Intuit Relieves Tax Woes of Drivers, Rabbits, and Freelancers
Crowd Companies founding member Intuit provides business and financial management tools, such as QuickBooks, TurboTax and Mint.com, to consumers and businesses. In Fall 2014, Intuit introduced a new product, QuickBooks Self-Employed, which aims to simplify the financial lives of collaborative economy workers, such as Lyft drivers, Airbnb hosts or TaskRabbits, along with other types of independent contractors.
In the United States and around the world the self-employed are a large and expanding population. A recent study revealed that there are currently 53 million freelancers in the United States, and Intuit’s own research projects that 43% of workers will operate as self-employed businesses by 2020. These workers are required to report their income from self-employment using form 1099, which has earned them the shorthand title, “1099 workers.” The ranks of these self-employed workers have swelled in recent years in part because more people are earning this type of income through the collaborative economy.
Intuit had products in its portfolio aimed at the self-employed, but the recent rapid growth of freelance workers prompted the company to explore the design of a specially-designed product under its flagship QuickBooks offering. However, in order to be successful, Intuit needed to understand the ways in which the self-employed community is different from the small business community that has traditionally used QuickBooks.
Freelancers, including collaborative economy workers, tend to have some unique financial management concerns and tax obligations. For example, they tend to use the same accounts for both business and personal expenses, which can be hard to disentangle for the purpose of tax deductions when April rolls around. In addition, they may be working as a “business” for the first time, and may be confused about or unaware of their quarterly tax obligations, let alone how to estimate or pay them. Many have other, more traditional employment, and do this gig or on-demand work to complement their income. Finally, they may be forfeiting huge deduction opportunities simply due to lack of awareness.
QuickBooks Self-Employed includes new features and functionality inspired by the real-life challenges faced by collaborative economy workers and other 1099 workers. For example, QuickBooks Self-Employed enables freelancers to:
- Import transactions from their bank and credit card accounts and classify expenses as business/personal in real-time or on a recurring basis, either from the web-based platform or using a mobile app
- Claim mileage deductions by entering miles traveled
- Estimate quarterly and annual taxes using actual income and deductions
- Build their Schedule C form automatically by auto-classifying their business
- Connect with TurboTax to make it easy to file; later this year, the product will also include a simple “click to pay” option for quarterly taxes
- Uber, Lyft and Taskrabbit are offering drivers and taskers a free version of QuickBooks Online Self-Employed to help them avoid the pain of sorting through a year of income and expenses to determine what needs to be considered for tax purposes
- Peers.org featured QuickBooks Self-Employed in their marketplace with a discount for members
- Stripe is enabling its marketplace customers, such as Kickstarter and Instacart, to offer their workers the opportunity to flow their income data directly into QuickBooks Online
- Groove and Intuit hosted a ridesharing tax support hangout in San Francisco for ridesharing drivers
QuickBooks Self Employed launched in beta in Fall 2014. Since then, the product has helped independent workers track over $50 million in business expenses. Promotional efforts with startups in the collaborative economy have also been effective for both Intuit and its partners.
In addition, Intuit found that those who started using QuickBooks Self-Employed were more likely to begin to use TurboTax as well, particularly once they realized the scope of their challenge and responsibility. Satisfaction among those who paired the two products has been extremely high.
Additional insights include:
- Self-identification/targeting: Members of the self-employed audience generally do not identify as small businesses. They should be addressed as individuals whose personal and business lives are very intertwined, not as being a small business or having a small business. This audience, “side-giggers,” is made up of people who want flexibility, who don’t want to be committed and who want freedom.
- Pain points: Quarterly taxes are a big pain point and source of confusion for the self-employed, to the extent that they even know about this obligation. This conclusion is supported by search behavior near quarterly tax due dates, input from accountants with self-employed clients and product support requests. Yet, few appear to actually pay estimated quarterly taxes. Among the newly self employed – a group that includes so many of the workers in the on-demand economy – there is almost as much confusion about annual taxes and deductions.
- Time is money: Small business owners build businesses to make money. The self-employed use their time to make money. Time is the only thing they can control, so they constantly evaluate how they can optimize and monetize it.