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Why CPAs Should Double Down on Crypto Clients During COVID-19

Published
May 25, 2020
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The COVID-19 outbreak has impacted nearly every part of our lives—including business. While accounting is a necessary service, many clients are looking to cut costs and prospecting has become a challenge. CPAs focused on niche markets are uniquely positioned to overcome these challenges.

Let's take a look at why CPAs should double down on crypto clients during COVID-19 and how they can do it.

Why Crypto Clients?

Many successful CPAs focus on a niche market where they can offer expertise. For example, you may focus on craft breweries that have complex back offices or software businesses that have unusual business models. The focus on a single market can help set you apart in an increasingly crowded business.

Crypto is an attractive niche because nearly half of all users tend to be Millennial men earning between $75,000 and $99,999 per year in urban areas. These younger clients are an attractive demographic as they tend to have complex accounting requirements and a growing portfolio of assets.

It's also a rapidly growing market. Despite the crypto downturn, Coinbase added eight million new users between July 2018 and July 2019, bringing its total to 30 million users since its launch in 2012. That's a lot of potential clients that you could reach—even just in local markets.

CPA Crypto Clients

Coinbase User Growth - Source: Alistair Milne

There are also several catalysts that could make these clients more willing to switch to a specialist CPA:

  • The underperformance of crypto assets in 2019 means that they could benefit from tax loss harvesting to generate tax offsets for current and future years.
  • The IRS has sent more than 10,000 "education letters" to crypto users warning them to comply with their latest guidance, which has many high-profile users on edge.

In short, crypto users are an attractive demographic and there are at least two significant catalysts that could make them likely to switch CPAs during the current tax year.

Marketing to Crypto Clients

Crypto users consider themselves risk-taking, forward-thinking, innovative, and free-thinking, according to a Clovr survey. For many CPAs, that's a very different demographic than humble long-term investors that prefer to play it safe. It's important to ensure that your messaging accounts for these differences.

There are several ways to find leads:

  • Go Virtual - Participate in virtual crypto conferences that are arising due to COVID-19. By presenting on accounting topics, you can quickly transform yourself into an expert.
  • Write More - Write about crypto topics on your own blog or start guest posting on other popular accounting blogs to build up your reputation and visibility in the space.
  • Help Others - Answer questions on Quora or other forums where crypto enthusiasts ask about tax questions. You can build up a rapport and find potential clients on the spot.
  • Connect - Reach out to local financial advisors involved with crypto investments to set up referrals that go both ways or work with other professionals in the crypto space.

It also helps to build a lead conversion funnel to nurture leads over time rather than convert them in the moment. For instance, you may want to develop a free e-course to teach crypto users how to do their own taxes and offer your services as a hands-off way to automate the process.

Streamlining the Process

Attracting clients is only half the battle when it comes to crypto assets—you need to effectively handle them.

The first step is getting up-to-speed on Crypto Taxes and Accounting and regulations if you're not already familiar with them. There are many different continuing education (CE) programs for CPAs interested in the space, including the Crypto Tax Academy, CPA Academy and Pronto Tax School.

The second step is automating as much of the crypto tax preparation process as possible to avoid unnecessary busy work and improve your margins. With the IRS requiring a cost basis calculation for each transaction, crypto can quickly become a nightmare for CPAs that aren't prepared with the right tools.

ZenLedger's Tax Professional Suite simplifies the process of crypto tax preparation and ensures that you and your client have a defensible audit trail in place.

CPA Crypto Clients

ZenLedger’s Grand Unified Accounting - Source: ZenLedger

You can automatically aggregate transactions, perform calculations, and pre-fill IRS Form 8949, Form 1040 Schedule D and FBAR/FATCA. The only thing you need is a client signature to complete the filing process, but if you want to make changes, you can also easily update or edit the data.

The cloud-based platform also makes it easy to keep all of your clients under the same roof with full accounting transparency. Audit reports with drill-down functionality enable you and your client to walk through every buy, sell, trade and transfer to provide 100% confidence in the event of an audit.

Sign up for free and use the platform with as many clients as you would like without subscription fees.

The Bottom Line

Many successful CPAs focus on core specialties when attracting and retaining clients. Crypto clients are an attractive specialty because they tend to be younger and wealthier than the general public and there are at least two catalysts that could encourage them to switch CPAs.

Using the tips we've discussed and the ZenLedger platform, you can effectively target this unique market and build long-term value in your CPA practice.

Sign up for free and use the platform with as many clients as you would like without subscription fees.

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