For companies with a vast portion of their capital in crypto, having employees and contractors who want to be paid in their local currency can be difficult. Besides difficulties with banking relationships, just the sheer amount of payment needs precludes a startup company from having contractors all over the world. Enter: Bitwage Team Wages.
Bitwage is a payroll platform. Employers can fund a payroll and employees and contractors can choose to receive their funds in many different currencies. Workers can receive USD, Euros, Great British Pounds, Philippines Pesos, Brazillian Reais, and Mexican Pesos, with many more options coming.
A company, Entire Corp., has most of their holdings in Ethereum, as a result of a token sale. They have three employees in the US, two developers in Brazil, and a lawyer in Ireland.
Entire Corp. can pay their whole staff in USD terms (after taxes) with Bitwage. The payrolls add up to $20,000 USD. When the company selects Ethereum for the funding for this payroll, they'll come to this screen.
The company is given an exchange rate and five minutes to send send the ETH amount to the address given. Our system will automatically detect the payment and mark it received. From there, each person will receive the dollar amount allocated to them or their local currency. The process is the same for Bitcoin.
What to know
- The Bitwage service is strictly on a post-tax basis. It's best for W-9 and 1099 workers. You could also calculate net taxes and send that amount through Bitwage and find alternate means for tax payments.
- By the same token, Bitwage does not have the ability to pay the IRS taxes if you're paying W-2 employees.
- There are no crypto tax implications for employees being paid local currency through Bitwage.
- For Employers, the only tax implication is a sale of crypto and should be reported as any other sale. (In the above example, the company sold 72.73885804 ETH at $274.96 each.)
- Bitwage's exchange rate on Bitcoin and Ethereum is usually around 3% below the going rate, to account for the cost of services and currency fluctuations.
photo via Thought Catalog