
Show HN: Dead simple Bitcoin payroll - codelitt
Hey everyone! We&#x27;re the folks from Codelitt Incubator. We pay several of our employees either entirely or partially in BTC. This is a huge pain every month when we run payroll. Normally it consists of a wire to Bitstamp  (which includes a steep fee), buying the BTC on Bitstamp, sending to our company wallet, collecting receiving addresses, and then paying our employees. Because of this we&#x27;re building a dead simple BTC Payroll.<p>Our main goal is to make it easy for you to request that your employer pays you in BTC (partially or completely).<p>We don&#x27;t hold any money nor Bitcoins. It all happens in real time. Security, simplicity, and user control are our main priorities.<p>Employers - Sign up, verify bank account, add employees&#x2F;contractors name and email, and choose date to run payroll (if you opt in for automatic payroll. Also an option to run manually).<p>Employees&#x2F;contractors - Receive email after your employer adds you, setup account with bank account&#x2F;BTC receiving address, and how much of your paycheck you want in USD or BTC.<p>Incoin.io (that&#x27;s us) - We ACH debit company bank account, purchase necessary BTC, then credit employees&#x2F;contractors with USD or BTC depending on how they choose. We&#x27;ll maintain records so that when tax season rolls around, you&#x27;re all covered.&lt;p&gt;We would love some feedback.
What are your questions?
What are your concerns? 
Are there any cryptocoins besides BTC that are of any interest?<p>We are very close to launching our beta. We&#x27;re looking for some companies who would like to participate in our beta. You can sign up here for beta access or just to be alerted when we launch (very soon.) We&#x27;ll open it up quickly though after that. You can sign up here: https:&#x2F;&#x2F;www.incoin.io&#x2F;
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gamblor956
How are you handling payroll withholding? Nearly every major nation has some
equivalent of this. What about income tax withholding for cross border
payments?

These are issues that even the most basic payroll services offer today (i.e.,
handling the actual withholding/deductions and remitting the proper amounts to
the relevant tax authorities, not just keeping records). If you're not
addressing the tax issues, you're product isn't dead simple--it actually
increases the complexity of paying employees dramatically. Withholding taxes,
for example, are due at least quarterly; payroll taxes are usually due at
least monthly.

~~~
codelitt
That's a great question — and that is one of the first issues (alongside
bitcoin) that we want to get right.

Garnishments, withholdings, and taxes vary state to state, and sometimes city
by city. We're working with our tax lawyers and accountants to make this all
seamless, but it's a real pain. We're looking to launch in potentially three
states at first — just to make things easy.

Right now the reporting and payments are manual — we notify the company how
much is owed in taxes etc. and they must pay the government themselves.

We're looking to simplify this further, though, and debit the money for
garnishments to pay the government on behalf of employers where possible.

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liricooli
In finance, being subject to holding a currency you don't want to hold and
prefer to change, is called Foreign Exchange Risk [1].

Why would a reasonable person want that ? Even If I believe in Bitcoin, I'd
prefer getting paid in USD and choose to invest in Bitcoin.

[1]
[http://en.wikipedia.org/wiki/Foreign_exchange_risk](http://en.wikipedia.org/wiki/Foreign_exchange_risk)

~~~
codelitt
We're using this internally right now, and that's a risk we wanted to mitigate
for ourselves. Pretty sure that no-one wants to assume this risk.

The companies that use our service don't own or transact in Bitcoin. Wages are
specified and debited in USD — we then purchase Bitcoin and transfer it to the
employees. This effectively mitigates any risk from the companies.

For employees our main feature right now is that they can manage how much they
want in Bitcoin/USD — every month — and manage the risks themselves. Also, one
of our employees requested an "average bitcoin price", which helps to mitigate
any risk on the employees side
([https://news.ycombinator.com/item?id=7916822](https://news.ycombinator.com/item?id=7916822))

~~~
liricooli
I see. Than I still don't understand what you\ your employers benefit from
paying in Bitcoin ?

Unless your USD-->Bitcoin (and the other way round) transaction costs are
lower than the average joe's, why would I prefer being paid that why ? Even if
you cover the transaction costs I'd still prefer to be paid in USD and that
you'd pay me the additional transaction costs instead of converting USD to
bitcoin on my behalf.

Unless it's a finance backdoor in terms of tax, etc, I can't see the reason in
doing it.

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smorgantwo
Congrats for given this a go, good job. The only hesitation is of course is
payroll tax reporting. This is something you must be able to do for an
employer or really your service is of little value, due to assessed penalties
of non and/or late filings. I would suggest taking one State at time such as
CA, as soon, it appears cryptos will be legal tender and figure out how to do
all necessary payroll activities, such as tax reporting to State/Feds, wage
garnishment, etc., once you have this, then you've got something. I wish you
good luck in your endeavors!

~~~
codelitt
Thanks for the support. And you're correct. We answered a bit about us. We're
going to start simply with 1-3 states and then build out as we go.

[https://news.ycombinator.com/item?id=7916812](https://news.ycombinator.com/item?id=7916812)

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TorKlingberg
What is the main advantage over getting paid in USD and buying bitcoins on
your own? Other than promoting bitcoin.

~~~
tonyhb
Hey! I'm working on this project too.

You have a great question. One of the features that we're looking to implement
is "average bitcoin rate", where employees get paid an average rate for their
paycheck's work; this could heavily decrease variance and soften drops in
Bitcoin's price. Right now it's just an idea in the pipeline — we really need
to test demand and see if people would actually use it.

~~~
atmosx
That's nice. But you didn't really answer the question.

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cjbarber
Looks nice! I like the B logo.

I've also seen Bitwage [1] doing something similar to this and heard that
people like them.

[1]: [http://bitwage.co/](http://bitwage.co/)

~~~
codelitt
Ya! We've seen them, but we haven't been able to use their site yet.

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Mister_Snuggles
Out of curiosity, what do your BTC-paid employees do with the BTC? Are there
enough BTC-accepting merchants where you are that doing a significant portion
of your spending in BTC is reasonable? Are they able to buy groceries, pay
rent, etc in BTC? Or do they just hope that BTC will go up and they'll make
money on the exchange?

This may come off as critical, but it's not intended that way. I'm genuinely
curious as to how far BTC has come as a 'real currency'.

~~~
codelitt
No don't worry. It doesn't come off as critical at all. I would say its about
split. Several of them buy a lot online which helps. They use it in real life
occasionally, but often just change it into dollars when they need cash/local
currency in their account. Some of them hold a bit of it.

A few real world examples:

Employee 1 takes a 50/50\. He payed for his holiday with it because his travel
agent accepts it. He splits about half of his paycheck and uses the BTC
whenever possible.

Employee 2 takes 100% BTC, keeps everything in BTC and exchanges when he needs
local currency, but manages to do almost everything in BTC.

Employee 3 takes a tiny percentage in BTC and just holds it as an investment.

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minimaxir
If you're using Bitcoin as a means of _payroll_ , you may want to look into
the tax implications.

~~~
mjhea0
Good point.

I believe the IRS treats bitcoins as property, rather than an actual currency.
But form what I've heard, when doing you're taxes, you actually just treat it
as regular payroll taxes.

[https://bitcointaxes.info/](https://bitcointaxes.info/)

~~~
localcrisis
This is correct. From a tax perspective, this brings up a lot of headaches.
Let's say you get paid $5000 per quarter (to make things simple):

March 31: 25BTC (price per BTC - $200) June 30: 20BTC (price per BTC - $250)
September 30: 20BTC (price per BTC - $250) December 31: 10BTC (price per BTC -
$500) Total: 75BTC

Now at the end of the year you need to calculate your income. You made 75BTC
over the year, each of which was purchased at a different price. When you sell
them to transfer them into USD, you need to keep track of _which_ bitcoin you
are selling. If you sell one on December 31st, was it one from your first
paycheck (in which case you made a profit of $300, which counts as income
because you didn't hold it for over a year) or from the last one?

Simply buying BTC with USD from a company's bank account and sending it
somewhere isn't difficult. To actually provide a service that doesn't leave
employees in a tax nightmare they have no way of understanding is really what
matters.

[http://www.irs.gov/uac/Newsroom/IRS-Virtual-Currency-
Guidanc...](http://www.irs.gov/uac/Newsroom/IRS-Virtual-Currency-Guidance)

~~~
DougWebb
This is exactly the same as automatically buying stock shares every month in a
fixed dollar amount, and then having to figure out the profit/loss for
taxation when you sell the shares. With stocks, the most straightforward
approach is also to specify which shares you sold so that you can calculate
their change in value accurately.

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imaginenore
> _Normally it consists of a wire to Bitstamp (which includes a steep fee)_

If you mean $30-40 for the wire and 0.2% for the trade, that's not steep at
all.

Try sending money abroad any other way, and you're likely to pay around 3-8%.
Or much more if the destination is one of the messed up African countries.

~~~
sanswork
Would you not just pay the exact same fees minus the 0.2% bitstamp fee?

I assume the 3-8% you're talking about is the exchange rate but unless the
place your sending money has a good local exchange with liquidity you're going
to pay that anyhow having the money sent from the exchange to you.

~~~
codelitt
With our system you will just pay one fee to accomplish your end goal. The ACH
debit and BTC transaction fee doesn't cost you any more. It should eliminate
the 3-8% on exchanges for foreign currency, the wire transfer fees, and the
BTC exchange fee. You'll just have one instead of 3. We're working to price it
competitively.

~~~
sanswork
True but thats not really a comparable result to be one discussed with 3-8%
exchange fees. To be comparable the person on the receiving end would have to
sell their bitcoin for their local currency. That would reintroduce the
exchange fees.

~~~
codelitt
Very true. That's why we offer employees the option choose what percentage of
their paycheck to receive in BTC and USD (hope to add other currencies soon).
The idea isn't to get paid in BTC and then to exchange it. We're idealists,
but the idea is to get paid in BTC and use it!

------
mjhea0
clickable link - [https://www.incoin.io/](https://www.incoin.io/)

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wesley
Any chance of adding other coins, such as Nxt?

~~~
codelitt
We want to add other coins for sure. We're going to get BTC right during the
beta and then start adding other coins as we go. Maybe we could open up
voting.

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atoponce
Is the source code Free and Open Source Software?

~~~
codelitt
Unfortunately not right now. We're looking at this from a startup's point of
view, and putting our SaaS code on github isn't something we're looking ATM.
We will be work on releasing an API for others to use.

~~~
atoponce
That's very unfortunate. With the revelations of Edward Snowden against the
NSA, and the ability to call into questions the ethics of cloud computing and
their providers, startup cloud companies that don't provide their software
code under a copyleft license won't do well in the long term, I suspect.

The fact that personal and financial data will be hosted on your company
servers, tying names and accounts to Bitcoin transactions and wallets, all
doesn't pass the smell test, if the code isn't open for inspection.

Of course, there is nothing preventing your company from putting up placebo
code on Github, that doesn't actually represent what is running on your
servers. I understand that, but as a show of good faith, it would do your
company more in the long term by opening the code in addition to providing an
API.

Anyway, good luck.

~~~
codelitt
Extremely valid concerns.

We're trying to be as secure as possible — personal data is strongly encrypted
in our database, we're using tokens instead of bank details to keep things
more secure, we're implementing 2FA for logins, and we're using perfect
forward security for SSL.

Unfortunately, though, money laundering law mandates that we need to record
personal information so there's little we can do to get around the name <=>
bitcoin address issue. We have ideas (like company-specific encryption for
bitcoin addresses where only employers can decrypt addresses) but it's a long
way out, even if we do implement it.

