Avalara has added Bitcoin to the roster of currencies it can handle with its cloud-based AvaTax suite of sales tax compliance software. The new Bitcoin features will help companies calculate and account for taxes on Bitcoin as if it were any other currency.
The announcement this morning is being touted by Avalara as a first for the industry. The move by the Seattle-area company could create a smoother path to Bitcoin adoption for companies interested in accepting payment and conducting other transactions in the cryptocurrency.
It’s “one of the final, necessary steps to support bitcoin-driven business models,” said Webb Stevens, Avalara’s head of product, in a news release announcing the new feature.
AvaTax will track Bitcoin transactions through the blockchain, the currency’s decentralized electronic ledger, and keep detailed records about each transaction. The feature gives companies a paper trail that shows how each transaction was handled.
In addition, AvaTax will calculate how much tax a company will owe in Bitcoin at the time it needs to pay in any jurisdiction, so it’s possible for them to convert the right amount of government-backed currency at the right time for tax payments. The move brings a new degree of accountability, literally, to a currency that has, at times, been associated with more illicit dealings.
This is also big news for Bitcoin: businesses that need to manage sales tax compliance in multiple jurisdictions (there are over 10,000 in the U.S. alone) now have an easier way to do so. AvaTax could provide a gateway for companies looking to join Overstock.com and others on the Bitcoin bandwagon.
Avalara has been rapidly growing and announcing new products, including TrustFile, a free service aimed at helping small business with sales tax compliance. Earlier this year, the company landed $30 million in financing from a fresh round of investment.
Here’s an infographic explaining how the new Bitcoin feature works (Click to enlarge):
[Editor’s Note: Avalara is a GeekWire annual sponsor.]