift through unrelated transactions to isolate your crypto payroll expenses.

Next, choose a self-custodial wallet for your crypto payroll purposes. When you opt for a self-custodial wallet, you retain complete control over your company’s crypto assets. 

Unlike centralized wallets provided by exchanges, where you essentially hand over control of your private keys, a self-custodial wallet ensures that you (and only you) have access to your funds. This eliminates counterparty risks such as withdrawal limitations, fund freezing, and the ever-looming threat of hacks. 

Imagine the chaos, if due to some issue with a centralized exchange, your company’s funds get frozen right when payroll is due. Not only would this disrupt your cash flow, but it could also have a ripple effect on employee morale and trust. 

Pay your employees in stablecoins

Having a global, distributed team often lies in the cost advantages offered by countries with lower living and labor costs. But that can be offset by dealing with more volatile currencies. 

Paying employees in stablecoins can ensure fair compensation. For example, employees of the same role could have their compensation denominated in USDC, and they can then choose to convert a portion of their USDC into a local currency for spending.

Many employees are starting to receive salaries in stablecoins as a hedge against volatility in their local fiat currencies. 

Stablecoins, particularly USDC, have gained traction in countries grappling with political unrest, hyperinflation, or restrictive financial systems. The benefits are compelling:

• Pegged to USD: a safe haven currency that grants access to the best capital markets
• Collateralized by real USD in audited, regulated U.S. financial institutions
• Compatible with multiple blockchain networks
• Easy to on/off ramp

As one of the largest crypto payroll app that has processed nearly $400m in total crypto payments, USDC accounts for approximately 33% of all transactions, making it the most preferred crypto asset on the platform. 

Check local regulations for tax implications 

Ensuring your crypto payroll aligns with local laws and regulations is non-negotiable. 

Maintain meticulous records of all crypto transactions, including the payment value in local currency, the date, and any taxes withheld.

Depending on your jurisdiction, additional reporting may be required. For example, U.S. companies paying more than $600 annually to independent contractors must file a Form 1099-MISC with the IRS. 

When in doubt, it’s always best to consult with legal and accounting experts to ensure that your crypto payroll system is fully compliant. This could mean having a tax advisor who specializes in crypto or a legal consultant who understands the regulatory landscape of the countries where your employees reside.

Use a crypto payroll app

Paying employees in crypto can be tedious and prone to human error. 

Relying on spreadsheets and manual data entry can lead to inaccuracies that may take weeks or even months to rectify. Having disorganized records can also lead to missed or duplicate employee payments. 

A crypto payroll app can automate and secure your workflow, ensuring accurate record-keeping. It also facilitates a smooth transition if the primary payroll manager is unavailable.

We’ve compared some of the best crypto payroll solutions that you could use to pay your team in crypto easily, as summarized in the table below:

With Request Finance, you can set up recurring payments, batch-approve multiple payments, and pay all your employees in one go. Here’s a video demonstrating how Request Finance can streamline your crypto payroll process:

Beyond workflow automation, using a crypto payroll app also assist in meeting financial reporting obligations, such as accounting, auditing, tax compliance, and Anti-Money Laundering (AML) requirements.

For instance, if you pay an employee in USDC, the transaction is updated immediately in the dashboard on Request Finance, capturing details like the amount, date, and recipient. This allows for easy transaction monitoring and suspicious activity reporting to ensure AML compliance.

Auditing and tax filing processes are cumbersome, especially when you need to retrieve specific transaction details that are buried deep within spreadsheets or paper records. Crypto payroll apps allow for easy data retrieval, making the process more efficient. 

You can download these transactions and provide a detailed report for auditing or tax filing in a matter of minutes, not hours. 

By adhering to these best practices, you can deftly navigate the intricacies of crypto payroll management.

Ready to automate your crypto payroll? Discover how Request Finance can make the process secure, simple, and compliant.