Fintech Can Save the Self-Employed Billions of Dollars
Consumer bank statements are holding billions of dollars in tax savings for small business owners, independent workers, and gig workers — but most of it may never be discovered. That's because over 90% of these entrepreneurs commingle their personal and business spending, which makes unscrambling or what I like to call “uncommingling” their deductions at the end of the year a tedious process.
Is it legal to commingle finances like that? In most cases, yes. But one of the many disadvantages is that it complicates filing taxes.
As tax deadlines loom, many self-employed people who launched businesses in 2021 are starting to agonize over the daunting task of going through months of bank and credit card statements to find their business deductions. Some people have drawers full of receipts. Others plan to spend an entire day (at least) going through thousands of line items. And many have already resigned themselves to the fact that they might not get it done.
The newly self-employed may also not have a clear understanding about what deductions are available to them and how they work. Some think that taking a standard deduction or child deduction on their personal taxes precludes them from also taking business deductions. And, too often, people fear that taking deductions will attract an audit.
The self-employed often don't realize that the government created tax deductions as an incentive for individuals to create businesses.
The average business owner misses out on considerable tax savings every year due to a lack of knowledge and poor planning. Technology can help bridge the tax knowledge gap and save countless hours of deduction hunting.
A good deduction finder app scans and identifies potential deductions based on what the business does. A freelance writer may have deductions related to special editing software or in-person meetings with clients. A photographer may have deductions surrounding equipment rental, travel, and model fees.
Every type of business has unique deductions. The two commonalities with all valid business deductions are that they are ordinary (common in the industry) and necessary to run the business. The self-employed will often spend countless hours — while filling out their tax forms in April — trying to determine which expenses they can deduct.
It's best to track tax deductions on an ongoing basis, but if someone hasn't done it by year-end, it's still not too late to leverage artificial intelligence (AI). The second-busiest day at Hurdlr each year is the day after tax returns are due to be filed. People who missed the filing deadline on April 15 scramble to find a way to simplify finding deductions on April 16.
Our busiest day of the year is January 1, when all the folks who have been tracking their expenses get their year-end reports.
It's best to have separate accounts to keep business expenses separate from groceries and haircuts. However, many gig workers don't feel they do enough business to have a separate bank account, or they may worry about the fees some business accounts have.
A consumer bank account or personal credit card can do the job of isolating business expenses and income, but it needs to be used solely for the business.
For the 90% of business owners who currently commingle personal and business finances and will likely continue doing so, allowing a deduction-finding app or API to scan their accounts can streamline the job of identifying business income and expenses.
Along with our popular tax deduction finder app for the self-employed, Hurdlr also offers a tax API with six core components that our enterprise clients can leverage for their customers. It includes an income tax estimator, a tax deduction finder, capabilities for creating tax reports and forms, as well as preparing and filing taxes, categorization of transactions, and processing payments.
Plus, Hurdlr's API can seamlessly layer onto other platforms, allowing for ease of use and access. Read about some of our use cases and request access. We love to work with other Fintechs and organizations to help them serve their customers.
Here Are 16 Real Estate Agent Tax Deductions
Gig Economy Jobs Like Uber
As an independent contractor, driving for an on demand economy company gives you the ability make money with your extra time. Drive during your lunch break, at night, or during busy weekends – it’s up to you. However, these companies don’t only provide taxi-style services; companies like HopSkipDrive enable the driver to chauffeur kids to their activities around town, similar to a nanny. Other rideshare companies allow the individual to use their vehicle to make extra cash by renting it out or sharing a ride to work. If you have a car, then there’s an on demand economy opportunity out there for you.
Gig Economy Sites Like Airbnb
Make money off renting out your home, car, boat, tools, or almost anything with these sites like Airbnb. If you are out of town, make money while you are away. If you have free space in a home you live in, you can leverage that too. You can also choose specifically who you would like to rent to – say, a college sports fan. Check these hosting companies out below.
Gig Economy Delivery Jobs Like Postmates
Delivery jobs vary in their specific functions, but they all allow independent contractors like yourself to travel, create a flexible schedule, and deliver goods (as opposed to passengers). Jobs like Postmates give you the ability to work short gigs during times like your lunch break or at night, while others like Roadie allow you to use space in your car for somewhere you are already going to deliver a package.
Unskilled On Demand Jobs
If you’re looking to help someone out and make some quick cash, then this section is for you. These companies function as automatic lead generators: instead of finding gigs by yourself, these companies give you the gigs. If you enjoy working with people and assisting them with their problems, many of the companies listed allow you to do just that.
Gig Economy Jobs for Freelancers
Freelancing allows individuals to work wherever they want, whenever they want, with whoever they want. Freelance occupations range from bloggers, lawyers, chefs, stylists, caregivers, techies, and many more. If you like the freedom to travel and be your own boss, check out the companies below.
Rideshare Companies With Jobs Like Uber
As an independent contractor, driving for an on demand economy company gives you the ability make money with your extra time. Drive during your lunch break, at night, or during busy weekends – it’s up to you. However, these companies don’t only provide taxi-style services; companies like HopSkipDrive enable the driver to chauffeur kids to their activities around town, similar to a nanny. Other rideshare companies allow the individual to use their vehicle to make extra cash by renting it out or sharing a ride to work. If you have a car, then there’s an on demand economy opportunity out there for you.
Sites Like Airbnb
Make money off renting out your home, car, boat, tools, or almost anything with these sites like Airbnb. If you are out of town, make money while you are away. If you have free space in a home you live in, you can leverage that too. You can also choose specifically who you would like to rent to – say, a college sports fan. Check these hosting companies out below.
Delivery Jobs Like Postmates
Delivery jobs vary in their specific functions, but they all allow independent contractors like yourself to travel, create a flexible schedule, and deliver goods (as opposed to passengers). Jobs like Postmates give you the ability to work short gigs during times like your lunch break or at night, while others like Roadie allow you to use space in your car for somewhere you are already going to deliver a package.
Unskilled On Demand Jobs
If you’re looking to help someone out and make some quick cash, then this section is for you. These companies function as automatic lead generators: instead of finding gigs by yourself, these companies give you the gigs. If you enjoy working with people and assisting them with their problems, many of the companies listed allow you to do just that.
Freelance On Demand Jobs
Freelancing allows individuals to work wherever they want, whenever they want, with whoever they want. Freelance occupations range from bloggers, lawyers, chefs, stylits, caregivers, techies, and many more. If you like the freedom to travel and be your own boss, check out the companies below.
