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Bitcoin use is on the rise – what your company must know

(Business Finance) Bitcoin is a digital currency that is making waves, and could impact your business, whether you understand the concept or not.





Cryptocurrency use is on the rise – better get a grip on it

You may have heard the terms Bitcoin, Silk Road, cryptocurrency, PeerCoin, CoinFunder, and so forth, and if you’ve turned a deaf ear because it sounds geeky, that’s a mistake. Cryptocurrency is a digital currency that some say is a fad, others insist it is the currency that will eventually become mainstream.

Victoria Treyger, the CMO of Kabbage, which provides working capital for small businesses. She says she joined the company because she loved the message: To understand customers better and provide them with cash when they need it. We’ve been writing about Bitcoin for years, and Treyger agrees that Bitcoin and other digital currency is important to business.

“Bitcoin use is on the rise; however, most people today still do not understand the use, distribution, and regulation of Bitcoins. The big question concerning Bitcoin and your small business is whether you should accept Bitcoins in the first place,” said Treyger.

She adds, “There are many advantages and disadvantages in implementing Bitcoin into your business plan. Yet at the end of the day, it’s a decision you as a small business owner need to make when taking into account Bitcoin’s regulation, security, value, taxes, security, and acceptability.”

Because Bitcoin is inexpensive and fast, it is popular in the financial world, and Treyger says it is “tech-forward, which also garners many followers for the digital currency.”

Bitcoin is not currently regulated by any government agency, Treyger notes, so it is an international form of currency available to anyone with Internet access. So far, not many businesses accept Bitcoins, making Bitcoins difficult to spend and seemingly useless even as their exact value fluctuates daily. So will the Bitcoin bubble eventually burst?

In her own words, Treyger dives into what Bitcoin is, how it works, and what you need to know for your business.

Who regulates Bitcoin?

Bitcoin currently has no government or protocol regulation. Instead, there are Bitcoin miners who essentially process Bitcoin transactions and secure the network. Because there are so many Bitcoin users spread out across the world, it is highly improbable that a form of regulation will ever be implemented.

So far, the only type of regulation that could emerge is some sort of government regulation that either bans the use and distribution of Bitcoins or designates laws for legitimate uses of Bitcoins. And if a regulatory system were put into place, it would create higher transactions costs for Bitcoin, taking away one of its main advantages. Bitcoin is also resistant to any form of regulation, which makes it potentially the prime type of currency for questionable activities.

Bitcoin is argued to not be a legal currency. Its value fluctuates and changes daily, and the volatile nature of Bitcoin’s value could cause the bubble to pop due to the perception is gives to users. As a Bitcoin user, you can hold onto your individual Bitcoins in the hope that the value increases or you can exchange them into legal tender for their current projected value. If the value of Bitcoins steadily decreases for a long enough period of time, it could cause users to sell all of their Bitcoins, causing the Bitcoin network to crash.

Is Bitcoin secure?

Fraudulent use of bank accounts and credit cards can be reversed easily, yet Bitcoin does not offer the same services. All Bitcoin transactions are final. The only person who can decide to issue a refund through the Bitcoin network is the person who has the currency in their Bitcoin wallet.
A wallet is a digital platform that holds your Bitcoin codes for fast, simple, and easy use. Because there is also no Bitcoin regulation, no Bitcoin user can be forced to issue a refund.

Consumer losses are generally greater on the Bitcoin network than any other payment plan network because of the lack of mandatory refunding. Most other payment networks set up consumer protection to avoid stolen funds and hackers. So if your Bitcoins are stolen or lost due to network failure or hacking, there is no way to ever get them back and there is no sort of insurance on them.

To turn Bitcoins into legal currency, a Bitcoin exchange must be used, which charges a small fee and also opens your wallet door up to hackers. The FDIC does not protect Bitcoin wallets either, so wallets are constant targets for hackers.
Exchange sources are also large targets for hackers because they receive thousands of keys to wallets every day to perform exchange transactions. If their network is compromised, all of those Bitcoins are gone for good. Bitcoin software is still being developed to try to make the system as a whole more secure and accessible, but for now if you insist on using Bitcoins, exchange them quickly.

User error also leads to a lot of Bitcoin security issues every day. Bitcoin wallets essentially hold keys or passwords for Bitcoins that can be accidentally deleted, lost, and stolen. There are independent insurance companies that offer insurance on Bitcoin wallets as well as third party service providers that can handle all of your wallet information for you. Bitcoin is still currently working on security procedures to implement to give their users greater protection.

What is the value of a Bitcoin, and how do I handle Bitcoins during tax time?

Bitcoins gain value based on consumer and merchant implementation into use. Bitcoins are only valuable if they can be accepted as a form of currency, and this is backed by the trust that its users instill into it when they purchase them.

The value fluctuates based on amount sold and distributed. There is a fixed amount of Bitcoins that will be sold to the public, and as demand for Bitcoins increases, so does its value. Bitcoin’s price is determined by this same principle of supply and demand. Because there is a predetermined number of Bitcoins, which are distributed at a decreasing rate, demand for Bitcoins outweighs supply, keeping inflation at bay.

Because the Bitcoin market is currently so small, the price of Bitcoins is extremely volatile. If your business accepts Bitcoins, depending on the day, you could gain or lose money based on exchange rates. Inflation could cause the downfall of Bitcoin eventually, leaving them worthless. Technical failures, waning interest, and government regulation could all garner Bitcoins useless one day.

Despite that Bitcoin is not a legal form of currency, tax issues still arise. Not claiming Bitcoin income could lead to audits from the IRS. For now, there is no exact way to designate the value of your Bitcoins for tax purposes but regulations will eventually be put into place.

How widely are Bitcoins accepted?

Widespread use of Bitcoins as currency has not fully taken off yet, if at all. Few businesses accept Bitcoins, which make it hard to spend and use them. This is probably because a lot of people still don’t even know what Bitcoin is or how to use it properly.

Its use is so small, which makes the value extremely volatile. Bitcoin can be seen as unstable, which deters more people from implementing it into their business plan. As a result of its unpredictable nature and potential use in questionable activities, most merchants have not accepted Bitcoins as a form of payment for their stores.

When considering whether to accept Bitcoins as a form of currency for your small business, there are a few key things to remember. Bitcoin transaction fees are quite small, usually between zero and one percent. Because Bitcoin is a digital form of currency, there is much higher risk of fraud and hacking, and all transactions are final, meaning there is no consumer or merchant protection plan put in place to keep your Bitcoins safe.

Bitcoin and consumer protection

Because Bitcoin lacks these basic consumer protections, a lot of customers could be deterred from buying from vendors who use Bitcoin as their primary payment type. The fluctuating value of Bitcoins also means that your business could lose or gain money each day based on Bitcoin supply and demand.

Because no government agency currently regulates Bitcoins and Bitcoin is an online marketplace, it is extremely vulnerable to fraud and hacking. The risks for a small business are equal or greater than whatever benefits you could get out of using and accepting Bitcoins. The major thing you need to think about is liquidity and whether you want to have your business tied up in Bitcoin currency.

Bitcoin is extremely risky, which could be part of its appeal, but think about what the consequences are for you and your business. For now, it is hard to tell what the future of Bitcoin is. As a small business owner, you have a few things you definitely should take into account when determining whether accepting Bitcoins as a payment method makes sense.

The American Genius is news, insights, tools, and inspiration for business owners and professionals. AG condenses information on technology, business, social media, startups, economics and more, so you don’t have to.

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Business Finance

6 questions to ask when considering a startup accelerator

(BUSINESS FINANCE) Accelerators can help change startups from unknowns to leaders in the industry, but does your startup need one? And if so, which one?



accelerator pitch

When I’m advising startups, I often hear the question: “which accelerator is the best fit for me?” (Besides the obvious YC or Techstars.)

First off, I’ll ask if your company would benefit from an accelerator, or if you need to pursue something for early early stage companies before you achieve more market validation, like an incubator. (Side note: If you’re curious about incubators, here is a comparison of the two.)

If you’re new to these terms, here’s a brief recap on startup accelerators:

Startup accelerators are for companies with established co-founders and market validation – companies can be anywhere from pre-revenue/self-funded, or even have raised at least $1M.

Most programs can last anywhere from 10 weeks to 3-4 months. With many top accelerators like YC and Techstars, you’ll be expected to move to the city where it’s hosted and spend 40+ hours a week minimum in their dedicated coworking space, and several accelerators will often offer housing stipends to make the move easier. These programs typically conclude with a demo day to pitch your product to a variety of community leaders, angel, and institutional investors.

If your product has achieved market validation and is in a place where you’re ready to scale, congrats!

Before you commit to an accelerator, ask yourself and the program these six questions:

1. What kind of mentorship is available?

By and large, one of the most valuable portions of an accelerator is the networking with peers and mentors. Ask what kind of mentors are available to you as a part of a program, and ask their specific involvement and the opportunities to connect. These mentors will be crucial in guiding your company’s growth. Even if they aren’t in the same industry or have solved a similar problem that your company is trying to achieve, their advice and connections could prove to be invaluable.

2. What are the perks?

You’re giving up a lot of equity to be in a program, but it doesn’t come without its perks. Many programs offer not only a cash investment or stipend for housing or other growth costs, but programs like Techstars offer free services such as web hosting costs (an upwards of ~250k), legal and accounting services, and other credits and perks that can be worth 6-7 figures. Make sure you know what you’re getting before you say yes to a program.

3. Do I want an industry-specific or industry-agnostic program?

This one is important and is directly related to #2. If your company sells CPG products, web hosting credits may not be valuable to your business, but a CPG-specific accelerator like SKU or The Brandery with direct connections to Sephora, Target, and Whole Foods may make more sense.

4. How much equity am I willing to give up?

Try not to make this a guessing game and make as many data-driven decisions on this as you can. Create a revenue and valuation model and see how much your company would benefit from the networking, fundraising opportunities, and perks offered, and see what the ROI would potentially be.

5. What are the funding and exit numbers?

This is an objective way to view the success of an accelerator: # of funding raised and exits. Of course, younger accelerators will have smaller numbers, but it’s worth looking to see if a company has raised $ after. Seed-DB is a great resource to view these numbers for hundreds of accelerators globally.

6. What do alumni think?

All accelerators are going to tout the transformative experience that is their program, and program mentors will likely have a similar narrative.

The best resource to learn the real experience of an accelerator: ask its alumni, and they’ll give you the truth. Make sure to survey both recent and more experienced alumni, as they’ll be able to speak to both the short term and long term benefits.

Personal experience: the night before I was set to hear from an accelerator on my application status, two alumni stressed to me that the time and equity investment wasn’t worth it. I consider this providence!

Finally, two items to note:

Choosing an accelerator is all about finding the right fit between you and the organization. Sadly, not all accelerators are created equal, and try to view a potential relationship with an accelerator as an investor relationship, or better yet, dating. There’s a reason the phrase “no money is better than bad money” is prevalent in the startup community.

Make sure to do your due diligence and ask the right questions to make sure a specific program is worth the investment of time, energy, and equity.

And sometimes? That may not mean an accelerator is a right fit right now or at any point, and that’s okay.

This editorial first appeared here in November 2019.

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Business Finance

Weed greed: Some states are raking in the tax dollars on cannabusinesses

(FINANCE) The tax profits from weed sales in these states just may be enough to push politicians toward legalizing the drug cross-country.



Weed leaves.

States are making bank on weed taxes

The Marijuana Policy Project makes the case to legalize cannabis with its recently released report. According to the report, as of December 2021, states that legalized adult-use cannabis brought in a combined total of $10.4 billion in tax revenue since 2014. This tracks the 18 states where marijuana is legalized for recreational use. It does not include medical marijuana, which would dramatically increase the figure. The figures also don’t include local tax revenue, just tax revenue at the state level, nor does the report include any licensing or business fees that are generated by the industry.

Which states are bringing in the money with cannabis taxes?

Eighteen states have legalized marijuana for adult use. In some of those states, the laws were just approved, so tax collections have not begun or not yet available. Here are some of the figure’s from the MPP report.

State Tax collection in 2021 Total taxes received since cannabis was legalized
Colorado $367+ million (thru November) $1,791,138,715 (2014)
Washington $480+ million (thru September) $3,051,390,820 (2014)
Oregon $138+ million (thru September) $635,512,128 (2016)
Alaska $24+ million (thru October) $95,004,906 (2016)
Nevada $471+ million (through September) $471,544,647 (2017)
California $976+ million (through September) $3,123,477,637 (2018)
Massachusetts $205+ million (through November) $384,529,750 (Nov. 2018)
Michigan $188+ million (through November) $271,129,649 (Dec. 2019)
Illinois $387+ million (through November) $562,750,974 (2020)
Maine $11+ million (through November) $13,063,204 (Oct. 2020)
Arizona $121+ million (through October) $121,463,757 (2021)


Most states have legislation that puts the tax revenue toward specific initiatives. In Illinois, 20% of the revenue goes into mental health services. In Michigan, many of the funds have been put toward schools and transportation. California directs its revenues toward local non-profits that benefit “people adversely impacted by punitive drug laws,” and invests a portion of the money in environmental programs.

Marijuana is profitable

The Hustle reports that Denver generated over $237 million and West Hollywood in California has generated $2.2 million in one year from 6 dispensaries in less than 2 square miles. The Tulsa World reports that Oklahoma, which has only legalized medical marijuana, collected over $55 million in 2019. With more Americans leaning toward decriminalizing marijuana and making it legal, the profits to be made from marijuana sales may push politicians toward legalizing weed.

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Business Finance

Get outstanding invoices paid to you by following these 7 steps

(FINANCE) For a freelancer, it’s more important than ever to bring up the issue of getting paid on time. Here are 7 tips to get your money.



Handing over card representing getting paid.

For many, an awkward topic of conversation revolves around getting paid. Whether asking for a raise or asking to borrow money, people often feeling uncomfortable when talking money.

This is equally, or possibly even more so, true for freelancers who are solely in charge of their finances. Without a system of weekly direct deposit, freelancers have to work overtime to keep their earnings in order.

The issue with this is that clients also have a lot on their plates, and something as simple as a freelancer’s paycheck is common to fall through the cracks. This causes freelancers to have to work friendly reminders into their repertoire.

However, freelancers may not always be knowledgeable of the best ways to keep their finances in check (no pun intended). Below are seven ways to enhance payment methods.

  1. You have to be willing to make billing a priority. Due to the fact that money is awkward to talk about, as aforementioned, many let this fall by the wayside. The best way to do this is to keep up to date with your invoices and send them as soon as they are done. Making a calendar specific for billing can help with this idea.
  2. This second bit dates back to when we were young and learning our manners: it is crucial to be polite. Not only is it the right thing to do, but it also increases speed in payment. Using “please” and “thank you” in invoicing emails are said to get you paid 5% faster.
  3. It is best to try and keep a complicated concept like finance as simple as possible. Make sure you are creating specific due dates. This will help to signify importance of payment.
  4. Now that virtually anything can be done online, it would make sense to use electronic payment verses an old-school check. Accepting online payments will get a user paid, on average, eight days faster as opposed to a check.
  5. This is an important notion to keep in mind for any aspect of your business life: be professional. Invoices are often seen by many eyes so it is best to include your business’s logo on said invoice. This has been found to increase chances of being paid on time by 10%.
  6. Specificity is urged again in the form of transparency. Make sure you are giving detailed descriptions on each invoice so that anyone looking at it knows exactly what you are being paid for. By doing this, you are 15% more likely to be paid on time.
  7. While you may be invoicing month by month, try to avoid sending on the 30th or 31st. Being that everyone, generally, sends their invoices in on these dates, it takes 10 – 20% longer to be paid. With everyone sending it at the end of the month, it has a tendency to back up payroll.

The most important thing to remember is that while the topic of money may be awkward, it is your money. If you let a few invoices fall behind because you are uncomfortable reminding your client, this has a way of adding up. Be sure to keep on track with your finances to earn what you are working for.

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