Curious about the community's thoughts on a scenario involving bitcoin payment strategies and their tax implications.
The scenario:
Someone earns primarily bitcoin from their business
They have limited fiat cash flow
Need to cover regular business expenses (supplies, shipping, operational costs)
Fiat reserves are getting low
Option 1: Strike Bill Pay
Use credit card for fiat purchases
Pay off credit card with bitcoin through Strike
Tax concern: Each bitcoin payment likely creates a taxable event
Option 2: Bitcoin-backed loan (Ledn)
50% LTV, 12.3% annual interest, 1-year term with refinancing option
Get fiat cash upfront using bitcoin as collateral
Tax concern: Would need fiat income to service interest payments; selling bitcoin to pay loan interest would create taxable events
Key question:
In this scenario, which approach would be more tax-efficient?
The loan option seems attractive for tax deferral, but there's a practical challenge of servicing 12.3% annual interest without sufficient fiat income.
What are your thoughts on navigating this type of situation? Has anyone encountered similar scenarios or have insights on the tax implications and cash flow considerations?
Off-the-wall idea: can you partner with a financier who will pay your fiat expenses in exchange for equity in the business?
Interesting. I haven't thought of that. Expand a bit on that if you dont mind?
I guess this would basically just be selling shares in your company to raise the cash needed to cover operating expenditures.
Since you're accumulating bitcoin, this would be attractive to investors for the same reason treasury companies are.
As you eventually find suppliers who accept bitcoin, your need to issue shares will decrease.
None. Bitcoin is cash.
Why not exchange to fiat regularly by p2p? like robosats for example and only to cover your fiat bills while you try to setup a supply chain that accepts bitcoin.
I think both strategies are bad because you are deep back into fiat, with all the shit pack, loan and credit card. I understand your scenario and my ideias could not be the best or not a solution. I’m just adding my comment and leaving the problem for you, I wished to help you more about it.
I've actually never thought about selling on RoboSats. Never have done that. Do you have experience with that? If not, I wonder if someone here could share how to go about doing that properly.
I use it often, but here in SN are helpful people and information.
I found this post from @siggy47 and a short daily thread from him too with many helpful links.
Awesome, thank you so much. I actually sold some sats on Robo the other day with success.
Great. Now I hope you have success building a supply chain that accepts bitcoin. Are the raw materials for your products all cultivable? Nothing industrialized? Rural producers are the best ones to accept bitcoin since they are often at the beginning of the chain.
Unfortunately no, I'm not able to pay for any of my ingredients in bitcoin yet. I'm trying to source some on nostr actually, but it'll take some time. Although, I do source the coffee for my new Coffee Crunchy Hodl butter from Satoshi Coffee.
https://oshigood.us/