ZenLedger.io is a Seattle-based startup that helps individuals and CPAs with their taxes with cryptocurrency investments. They are VC-backed and have a team of 10.
Cryptotapas sat with Pat Larsen, CEO of ZenLedger to discuss what makes ZenLedger different from other crypto tax software in the market, and Larsen’s thoughts on the evolution of the crypto investment space and the future of blockchain technology.
CT: What made you start ZenLedger when there are other Cryptocurrency tax solutions in the market?
Pat: “Before getting into tech, I was an investment banker, so I’m pretty familiar with finance and accounting. I ran a business unit at Amazon followed by an eCommerce startup. I was coming off of the eCommerce startup and wanted to get back on the forefront of technology. When cryptocurrency hit the mainstream in 2017, I kept talking to smart people in the space and brainstormed about solutions to some structural issues in the space and landed on the tax idea.
We felt that other platforms could use some improvements. When we talked to existing users of these platforms. our suspicions were confirmed. We gathered the feedback and put that into building a better product that is easy to use and provides accurate tax forms. Getting an investor or CPA accurate accounting in crypto across multiple exchanges and wallets is not an easy task, but it is a valuable problem to solve.”
CT: What is the biggest differentiator of ZenLedger compared to other crypto tax software out there?
Pat: “Transparency and customer friendliness, which manifests in a couple of things. One is our Unified Accounting Spreadsheet that shows all transactions in one place along with our backend calculations that will be immensely helpful in case of an audit, or for tax professionals that want to show detail to their customers.
Our customer service is incredible. People have been quite surprised when we respond to their questions during the night or on weekends. It just shows how serious we are about this business, which is often lacking in the crypto space. ZenLedger will give you a summary for free after you upload your transactions, and then you can pick the appropriate plan for the complexity of your return. We’ll also be releasing a tool to help with tax loss harvesting. It’s been a tough year for everyone.”
CT: We have to be honest here. We did not think you would respond to our questions and request over the weekend, but you did. That is just a testament to what you said about customer service, and we certainly appreciate that you are bringing true business candor to the Crypto space. Now onto the next question.
CT: What is your vision for ZenLedger?
Pat: “I think there are going to be opportunities that present themselves, perhaps in security tokens if they get traction. Whatever form Security and Utility tokens take going forward, ZenLedger can continue to be more of a picks-and-shovels type of financial layer of services in the Blockchain space.
If people start earning income in multiple Cryptocurrencies from multiple sources or charge fees for their services in Crypto, that starts looking a lot like ADP or SAP does with daily, weekly or monthly accounting along with annual tax assistance. Since data is already structured in ZenLedger, we will see more utilities for services like ZenLedger and more opportunities will present themselves as this ecosystem evolves into a daily use case.
We also want to keep improving our core technology. From an accuracy standpoint, we are always fine-tuning our algorithms to track transactions, and filling in lots of holes that are created when cryptos are moved between wallets and exchanges.”
CT: How big of a team do you have at ZenLedger?
Pat: “We have 10 people; 6 developers and rest are on the business support side.”
CT: How many exchanges do you support right now and how many are you going to bring onboard for 2018 tax year?
Pat: “We continuously add exchanges to the platform. We also provide extensive Wallet support. We cover all the major exchanges and wallets and many of the smaller ones. Coinbase, GDAX/CoinbasePRO, Binance, Bittrex, Kucoin, Kraken, Poloniex, Jaxx, Trezor, Ledger…etc.
CT: How many countries do you currently support?
Pat: “Our primary focus is the United States to help individuals with tax forms, however, individuals from other locations can benefit from our reports as well. We will keep looking to support other countries as regulations become more clearer.”
CT: Isn’t ZenLedger the only Crypto tax software that supports FBAR Filing, FinCEN Form 114?
Pat: “That is true. What we do is pull the peak value from the exchanges, irrespective of how many assets you own, so that you can include that information on FinCEN Form 114. We currently do not support direct import of data to FinCEN since there is a lot of personally identifiable information that goes on the form. We provide values for FBAR and FATCA purposes.”
CT: People either do not know about FinCEN filing requirement or they forget, but we believe it is an important disclosure with serious repercussions for non-compliance.
Pat: “FBAR reporting is quite important and has serious consequences for non-disclosure. If you have more than $10,000 of peak assets in a foreign exchange like Binance or Huobi in a calendar year, you have to fill out a FinCen 114 FBAR filing.”
CT: Do you only support retail customers or are you also supporting CPAs?
Pat: “We support retail investors and provide CPAs with workflow management to help provide services to their customers. CPAs do not have to pay licensing fees. They can create free accounts to start serving their clients. That way, each taxpayer’s transactions can be handled separately and costs can be passed on to taxpayers or bundled into the CPA’s bill.”
CT: ZenLedger allows users to upload their transaction detail and view the tax summary information for free. They can wait to pay for the services when they decide to download the tax forms. Is this going to be available for 2018?
Pat: “Yes, we plan to keep that form of feature available for our customers for the 2018 calendar year.”
CT: Where do you think the blockchain and crypto space is headed next?
Pat: “As more talented individuals spend more resources and time in this space, we will see applications that bring blockchain use cases to life. Obviously, we will see innovations in the supply chain management, joint ownership of assets to share revenue, etc.
Interesting models where individuals get paid for their time and attention will also emerge as a first case model for blockchain use cases. Transferring value across borders, eating into the money transfer business, can also be a great use-case, and an area where we will see solutions in blockchain space coming out sooner than others.”
CT: Is there anything you want our readers to know that we have not asked you about?
Pat: “We take customer service very seriously, and that translates into a product that is easy to use and handles transactions accurately. We continuously talk to CPAs to ensure that we are updating our software to mirror the regulations so that our customers can be sure of the quality we provide them.”
CT: Thank you, Pat, for taking the time to chat with us today. We appreciate it.
Thank you for reading this article.
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About the author
RK Reddy holds two Masters degrees, one in Accounting and another in Business Administration with over 15 years of experience in the financial services industry.
RK Reddy is an ardent fan of Blockchain and Cryptocurrencies. You can see the excitement about this new technology in every article on Cryptotapas.com. Sometimes this excitement leads to an overly optimistic view. Guilty as charged. RK Reddy says “what may seem like an ‘overly optimistic expectation’ today may become an everyday norm in 5-10 years; look at the history of cars or airplanes, Blockchain and Cryptocurrencies belong to a similar frame of reference.” Of course, that is just his opinion.