8 ms·

Show HN: Painless1099 – automated self-employment taxes

92 points by deuce42x 10y ago

dd36 10y ago
Could also be useful to partners in an LLC that can't be paid by W-2. Smart idea.
- lojack 10y ago
  Last year I was hit with a massive IRS bill I was completely unprepared for. Saved some money, but not nearly enough. Something like this would have absolutely saved me.
  - acallwood 10y ago
    We'd love to have you this year. One of my partners got slammed with something like a $15,000 bill two years ago. That was the impetus for building out a platform to automate what's typically a pain in the ass.
- acallwood 10y ago
  Yep. I'm one of the founders and we all run our payments through Painless. True story - our accountant sent me my personal bill last week and I had a heart attack until I remembered I have an account with cash in it specifically FOR my taxes this year. It was a "duhhh" kinda moment, but I've been so programmed as a consultant to freak out about 1099 taxes, so it was my default reaction even after spending the whole year building a solution.
deleted 10y ago
[deleted]
deuce42x 10y ago
I've been working on this project for a little over a year as an advisor, primarily on the marketing and bank tech pieces of the business. The team saw an opportunity to make something (saving for 1099 taxes) that's unnecessarily complex much simpler, so they developed this nifty automated bank account to save from a user's self-employment income. You can set a fixed saving percentage, or let the software estimate for you based on your state and projected income. So far, we've seen developers, writers, real estate brokers, Airbnb hosts, and designers get value from the platform. The founders will be checking in here to answer questions, so ask away!
bubbleRefuge 10y ago
Take down that monopoly that is turbo tax!!!!!
- buckbova 10y ago
  Been using free tax usa (www.freetaxusa.com) for a decade now. Just works.
  - acallwood 10y ago
    We're fans of Free Tax USA. They have a pretty solid self-employment offering, but we found that we still run into the issue of having to manually save throughout the year for our tax obligation. If anything, we've always thought of our product as a compliment to some of the existing platforms out there for filing.
- fosco 10y ago
  Taxslayer [0]is nice. I've been using for 3 years. that being said I have not tested all of the others, it worked so i kept using it. [0] https://www.taxslayer.com/ https://www.taxslayer.com/
bitdeveloper 10y ago
This looks interesting. Can you go into a little detail about how well you currently cover state taxes vs. federal, quarterly payments, etc? The service I currently use doesn't really help much on the state level.
- acallwood 10y ago
  Totally - We handle withholding for your Federal AND State obligations. We collect a bit of information from you when you sign up and then our algorithm crunches based on your income and location. As far as quarterlies go, we pass along reminders and quarterly filing instructions currently. In the near future, you'll be able to remit payment directly from our platform.
meesterdude 10y ago
First off, let me echo what an amazing pain in the ass it is to be a 1099er, and how big a deal this can be for people. Kudos there. I'd ask for a little more transparency on how you guys make money and all - a $5 monthly fee for example, wouldn't be insulting. If you start talking about percentages, GTFO. And also data privacy and being clear that you do not profit off my data would also be important. Really just a clear alignment of business interests. If I wasn't switching into a FT role, i'd be all over this. But I always got paid via check, which went into my bank account. I think the thing that would make the most sense is to be able to setup a separate account with your own bank, so you can still direct deposit without worrying about ATM fees or what have you, and still be able to keep painless1099 in the loop of money by giving them access. Anything else introduces friction / fees that would deter usage; and i really really hate fees. (a reason i dont do paypal, for example) Anyway, great idea. I hope you can make it work.
- toomuchtodo 10y ago
  > But I always got paid via check, which went into my bank account. I think the thing that would make the most sense is to be able to setup a separate account with your own bank, so you can still direct deposit without worrying about ATM fees or what have you, and still be able to keep painless1099 in the loop of money by giving them access. Anything else introduces friction / fees that would deter usage; and i really really hate fees. (a reason i dont do paypal, for example) Sounds like they could make some referral cash off of referring people to checking accounts.
  - acallwood 10y ago
    Connecting two existing personal accounts is something we've considered, but we've found that this doesn't necessarily help saving from a user perspective. The majority of our users love that they now have an account that is out of sight and out of mind. We haven't ruled out other options, but the current setup has been pretty well received by our current our user base.
    - meesterdude 10y ago
gricardo99 10y ago
If they could take care of also making quarterly IRS payments, so I avoid the underpayment penalty, this would be quite nice.
- deuce42x 10y ago
  This is something that we're working on!
- tdicola 10y ago
  There's a system for this already, sign up for EFTPS and the Treasury Department will automatically schedule and take out estimated tax payments. I just set mine up for next tax year and it's easy. Their website is awful and stuck in the 90's but it does work. https://www.eftps.gov/eftps/ https://www.eftps.gov/eftps/
melvinmt 10y ago
I'm a 1099-consultant and whenever a payment comes in, I just update a spreadsheet and transfer the amount to a separate savings account. It's not that big of a pain really, just takes a couple of minutes, but it would be nice to automate this with your service. The only reason I'm hesitant to switch is because you're offering this for free. How do I know you're still going to be in business in a year from now? In other words, what is your business model?
- acallwood 10y ago
  Hi there! It's free for now as we offer perks for signup. We'll shortly roll to a subscription based service for access to tax withholding. We'll also introduce some premium features down the road to continue automating the tax portion of your consulting. Hope that helps!
Ajdeanmny 10y ago
This seems like something that is easy for me to do myself. I deposit a check in my bank account and either manually or automatically move some percentage of the money to a separate savings account. I guess I don't see what value this adds?
- acallwood 10y ago
  There are a handful of people who are in the same boat you are and handle their taxes on their own with no problem. That said, for the vast majority of us, setting money aside and not touching it is really (like, REALLY) hard. Painless gets cash from freelance gigs out of sight and out of mind before you feel like it's money you should dip into. Beyond that, the automation of a process you'd have to do manually otherwise is something we think everyone can get behind whether you have a process in place currently or not.
EddieRingle 10y ago
I never really considered this an issue. I've been self-employed since 2012 and kept a spreadsheet that calculated the quarterly payments I need to make, so I just sent that amount into a 1% APY savings account every time I got paid. More recently, I took on a regular W2 job, and I've updated the spreadsheet so that it accounts for both W2 income (and any withholdings from that) as well as 1099 profit/losses (as I enter business expenses as well). It was all pretty easy to set up and I just update it whenever tax brackets and standard deductions change (usually an annual thing).
pumblechook 10y ago
Man, if this would've been around a year or so ago! The whole 1099 process was by far the biggest pain point for me of being a contractor/sole proprietor. What led you to address this problem from the banking, rather than accounting, side? For me, the banking part wasn't a big source of friction. It was keeping up with income and expenses, trying to determine what I could safely deduct, and coming up with a reasonable estimated quarterly tax bill (especially for my state taxes, which I could only send in yearly). After that was done, moving the money around was relatively trivial. Even if your product removes all that friction, I would still think that requiring users to open up another bank account and essentially give you control over all their revenue would be a huge hurdle to overcome. Also, were I still a contractor, not being able to track expenses as well would be a deal breaker for me, especially in months where cash flow was tight. Yes, doing my taxes is a hassle, but compared with the hundreds or thousands I might save on a quarterly tax bill with expenses accounted for, it is a minor annoyance.
- gk1 10y ago
  Have you looked at FreshBooks? You can sync expenses with your credit card(s) and bank account(s), categorize them, then view a Profit & Loss report to see your net income (income minus expenses).
- character 10y ago
  I think it depends on the primary use case (for accounting vs banking) - I know a lot of people who are earning barely livable wages as 1099 employees and they are often tempted to spend everything they earn (need to make rent and feed themselves) but then come April they haven't saved enough for their taxes and get screwed. Having a separate bank account that withholds the taxes for them first and then deposits 100% spendable money (just like a W-2 employee) would be really helpful for people in this position. If you're coming at the problem with this use case in mind primarily, the approach they took makes sense. I think those people can benefit from this service the most too.
jly 10y ago
This is something I manage pretty easily without a lot of fuss using a spreadsheet and one bank account with my 1099 business. I do a small volume of transactions with higher dollar values, so this might appeal more to high-volume businesses where the manual effort increases a lot. I would be more interested in hooking in to the paying and calculating quarterly estimated tax payments. Will this system do sales tax saving/payments? I pay those quarterly to my state just like the IRS estimated income payments and treat them essentially the same from a management standpoint. Any third-party system would need to be flexible to handle that, as well.
gk1 10y ago
Is it really that difficult to put away 30-40% of every payment towards taxes? Not trying to be cynical, just having a difficult time understanding why a service is needed to perform a routine transfer.
- jessedhillon 10y ago
  There's a lot of value in being able to hone in on the exact figure -- 31.8% based on your previous year's income and deductions -- giving you an extra 9.2% if you were conservative and putting aside 40%. I don't know if that's what this service can actually offer, just putting out there that it's more complicated than just setting aside a gross estimate like that.
  - acallwood 10y ago
    Totally right - We withhold exactly the amount you need to set aside, as opposed to just blindly ballparking it as we've all done at some point (if we separated taxes at all). Taking the guesswork out of the amount we should be setting aside is a big piece of why we built Painless!
- acallwood 10y ago
  Yep - this is pretty tough for the majority of independent contractors. Simply figuring out how much to save is the first issue, but the larger issue is ACTUALLY separating funds from your regular checking account so you don't spend these funds that should go to the IRS every quarter. We built Painless to automate what (admittedly) should be a "routine transfer" but often isn't and becomes a problem at the end of the year when we owe a huge bill that sucks to pay outright. The convenience of automating money movement is the big piece of what we do for our users. Hope that helps!
ents 10y ago
"Confirm Password must contain an uppercase and a lowercase letter, a number, and must be at least 8 characters long" C'mon.
- character 10y ago
  strict password requirements are usually a requirement for regulated businesses (such as those creating back accounts). Having a secure password for an account that manages your money is a good thing!
  - acallwood 10y ago
    +1 =)
  - strictpassword 10y ago
    But it rejects some of the best passwords practice, Diceware http://world.std.com/~reinhold/diceware.html http://world.std.com/~reinhold/diceware.html
- fencepost 10y ago
  Upper, lower, number, 8+ characters is actually a pretty loose requirement. My standard spiel when I'm telling people the password requirements after giving them their temporary passwords is "You're going to have to change your password when you first log in. There are 4 types of characters: Upper, Lower, Digits and Punctuation; you're going to have to have at least 3 of those 4, it doesn't like your first name, it doesn't like your last name and your password must be longer than 8 characters. I recommend selecting 2 unrelated words that you can remember, changing at least one letter in each to uppercase, throwing a digit in before, after or between them and adding punctuation somewhere else."
- tumblen 10y ago
  The real problem is banking sites that say, "Your password must be less than 12 characters and must not include symbols."
tdicola 10y ago
Just to be the devil's advocate, what happens if this company goes bust and your tax money is stuck in their account and inaccessible? The IRS isn't going to accept some sob story about not having access to funds... I'd be very leery about putting an intermediary between my sole source of income and myself. Is there insurance? How do you know they're trustworthy?
- tommynicholas 10y ago
  The accounts are FDIC insured and held in an accredited bank according to the website. $250k of insurance per account.
  - tdicola 10y ago
    Ok but who owns the account and how do you know they're trustworthy? I could open a bank account anywhere and ask you to start depositing your income there. You have to trust that I'll give it back to you though--FDIC won't apply.
    - tommynicholas 10y ago
      Each account is a separate, FDIC insured account held with Lincoln Savings Bank. Your account is your account, there is no money pooling done. Painless 1099 is a front end to that account to let you do various things automatically and easily. Does that make sense? I suppose technically just like your accountant could steal your money because they have access to your accounts there's some risk but not really.
      - tdicola 10y ago
        Perfect, thanks for clarifying! Yeah it wasn't really obvious if this is an account Painless 1099 owns or the user owns. Thanks!
        acallwood 10y ago
        Hi gents - a little late to the party here, but yeah, tommynicholas is absolutely right here. We help you open an account with our bank (Lincoln Savings Bank) and your money goes into an account in your name at LSB. If anything were to happen (heaven forbid) this cash is secure and guaranteed. If anything, you could make a solid case about a bank going out of business before anything. But all jokes aside, before building anything, security of funds is something we made sure our users feel really good about and we found a great partner to make sure your accounts and deposits are insured!
elliotroth 10y ago
fantastic idea. I consistently get screwed over at the end of the season for not preparing my taxes correctly. I'll be signing up.
- acallwood 10y ago
  Awesome to hear! We can't wait to have you!
jordanlev 10y ago
Comment about your marketing website: I browse with cookies and localStorage disabled, and when I visit your site it's completely blank. I understand that if I were to create an account, log in, and utilize the functionality of your app that cookies (and/or localStorage) would be a requirement, but I don't understand why the marketing content wouldn't show up at all.
- hangoverhammers 10y ago
  Solid find! Sorry for the issue you're having - we haven't seen this yet. We're running on Angular 2 and it looks like our auth, which requires cookies, is causing a crash. That's why you don't see any copy. We'll look into and/or report this to the Angular team. Thanks again! Very helpful!
baus 10y ago
A company doing something similar closed down last year: https://www.crunchbase.com/organization/zen99 https://www.crunchbase.com/organization/zen99
- phonon 10y ago
  Probably worth reading then-- https://medium.com/@tmzier/why-zen99-shut-down-a368371eb9dd#.ms7xju1dd https://medium.com/@tmzier/why-zen99-shut-down-a368371eb9dd#...
- CPLX 10y ago
  Perhaps they still exist, but the internet exceeded the number of available slots for startups with the word Zen in the name and they disappeared from view.
- acallwood 10y ago
  Hey guys! We're pretty familiar with the zen99 crew. For the most part, they were thinking about the same world as we are, but were tackling the problem a little differently. I think as founders, we have a really bad habit of pretending out competitors are stupid and operating as if they didn't know what they were talking about. That's rarely the case in general, and certainly not the case in this instance. Tristian (CEO of zen99) wrote an awesome post mortem, which I think was just shared below, and it's been really helpful for quite a few of us in the fintech space. Continuing to read and build on the lessons that companies have learned before us is a big part of why we built the product we did as opposed to trying to replicate zen99 and hope it worked out for us. We really appreciate this thread and you guys pointing out the similarities between our companies!
mrchess 10y ago
Fwiw I use and am actually quite impressed with Quickbooks Self-Employed version, and I've never had a problem with 1099 management. They keep tax estimates for you in the upper-right corner so you always know around how much you will need to pay, and you can pay the quarterly taxes online through them via. eftps. While they don't auto-save for you, I'd argue you should be responsible enough to do this yourself. They were a bit buggy when they first released, but their support was pretty good to me and they have fixed all issues I've reported. That being said, I'm not sure what this product can do for me over what I'm using now. Actually, I just looked at their FAQ and they don't track expenses or anything... things you can do with Quickbooks. Now I'm not trying to down this company, but just am pointing out to others that a mature version of this product already exists (minus the auto-save) and that I can't identify "why" I should switch over to Painless.
- acallwood 10y ago
  It's really the automation part that we drilled down on. To be honest, we love QBSE and don't consider them competition as much as we see them as a compliment to what we do. Tracking your tax obligation is great, but we take it a step further and just automate the cash that should be transferred out of your every day account and into one that you're less tempted to spend from. For a large portion of our 1099 peers, we see that the savings aspect is either A) hard, or B) a process that, if automated, could free up time to actually focus on work rather than having to actively (and manually) manage your taxes.
trentbigelow 10y ago
I think Painless1099 IS on to something: taxes for freelancers are a pain, and no one wants to learn how to do it. However, I think asking some people to change their bank accounts is going to be resisted. Also, waiting an additional 2-3 days to access your money when you're living paycheck to paycheck (as most independent contractors are) is not an option. My cofounders and I are working on solving this same problem, however we took a different approach. (https://www.track.tax https://www.track.tax) Track.tax creates a savings account in the user's name (same as Painless1099), but we also connect to the user's existing financial accounts to calculate taxes. Our chatbot (named Aida) communicates via SMS to ask simple questions to hash out the gory details. This means: 1. You can get paid via check, cash, or any other way you (or your clients) would like. 2. Money comes into your account first, then taxes are calculated and moved to your tax savings account. 3. Saving for taxes is as simple as responding "yes" to a text. We'd love your feedback, and any comparison (strengths/weaknesses) you see between us an Painless1099. Although we know solving this problem is really worth it, we'd greatly appreciate honest additional feedback from you guys, so feel free to text "HN" to TRACK (87225) and we'll give you a full year on the service!
- acallwood 10y ago
  Love what you guys are doing and would love to chat sometime, Trent! hello@painless1099 will do it if you're interested!
DonutATX 10y ago
Save 50% of everything you earn as a 1099er. How hard is that?
icodestuff 10y ago
Does the account earn interest? Right now I have an Ally savings account I transfer a percentage of my revenues every two weeks, so I'm earning 1% on my tax bill. It's small, but not irrelevant.
- acallwood 10y ago
  Currently these accounts do not earn interest. This may change in the future, however!
antjanus 10y ago
Oh man, i wish this had existed 5 years ago when I first started contracting. Estimating my taxes, doing withholdings, etc. was just a nightmare for me. I might look into this if I go back into contracting at any point. Really cool! :)
rwhitman 10y ago
A tool that does automatic withholding of business deposits in a savings account for taxes is something I've been dreaming of for a while, to the point where I even sat down for a bit to see if I could cook up my own tool to do it. Alas banks do not exactly go out of their way to expose a money transfer API... This sounds exactly like what I wanted.. but I don't know if I want to be the early adopter guinea pig for something that involves setting up new bank accounts and automatically routing my finances around. I was kind of hoping my bank would eventually build conditional features into the automatic transfer / bill pay, as I'd much rather keep all my cash within my banking institution rather than sending it to an unproven 3rd party. Either way, I will be watching this closely..
- acallwood 10y ago
  Thanks for the feedback! FWIW, with Painless, your money is always accessible to you as it's in an FDIC Insured savings account. If (heaven forbid) we're not around in the long term, your cash is insured up to $250,000 and your new savings account is in a well-established financial institution at Lincoln Savings Bank. Really what we've done is use existing infrastructure to automate transfers that you'd be making manually, whether between two accounts in your existing institution or two accounts at separate ones.
toddh 10y ago
Why not just send in the taxes as you receive payment? Like salaried people do?
joshmn 10y ago
Hey, just an experience thing. Looking at the "fees I wouldn't pay with 1099" I didn't read all the copy (I'm guessing 80% of us don't); I thought I'd end up paying those fees. Might want to make it more obvious with a classic strikethrough, or something. :)
jMyles 10y ago
This looks like nearly the tool I need: what I'm really looking for is a program that allows me to keep track of deductions and their reasoning. Also, some kind of facilitated back-and-forth with a CPA will be amazing?
- acallwood 10y ago
  Hey thanks for the feedback! We're building a small network of CPAs to allow you to get feedback in real time on some of our more nuanced tax question. Expenses and deductions you can expect to see down the road as well!

92 points by deuce42x 10y ago

dd36 10y ago

Could also be useful to partners in an LLC that can't be paid by W-2. Smart idea.

lojack 10y ago
Last year I was hit with a massive IRS bill I was completely unprepared for. Saved some money, but not nearly enough. Something like this would have absolutely saved me.
- acallwood 10y ago
  We'd love to have you this year. One of my partners got slammed with something like a $15,000 bill two years ago. That was the impetus for building out a platform to automate what's typically a pain in the ass.
acallwood 10y ago
Yep. I'm one of the founders and we all run our payments through Painless. True story - our accountant sent me my personal bill last week and I had a heart attack until I remembered I have an account with cash in it specifically FOR my taxes this year. It was a "duhhh" kinda moment, but I've been so programmed as a consultant to freak out about 1099 taxes, so it was my default reaction even after spending the whole year building a solution.

deleted 10y ago

[deleted]

deuce42x 10y ago

I've been working on this project for a little over a year as an advisor, primarily on the marketing and bank tech pieces of the business. The team saw an opportunity to make something (saving for 1099 taxes) that's unnecessarily complex much simpler, so they developed this nifty automated bank account to save from a user's self-employment income. You can set a fixed saving percentage, or let the software estimate for you based on your state and projected income. So far, we've seen developers, writers, real estate brokers, Airbnb hosts, and designers get value from the platform. The founders will be checking in here to answer questions, so ask away!

bubbleRefuge 10y ago

Take down that monopoly that is turbo tax!!!!!

buckbova 10y ago
Been using free tax usa (www.freetaxusa.com) for a decade now. Just works.
- acallwood 10y ago
  We're fans of Free Tax USA. They have a pretty solid self-employment offering, but we found that we still run into the issue of having to manually save throughout the year for our tax obligation. If anything, we've always thought of our product as a compliment to some of the existing platforms out there for filing.
fosco 10y ago
Taxslayer [0]is nice. I've been using for 3 years. that being said I have not tested all of the others, it worked so i kept using it. [0] https://www.taxslayer.com/ https://www.taxslayer.com/

bitdeveloper 10y ago

This looks interesting. Can you go into a little detail about how well you currently cover state taxes vs. federal, quarterly payments, etc? The service I currently use doesn't really help much on the state level.

acallwood 10y ago
Totally - We handle withholding for your Federal AND State obligations. We collect a bit of information from you when you sign up and then our algorithm crunches based on your income and location. As far as quarterlies go, we pass along reminders and quarterly filing instructions currently. In the near future, you'll be able to remit payment directly from our platform.

meesterdude 10y ago

First off, let me echo what an amazing pain in the ass it is to be a 1099er, and how big a deal this can be for people. Kudos there. I'd ask for a little more transparency on how you guys make money and all - a $5 monthly fee for example, wouldn't be insulting. If you start talking about percentages, GTFO. And also data privacy and being clear that you do not profit off my data would also be important. Really just a clear alignment of business interests. If I wasn't switching into a FT role, i'd be all over this. But I always got paid via check, which went into my bank account. I think the thing that would make the most sense is to be able to setup a separate account with your own bank, so you can still direct deposit without worrying about ATM fees or what have you, and still be able to keep painless1099 in the loop of money by giving them access. Anything else introduces friction / fees that would deter usage; and i really really hate fees. (a reason i dont do paypal, for example) Anyway, great idea. I hope you can make it work.

toomuchtodo 10y ago
> But I always got paid via check, which went into my bank account. I think the thing that would make the most sense is to be able to setup a separate account with your own bank, so you can still direct deposit without worrying about ATM fees or what have you, and still be able to keep painless1099 in the loop of money by giving them access. Anything else introduces friction / fees that would deter usage; and i really really hate fees. (a reason i dont do paypal, for example) Sounds like they could make some referral cash off of referring people to checking accounts.
- acallwood 10y ago
  Connecting two existing personal accounts is something we've considered, but we've found that this doesn't necessarily help saving from a user perspective. The majority of our users love that they now have an account that is out of sight and out of mind. We haven't ruled out other options, but the current setup has been pretty well received by our current our user base.
  - meesterdude 10y ago

gricardo99 10y ago

If they could take care of also making quarterly IRS payments, so I avoid the underpayment penalty, this would be quite nice.

deuce42x 10y ago
This is something that we're working on!
tdicola 10y ago
There's a system for this already, sign up for EFTPS and the Treasury Department will automatically schedule and take out estimated tax payments. I just set mine up for next tax year and it's easy. Their website is awful and stuck in the 90's but it does work. https://www.eftps.gov/eftps/ https://www.eftps.gov/eftps/

melvinmt 10y ago

I'm a 1099-consultant and whenever a payment comes in, I just update a spreadsheet and transfer the amount to a separate savings account. It's not that big of a pain really, just takes a couple of minutes, but it would be nice to automate this with your service. The only reason I'm hesitant to switch is because you're offering this for free. How do I know you're still going to be in business in a year from now? In other words, what is your business model?

acallwood 10y ago
Hi there! It's free for now as we offer perks for signup. We'll shortly roll to a subscription based service for access to tax withholding. We'll also introduce some premium features down the road to continue automating the tax portion of your consulting. Hope that helps!

Ajdeanmny 10y ago

This seems like something that is easy for me to do myself. I deposit a check in my bank account and either manually or automatically move some percentage of the money to a separate savings account. I guess I don't see what value this adds?

acallwood 10y ago
There are a handful of people who are in the same boat you are and handle their taxes on their own with no problem. That said, for the vast majority of us, setting money aside and not touching it is really (like, REALLY) hard. Painless gets cash from freelance gigs out of sight and out of mind before you feel like it's money you should dip into. Beyond that, the automation of a process you'd have to do manually otherwise is something we think everyone can get behind whether you have a process in place currently or not.

EddieRingle 10y ago

I never really considered this an issue. I've been self-employed since 2012 and kept a spreadsheet that calculated the quarterly payments I need to make, so I just sent that amount into a 1% APY savings account every time I got paid. More recently, I took on a regular W2 job, and I've updated the spreadsheet so that it accounts for both W2 income (and any withholdings from that) as well as 1099 profit/losses (as I enter business expenses as well). It was all pretty easy to set up and I just update it whenever tax brackets and standard deductions change (usually an annual thing).

pumblechook 10y ago

Man, if this would've been around a year or so ago! The whole 1099 process was by far the biggest pain point for me of being a contractor/sole proprietor. What led you to address this problem from the banking, rather than accounting, side? For me, the banking part wasn't a big source of friction. It was keeping up with income and expenses, trying to determine what I could safely deduct, and coming up with a reasonable estimated quarterly tax bill (especially for my state taxes, which I could only send in yearly). After that was done, moving the money around was relatively trivial. Even if your product removes all that friction, I would still think that requiring users to open up another bank account and essentially give you control over all their revenue would be a huge hurdle to overcome. Also, were I still a contractor, not being able to track expenses as well would be a deal breaker for me, especially in months where cash flow was tight. Yes, doing my taxes is a hassle, but compared with the hundreds or thousands I might save on a quarterly tax bill with expenses accounted for, it is a minor annoyance.

gk1 10y ago
Have you looked at FreshBooks? You can sync expenses with your credit card(s) and bank account(s), categorize them, then view a Profit & Loss report to see your net income (income minus expenses).
character 10y ago
I think it depends on the primary use case (for accounting vs banking) - I know a lot of people who are earning barely livable wages as 1099 employees and they are often tempted to spend everything they earn (need to make rent and feed themselves) but then come April they haven't saved enough for their taxes and get screwed. Having a separate bank account that withholds the taxes for them first and then deposits 100% spendable money (just like a W-2 employee) would be really helpful for people in this position. If you're coming at the problem with this use case in mind primarily, the approach they took makes sense. I think those people can benefit from this service the most too.

jly 10y ago

This is something I manage pretty easily without a lot of fuss using a spreadsheet and one bank account with my 1099 business. I do a small volume of transactions with higher dollar values, so this might appeal more to high-volume businesses where the manual effort increases a lot. I would be more interested in hooking in to the paying and calculating quarterly estimated tax payments. Will this system do sales tax saving/payments? I pay those quarterly to my state just like the IRS estimated income payments and treat them essentially the same from a management standpoint. Any third-party system would need to be flexible to handle that, as well.

gk1 10y ago

Is it really that difficult to put away 30-40% of every payment towards taxes? Not trying to be cynical, just having a difficult time understanding why a service is needed to perform a routine transfer.

jessedhillon 10y ago
There's a lot of value in being able to hone in on the exact figure -- 31.8% based on your previous year's income and deductions -- giving you an extra 9.2% if you were conservative and putting aside 40%. I don't know if that's what this service can actually offer, just putting out there that it's more complicated than just setting aside a gross estimate like that.
- acallwood 10y ago
  Totally right - We withhold exactly the amount you need to set aside, as opposed to just blindly ballparking it as we've all done at some point (if we separated taxes at all). Taking the guesswork out of the amount we should be setting aside is a big piece of why we built Painless!
acallwood 10y ago
Yep - this is pretty tough for the majority of independent contractors. Simply figuring out how much to save is the first issue, but the larger issue is ACTUALLY separating funds from your regular checking account so you don't spend these funds that should go to the IRS every quarter. We built Painless to automate what (admittedly) should be a "routine transfer" but often isn't and becomes a problem at the end of the year when we owe a huge bill that sucks to pay outright. The convenience of automating money movement is the big piece of what we do for our users. Hope that helps!

ents 10y ago

"Confirm Password must contain an uppercase and a lowercase letter, a number, and must be at least 8 characters long" C'mon.

character 10y ago
strict password requirements are usually a requirement for regulated businesses (such as those creating back accounts). Having a secure password for an account that manages your money is a good thing!
- acallwood 10y ago
  +1 =)
- strictpassword 10y ago
  But it rejects some of the best passwords practice, Diceware http://world.std.com/~reinhold/diceware.html http://world.std.com/~reinhold/diceware.html
fencepost 10y ago
Upper, lower, number, 8+ characters is actually a pretty loose requirement. My standard spiel when I'm telling people the password requirements after giving them their temporary passwords is "You're going to have to change your password when you first log in. There are 4 types of characters: Upper, Lower, Digits and Punctuation; you're going to have to have at least 3 of those 4, it doesn't like your first name, it doesn't like your last name and your password must be longer than 8 characters. I recommend selecting 2 unrelated words that you can remember, changing at least one letter in each to uppercase, throwing a digit in before, after or between them and adding punctuation somewhere else."
tumblen 10y ago
The real problem is banking sites that say, "Your password must be less than 12 characters and must not include symbols."

tdicola 10y ago

Just to be the devil's advocate, what happens if this company goes bust and your tax money is stuck in their account and inaccessible? The IRS isn't going to accept some sob story about not having access to funds... I'd be very leery about putting an intermediary between my sole source of income and myself. Is there insurance? How do you know they're trustworthy?

tommynicholas 10y ago
The accounts are FDIC insured and held in an accredited bank according to the website. $250k of insurance per account.
- tdicola 10y ago
  Ok but who owns the account and how do you know they're trustworthy? I could open a bank account anywhere and ask you to start depositing your income there. You have to trust that I'll give it back to you though--FDIC won't apply.
  - tommynicholas 10y ago
    Each account is a separate, FDIC insured account held with Lincoln Savings Bank. Your account is your account, there is no money pooling done. Painless 1099 is a front end to that account to let you do various things automatically and easily. Does that make sense? I suppose technically just like your accountant could steal your money because they have access to your accounts there's some risk but not really.
    - tdicola 10y ago
      Perfect, thanks for clarifying! Yeah it wasn't really obvious if this is an account Painless 1099 owns or the user owns. Thanks!
      - acallwood 10y ago
        Hi gents - a little late to the party here, but yeah, tommynicholas is absolutely right here. We help you open an account with our bank (Lincoln Savings Bank) and your money goes into an account in your name at LSB. If anything were to happen (heaven forbid) this cash is secure and guaranteed. If anything, you could make a solid case about a bank going out of business before anything. But all jokes aside, before building anything, security of funds is something we made sure our users feel really good about and we found a great partner to make sure your accounts and deposits are insured!

elliotroth 10y ago

fantastic idea. I consistently get screwed over at the end of the season for not preparing my taxes correctly. I'll be signing up.

acallwood 10y ago
Awesome to hear! We can't wait to have you!

jordanlev 10y ago

Comment about your marketing website: I browse with cookies and localStorage disabled, and when I visit your site it's completely blank. I understand that if I were to create an account, log in, and utilize the functionality of your app that cookies (and/or localStorage) would be a requirement, but I don't understand why the marketing content wouldn't show up at all.

hangoverhammers 10y ago
Solid find! Sorry for the issue you're having - we haven't seen this yet. We're running on Angular 2 and it looks like our auth, which requires cookies, is causing a crash. That's why you don't see any copy. We'll look into and/or report this to the Angular team. Thanks again! Very helpful!

baus 10y ago

A company doing something similar closed down last year: https://www.crunchbase.com/organization/zen99 https://www.crunchbase.com/organization/zen99

phonon 10y ago
Probably worth reading then-- https://medium.com/@tmzier/why-zen99-shut-down-a368371eb9dd#.ms7xju1dd https://medium.com/@tmzier/why-zen99-shut-down-a368371eb9dd#...
CPLX 10y ago
Perhaps they still exist, but the internet exceeded the number of available slots for startups with the word Zen in the name and they disappeared from view.
acallwood 10y ago
Hey guys! We're pretty familiar with the zen99 crew. For the most part, they were thinking about the same world as we are, but were tackling the problem a little differently. I think as founders, we have a really bad habit of pretending out competitors are stupid and operating as if they didn't know what they were talking about. That's rarely the case in general, and certainly not the case in this instance. Tristian (CEO of zen99) wrote an awesome post mortem, which I think was just shared below, and it's been really helpful for quite a few of us in the fintech space. Continuing to read and build on the lessons that companies have learned before us is a big part of why we built the product we did as opposed to trying to replicate zen99 and hope it worked out for us. We really appreciate this thread and you guys pointing out the similarities between our companies!

mrchess 10y ago

Fwiw I use and am actually quite impressed with Quickbooks Self-Employed version, and I've never had a problem with 1099 management. They keep tax estimates for you in the upper-right corner so you always know around how much you will need to pay, and you can pay the quarterly taxes online through them via. eftps. While they don't auto-save for you, I'd argue you should be responsible enough to do this yourself. They were a bit buggy when they first released, but their support was pretty good to me and they have fixed all issues I've reported. That being said, I'm not sure what this product can do for me over what I'm using now. Actually, I just looked at their FAQ and they don't track expenses or anything... things you can do with Quickbooks. Now I'm not trying to down this company, but just am pointing out to others that a mature version of this product already exists (minus the auto-save) and that I can't identify "why" I should switch over to Painless.

acallwood 10y ago
It's really the automation part that we drilled down on. To be honest, we love QBSE and don't consider them competition as much as we see them as a compliment to what we do. Tracking your tax obligation is great, but we take it a step further and just automate the cash that should be transferred out of your every day account and into one that you're less tempted to spend from. For a large portion of our 1099 peers, we see that the savings aspect is either A) hard, or B) a process that, if automated, could free up time to actually focus on work rather than having to actively (and manually) manage your taxes.

trentbigelow 10y ago

I think Painless1099 IS on to something: taxes for freelancers are a pain, and no one wants to learn how to do it. However, I think asking some people to change their bank accounts is going to be resisted. Also, waiting an additional 2-3 days to access your money when you're living paycheck to paycheck (as most independent contractors are) is not an option. My cofounders and I are working on solving this same problem, however we took a different approach. (https://www.track.tax https://www.track.tax) Track.tax creates a savings account in the user's name (same as Painless1099), but we also connect to the user's existing financial accounts to calculate taxes. Our chatbot (named Aida) communicates via SMS to ask simple questions to hash out the gory details. This means: 1. You can get paid via check, cash, or any other way you (or your clients) would like. 2. Money comes into your account first, then taxes are calculated and moved to your tax savings account. 3. Saving for taxes is as simple as responding "yes" to a text. We'd love your feedback, and any comparison (strengths/weaknesses) you see between us an Painless1099. Although we know solving this problem is really worth it, we'd greatly appreciate honest additional feedback from you guys, so feel free to text "HN" to TRACK (87225) and we'll give you a full year on the service!

acallwood 10y ago
Love what you guys are doing and would love to chat sometime, Trent! hello@painless1099 will do it if you're interested!

DonutATX 10y ago

Save 50% of everything you earn as a 1099er. How hard is that?

icodestuff 10y ago

Does the account earn interest? Right now I have an Ally savings account I transfer a percentage of my revenues every two weeks, so I'm earning 1% on my tax bill. It's small, but not irrelevant.

acallwood 10y ago
Currently these accounts do not earn interest. This may change in the future, however!

antjanus 10y ago

Oh man, i wish this had existed 5 years ago when I first started contracting. Estimating my taxes, doing withholdings, etc. was just a nightmare for me. I might look into this if I go back into contracting at any point. Really cool! :)

rwhitman 10y ago

A tool that does automatic withholding of business deposits in a savings account for taxes is something I've been dreaming of for a while, to the point where I even sat down for a bit to see if I could cook up my own tool to do it. Alas banks do not exactly go out of their way to expose a money transfer API... This sounds exactly like what I wanted.. but I don't know if I want to be the early adopter guinea pig for something that involves setting up new bank accounts and automatically routing my finances around. I was kind of hoping my bank would eventually build conditional features into the automatic transfer / bill pay, as I'd much rather keep all my cash within my banking institution rather than sending it to an unproven 3rd party. Either way, I will be watching this closely..

acallwood 10y ago
Thanks for the feedback! FWIW, with Painless, your money is always accessible to you as it's in an FDIC Insured savings account. If (heaven forbid) we're not around in the long term, your cash is insured up to $250,000 and your new savings account is in a well-established financial institution at Lincoln Savings Bank. Really what we've done is use existing infrastructure to automate transfers that you'd be making manually, whether between two accounts in your existing institution or two accounts at separate ones.

toddh 10y ago

Why not just send in the taxes as you receive payment? Like salaried people do?

joshmn 10y ago

Hey, just an experience thing. Looking at the "fees I wouldn't pay with 1099" I didn't read all the copy (I'm guessing 80% of us don't); I thought I'd end up paying those fees. Might want to make it more obvious with a classic strikethrough, or something. :)

jMyles 10y ago

This looks like nearly the tool I need: what I'm really looking for is a program that allows me to keep track of deductions and their reasoning. Also, some kind of facilitated back-and-forth with a CPA will be amazing?

acallwood 10y ago
Hey thanks for the feedback! We're building a small network of CPAs to allow you to get feedback in real time on some of our more nuanced tax question. Expenses and deductions you can expect to see down the road as well!