Last updated: April 4, 2026
Small businesses using digital assets must now prepare for Form 1099-DA, the new IRS requirement for reporting cryptocurrency sales and exchanges. This post is for business owners who accept crypto or invest business funds in digital assets, covering exactly how to organize your books before the 2026 filing season.
Disclaimer: Books LA provides bookkeeping and compliance support. We are not CPAs and do not provide income tax advice. We work closely with your CPA to ensure your financial data is tax-ready. Please consult a tax professional for specific filing strategies.
What exactly is the new Form 1099-DA for small businesses?
Fast Answer: Form 1099-DA is a new tax document that "brokers" (like Coinbase or Kraken) use to report your business's crypto sale proceeds to the IRS. Starting with the 2026 tax year, these forms will also include your "cost basis," meaning the IRS will know exactly how much profit or loss you made on every transaction.
For years, the world of digital assets felt a bit like the Wild West. You could buy, sell, or trade Bitcoin and Ethereum without much oversight from the tax man unless you were incredibly diligent with your own reporting. Those days are officially over. The IRS has introduced Form 1099-DA to create a transparent paper trail for every digital asset transaction. Consequently, if your business buys a piece of equipment with Bitcoin or sells an NFT, a copy of that transaction record is going straight to the IRS.
When does the new crypto reporting requirement start?
You might be wondering if you can put this off for another year. Actually, the transition is already happening. For transactions that occurred in 2025, brokers are required to report "gross proceeds" only. This means they tell the IRS how much money you received from a sale, but not what you originally paid for the asset.
However, the real heavy lifting begins with the 2026 tax year. Starting in 2026, brokers must report the cost basis and the date of acquisition for most digital assets. Therefore, any bookkeeping mistakes you make today could result in a massive headache when 2026 forms start arriving in your inbox. Because the IRS receives an identical copy of these forms, your business books must match the broker's data perfectly to avoid a red flag on your return.
Who counts as a crypto broker under the new rules?
The definition of a "broker" in the crypto space is surprisingly broad. It doesn't just refer to the big trading platforms you see on Super Bowl commercials. Under the new regulations, brokers include custodial exchanges, certain digital asset payment processors, and even some hosted wallet providers. Even kiosk operators, those Bitcoin ATMs you see in convenience stores, are now considered brokers.
If your business uses a payment processor to accept crypto from customers, that processor will likely issue you a Form 1099-DA. Similarly, if you use a business account on a major exchange to trade assets, you should expect a form. Understanding who is reporting your data is the first step in ensuring your bookkeeping cleanup covers all the right bases.
How should you track your crypto cost basis for 2026?
Tracking cost basis is the most significant challenge for small business owners. In the world of traditional stocks, your brokerage does most of the work for you. With crypto, you might move assets from an exchange to a private "cold" wallet and then back to a different exchange. When you do this, the second exchange has no idea what you originally paid for that asset.
To stay compliant, you need to implement a "wallet-specific" tracking system. This means documenting the exact price of the asset (in USD) at the moment of every acquisition. If you are moving assets between your own wallets, these are not taxable events, but they must be documented as "transfers" so they don't look like sales. We often recommend using specialized software that syncs with your QuickBooks Online or Xero account to automate this process. You can explore some of these options on our add-ons and apps page.
What happens if your records don’t match the 1099-DA?
Accuracy is no longer optional. If a broker reports that you sold $50,000 worth of Solana, but your books show $45,000, the IRS automated systems will likely trigger a notice. This is why reconciliation is the "secret sauce" of good bookkeeping. Every month, you or your bookkeeper should be matching your internal ledger against your exchange statements.
If you find a discrepancy, you need to resolve it immediately. Sometimes brokers make mistakes, or they might have different "valuation" methods for tokens. By staying on top of this monthly, you avoid the "tax season panic" where you're trying to find a receipt for a transaction that happened fourteen months ago. Many of our clients find that our monthly packages are the best way to keep this reconciliation on autopilot.
Why is separating business and personal crypto accounts critical?
One of the biggest mistakes we see is "commingling" funds. This happens when a business owner uses their personal Coinbase account to pay a business vendor or vice-versa. While this might seem convenient in the moment, it creates a nightmare for Form 1099-DA reporting.
The IRS expects business assets to be held in business accounts. If your personal name is on the 1099-DA but the income belongs to your S-Corp, you’re going to have a hard time explaining that during an audit. Furthermore, it makes it nearly impossible to calculate your true business profit. If you’ve already mixed your accounts, don't worry, we specialize in bookkeeping cleanup to get those threads untangled before the IRS comes knocking.
How can a bookkeeper help with the 2026 crypto transition?
You didn't start your business to become a crypto forensic accountant. A professional bookkeeper acting as your essential partner takes the technical burden off your shoulders. We ensure that every crypto transaction is categorized correctly, whether it’s revenue, an expense, or a capital gain.
Specifically, we help you:
- Categorize crypto payments as business income or expenses.
- Reconcile exchange statements with your bank accounts.
- Monitor for the arrival of Form 1099-DA and ensure it matches your ledger.
- Provide clean, organized reports to your CPA for tax filing.
This partnership allows you to focus on growing your business while we handle the data entry and compliance checks. If you're ready to get your crypto books in order, we'd love to chat. You can book a call with us here.
About the Author
Jelena Arkula is the owner of Books LA, an accounting firm based in Los Angeles, California. With years of experience helping local businesses navigate the complexities of cloud accounting, Jelena and her team are experts in QuickBooks Online and Xero. We specialize in providing "real-world" bookkeeping solutions that move businesses forward.
FAQ: Small Business Crypto Reporting
1. What is the deadline for receiving Form 1099-DA?
Generally, brokers must provide you with the form by January 31st of the year following the transactions. For 2026 reporting, you should receive your forms by early 2027.
2. Does Form 1099-DA apply to NFTs?
Yes, the IRS definition of "digital assets" includes NFTs (Non-Fungible Tokens). If your business sells or exchanges an NFT through a broker, expect a 1099-DA.
3. What if I use a decentralized exchange (DEX) like Uniswap?
Currently, the IRS has temporarily excluded some decentralized protocols from the immediate reporting requirements while they study the technology further. However, you are still legally required to report those gains on your taxes even if you don't receive a form.
4. How much does it cost to have a bookkeeper manage crypto?
Crypto bookkeeping is often an "add-on" service because it requires specialized software and more frequent reconciliation. Pricing usually depends on your transaction volume. You can see our base rates on our packages page.
5. I only buy and hold crypto; do I get a form?
No. You only receive a Form 1099-DA when you sell, exchange, or use digital assets to pay for goods or services. Simply holding (HODLing) is not a reportable event.
6. Can't I just use my exchange's year-end report?
You can use it as a starting point, but exchange reports are notoriously "siloed." They don't know what happened to the asset before it arrived on their platform or after it left. A bookkeeper provides the "full picture" across all your wallets.
7. What are the penalties for not reporting crypto?
The IRS is treating crypto non-compliance very seriously. Penalties can include substantial fines for underpayment of tax, and in extreme cases, it could be viewed as tax evasion. Matching your books to the 1099-DA is the best way to stay safe.
8. Do I need to report crypto if I lost money?
Yes! Reporting losses is actually beneficial because it can often offset your other business gains, reducing your overall tax bill. Your bookkeeper will help you track these "capital losses."
Ready to get your crypto books organized?
Click here to request a bookkeeping review or contact us to learn how we can help your LA business stay compliant in 2026.
