Independent Workers Facing Tax Hurdles Need Fintech Platforms to Provide Clarity

It's April, and millions of people in the U.S. — independent workers and gig workers in particular, and self-employed small business owners in general — are still paralyzed by the daunting task of filing their taxes. Preparing to file taxes is time consuming enough for most workers, but when you also have a side hustle or work independently, it can be a nightmare.

According to research done by IPX1031, 33% of people will wait until the last minute to file their taxes. Most give the reason as "too time-consuming" for their procrastination, and 22% say it's too complicated and stressful.

I think we can all agree that taxes are much more complicated than they should or need to be, and they only get more complicated as time goes by. There are currently more than 10 million words in the U.S. tax code, which adds up to around 143 novels in length!

We all dream of simplification of the tax code, but it's not likely to happen any time soon.

The best thing the self-employed can do is to be diligent about tracking business expenses, deductions, and income. And if they haven't been diligent, they just need to get started. There is no perfect day to start tracking finances.  Today is always a good day.

At Tight, the day after Tax Day — that's April 18 for 2022, by the way — is the second-busiest day of the year. The busiest is always January 1st.

The day after filing their taxes, people seem to be inspired to find a better way to track their income and expenses — and find all those tax deductions buried somewhere in the tax code and their various accounts.

With so many people doing gig work or accepting payment for products and services on various platforms and through a multitude of apps, things get even more complicated.

The 1099s that payment platforms supply are not always straightforward. Sometimes fees have been deducted from the amount reported, so it's up to the receiver to go back to the platform or to their bank and figure out what the actual income amount was and whether there were fees that can be claimed as deductions.

If payment platforms were smart, they would provide more clarity around income, fees, and expenses for business owners — which would be more profitable for everyone. Every hour a self-employed individual spends figuring out taxes is an hour they are not generating income that would go through the apps.

If a platform provides all the tax information a gig worker needs, without having to spend hours tracking down figures and reading tax code, both the workers and the platform would profit. Simply put, people can do more income-generating activities that drive revenue for a platform if they are not spending their limited number of working hours on administrative work.

And it's not hard for a payment platform to provide these features. All they need is to have Tight's API connected so their customers can automatically derive the tax benefits afforded to most small business owners right through the platform they’re already leveraging for their business income.

A lot of fintech platforms are still young and heavily focused on customer acquisition. However, growing the bottom line doesn't just happen through having more customers. How the platform serves those customers can have an extraordinary impact on profit. And, by the way, giving customers a coupon for a tax service is not going to save them much administrative time.

Fintech platforms need to start optimizing how they serve the self-employed (i.e. small business owners) so those customers can focus on maximizing their earnings.

At Tight, we're powering many new fintech ventures designed to help independent workers and SMBs bogged down by administrative work, and I'm excited to see these ventures launch throughout 2022.

Join us by empowering your customers, members, or affiliated independent contractors to easily manage their business finances and have year-round clarity about their income, expenses, and taxes by embedding the Tight API into your platform.