#makeitpainless

[painless1099]

Freelance Hacks: Preserving Your Tax Season Sanity

With tax day just around the corner yet again, you’re probably wondering why taxes have to be so dang complicated when you’re self-employed. The truth is...it doesn’t have to be. We’ve put together a short list of things to be thinking about heading into tax day to take some of the stress out of filing your return.

Update your calendar – there’s a new tax day this year

Tax day is typically April 15th, however it’s not uncommon for this to shift around from year-to-year depending on weekends and holidays. Because it happens to be on Sunday this year, and Monday is Emancipation Day in DC, the final day to cover any unpaid taxes and file your return is Tuesday, April 17th.

A little prep work goes a long way

Being self-employed means there’s ample opportunity for deductions on your return. The best way to make sure you’re not leaving any money on the table is by doing a little prep work before you get started on your return - especially if you don’t have the cash to pony up for an accountant. Most importantly, you’ll want to make sure all of your expenditures throughout the year are accounted for. As you’re organizing all of your expenses, using a tool like 99 deductions is a great way to get a feel for which deductions you qualify for and how you should sort your expenses to maximize your return. If your not already, taking advantage of tools like QuickBooks Self-Employed for categorizing expenditures and MileIQ for logging mileage can help make this process a lot less stressful.

Make sure you get something in by Tuesday

If sifting through a years worth of expenses is taking a little longer than you had planned, don’t panic! You can always file an extension with the IRS to buy yourself some time, which is super easy to do through most tax software. Keep in mind that this will only extend the amount of time you have to get your paperwork to the IRS, you will still incur interest on any unpaid taxes. If you find yourself needing more time and coming up short, take a look at this quick step-by-step guide on what to do if you can’t cover your tax bill.

Once you’re ready to knock out your return, it’s a good idea shop around a bit to find the e-filing software that best suits your needs. While TurboTax is super easy to use and provides great support for any first time filers or folks who may want some help navigating deductions, options like TaxAct and TaxSlayer offer a similar experience at a more economic price point. If you need a little help finding the ideal platform for you, check out this breakdown on the best tax software of 2018.

Don’t forget about this year’s tax obligation

If you find yourself doing the last-minute tax day scramble, or even if you’ve already filed your return – don’t forget that April 17th is also the deadline for the first round of quarterly estimated tax payments. The last thing you want to do is start 2018 with a missed payment penalty. Check out our guides on making federal and state quarterly tax payments for help with submitting your estimated taxes.

In closing, tax season doesn’t have to suck. Staying on top of your taxes throughout the year saves you time, money, and sanity when tax day rolls around. If this year was a bruiser for you, start looking into tools that can automate the minutia around managing your 1099 obligation. If you ever have any questions about how Painless and other tools can simplify managing your taxes, or you’d like some other tips on navigating the world of self-employment – drop us a line via the chat portal on our home page. If you’d like to create an account to start automating your tax obligation, you can do that there too. We’d love to have you.

Happy Taxing!

--

Dear Reader,

This is meant as a guide, not professional financial or tax advice. If you have any questions about your taxes or your deductions, hire an accountant or ask a tax professional.

Love,

Painless1099’s Lawyers

[painless1099]

PainlessBENEFITS: Self-Employment Benefits Made Easy

Having a system in place for managing your benefits and the financial obligations that come with being self-employed is a crucial part of building a stable career. That’s why we designed your Painless account to be the hub for all of these obligations. We’re continually focused on making it easier to manage these responsibilities from your Painless account and thanks to your help, coupled with a few of our own personal experiences, we’re stoked to announce a new extension to the Painless name. PainlessBENEFITS makes it easier than ever to create your own self-employment portable benefits package with our curated list of benefits providers as well as intuitive guides for linking those plans and policies to your Painless account. The preferred providers listed are not only the providers a majority of you already know and love, but are also the companies focused on catering to the needs of the self-employed workforce.

We’ve put together a quick summary to give you the rundown on each recommended platform and their offering:

MetLife

When it comes to providing your family with the financial protection they need for if the unthinkable happens – you need to find a provider you can trust. That’s exactly what MetLife is all about  – helping you navigate life’s twists and turns without dealing with the hassles you probably expect from a large financial services company. With MetLife’s Rapid Term life insurance, you can easily create the policy that fits your lifestyle.

Honest Dollar

With the leverage of parent company Goldman Sachs, Honest Dollar has quickly become the go-to provider for Individual Retirement Accounts. They’ve made comparing plans super easy so you don’t need the help of a financial advisor to know you’re choosing a plan that’s right for you. Once you’re set-up, making contributions is a breeze and you can easily schedule recurring deposits for a fully hands-off experience.

Stride Health

Stride Health was built for independent contractors and part-time employees and is solely focused on finding you the best coverage for the best price. Stride works with over 200 major carriers as well as hundreds of local insurance companies to guarantee that you’re getting the lowest price for a plan that covers your doctors and prescriptions. Finding coverage through Stride’s user friendly interface can be done and minutes, and the best part is that using the Stride Health platform is completely free!

For more information on each of these providers and their offerings, check them out on the new PainlessBENEFITS page.

We’re going to continue adding partners and integrations that make building your portable benefits package as easy as possible. For us, part of that process is being your go-to resource for all things self-employment benefits. If you’re looking for a benefit that’s not already listed on PainlessBENEFITS, leave us your email and a quick outline of what you need here. We’ll drop you a line with recommendations and any other necessary info.

[painless1099]

Creating Your Self-Employment Benefits Package with Painless1099

Jumping into the world of working for yourself can be tough, especially when it comes to the ever changing financial landscape of self-employment. Gone are the days when you had access to employer sponsored benefit packages and protections like workers comp and unemployment that are put in place for US workers. It’s incumbent on you to make sure you have decent health insurance, some kind of retirement savings, money set aside for taxes, and some cash in the coffers for any unexpected emergencies.

If reaching financial stability feels like it’s damn near impossible - you’re not alone. With 20% of freelancers completely uninsured, only 8% of folks making contributions to a retirement plan, and 40% of freelancers not putting any cash into savings, it’s easy to see that the current structure of benefits and protections is failing the fastest growing segment of our workforce. Luckily, this problem isn’t going unnoticed. Etsy recently released a white paper that outlines the need for an overhaul to our current system of financing and managing benefits for folks who are self-employed and Senator Mark Warner just introduced legislation to fund testing for building a portable benefits package for the independent workforce. While we’re stoked to see this conversation being held on the national level, legislative solutions and policy conversations aren’t likely to effect real change until 2018 or beyond – which doesn’t help the folks who need a better way of managing their benefits today.

We see tax withholding as the first frontier when it comes to managing your benefits and built Painless to the be the core hub for all of your financial obligations. Interestingly enough, Etsy’s white paper suggests that the best time to fund and manage benefits when you're self-employed is at the point of tax withholding. This means having a system that automatically sets money aside for taxes as well as retirement, and insurance payments and then makes sure that money is sent to the appropriate place on the appropriate date. Such a system would allow self-employed workers to use the “set it and forget it” approach to benefits that’s used when working as a W2 employee of a company.

Our mission here at Painless is to continue building a platform that gives you the ability to easily manage all of your benefits while creating the financial stability you need to build a stable career doing the work you love. As we see more and more Painless users linking things like their Betterment Safety Nets and WiseBanyan SEP-IRAs to their Painless accounts to automate the process of managing their benefits, we’re focused on building offerings and integrations to make this process as seamless as possible.

To make sure we’re focusing on the things that matter most to you, we need your help! We’ve put together a short survey to get a better understanding of what benefits related platforms you’re already using and which ones would be most valuable for you be able to manage within your Painless account. If being able to put managing all of your benefits on autopilot is interesting to you, please take a second to give us your feedback!

[painless1099]

Estimated Tax Fail? Help is Here!

Self-employed freelancers have a special place in the eyes of the IRS—one that makes them susceptible to higher levels of scrutiny than your average W-2 worker, especially during tax season. With your financial situation laid bare on your tax return, it’s impossible to avoid the ever watchful eyes of IRS agents, so if you’ve done something like inadvertently not paid estimated taxes for a year or more—otherwise known as an #EstimatedTaxFail—it’s safe to assume that you’ll soon be receiving tersely worded tax notices from the IRS. If you do, don’t despair, but don’t delay your response either. Here’s what to do to make good on your unpaid taxes.

Face the reality—and the error—of your ways. While it might be tempting to hope that your #EstimatedTaxFail goes undetected or just blows over, it’s best to acknowledge the reality that it won’t. Be proactive and acknowledge your mistake. Doing so will not only prove that you’ve got this adulting thing down cold, but it will also make the IRS (a little) more forgiving (maybe).

Still living in a past tax year? Get current on filing your tax returns. Sure, sometimes it’s fun to relive the past, but not when it involves your unpaid taxes. If you haven’t paid your estimated taxes for a few years, it’s time to get busy and prepare to file taxes not only for the current year but as far back as the previous six years. This will require collecting and organizing all of your available records, including 1099s, receipts, invoices, and other relevant documentation, then completing past due tax returns, one by one.

Prepare to pay the piper—a.k.a. Uncle Sam. To this point, all your #EstimatedTaxFail has cost you is a little bit of time and maybe a trifle of aggravation…here’s the part that is likely to hurt the most: you need to catch up on your current year estimated tax payments as quickly as possible. Taking swift action to pay your tax bill will not only reduce any penalties or fines that may be levied on previous year delinquencies, it will also send a signal to the IRS that moving forward, you intend to be compliant with making the required quarterly tax payments.

Take action to reduce penalties. If your #EstimatedTaxFail extends back a few years, then you’ll need to take care of any late filing and payment penalties that you’ve racked up. If there were extenuating circumstances which contributed to your lapse in tax payments (i.e. Reasonable cause which, according to the IRS, exists when a taxpayer demonstrates that he or she exercised ordinary business care and prudence in determining the tax obligation, but nevertheless failed to comply), you may be able to ask for a penalty abatement. In order to obtain abatement, you must make a sound argument for reducing penalties. A special note for first-timers! You may be granted a first-time (and one-time) penalty abatement waiver if you only failed to file taxes this past year and if you have a past history of compliant behavior.

Create a plan to pay back taxes. Once you determine how to handle late payment penalties and non-filing fees, you need to plan how you are going to pay the IRS the tax money you owe. If you can’t pay it upfront, you can ask the IRS to make other arrangements based on your documented ability to pay. While the IRS may seem totally unforgiving in the face of an #EstimatedTaxFail, the agency would rather work out a payment plan with you than be out of pocket altogether. So if you’re willing to work out a plan, chances are, they will be, too.

There’s no doubt that sooner or later an #EstimatedTaxFail will get you noticed by the IRS. That’s why it’s best to own the situation and take action to correct your delinquent tax payments as soon as possible. If you have several years of back taxes to pay and your tax situation is beyond what you can handle on your own, working with an experienced CPA can help alleviate the stress that often comes with those notifications from the IRS.

Jonathan Medows is a New York City based CPA specializing in taxes and business issues for freelancers and self­-employed individuals. He offers a free monthly email newsletter covering tax, accounting and business issues via his website, www.cpaforfreelancers.com, which also features a blog, how­to articles, and a comprehensive tax guide for freelancers.

[painless1099]

The Freelance Isn’t Free Act is now NYC law. Time to bring it home!

Freelancers in NYC got a huge win on last Monday as the Freelancing Isn’t Free Act officially went into effect. In August of last year, we posted about the steps you can take to minimize late payments and avoid nonpayment from flakey clients. Shortly after, our good friends at Freelancers Union started pushing for new legislation in New York City that protects freelancers by providing legal recourse if you end up with a deadbeat client who refuses to pay you for your hard work. Fast forward a few months, and the Freelance Isn’t Free Act is now the first legislation of it’s kind that directly protects freelancers hard work! This is a huge win for not only freelancers in NYC but freelancers everywhere, as this legislation will hopefully set the precedent for cities and freelancers across the US. Sign the petition to help bring the Freelance Isn’t Free Act to your city and make sure you’re always protected by having a contract in place with each of your clients.

As a quick recap, we picked out some of the pieces from the bill that we are stoked about and wanted to share.

1) Any person or company who hires a freelance working must execute a written contract detailing the scope of work being performed, payment method, and when payment is due.

2) Payment in full will be required within 30 days of the completion of the project or of the payment due date, whichever is later.

3) If there is a breach of the above terms, the bill could be enforced by the Office of Labor Standards or such entity as the mayor may designate - freelancers would no longer be left to fend for themselves!

You can learn more about your newly afforded rights as a freelancer here.

Huge thank you to the Freelancer’s Union for spearheading this effort and congrats to you for pushing to make sure that it became law. We think NYC Mayor Bill De Blasio put it pretty well, "Freelancers aren’t free. It's now the law in New York City that they be paid on time, have the written contracts they deserve and have the tools to defend their rights."

[painless1099]

Community for Sanity’s Sake

I was maybe a year out of school when I found myself broke, running a startup that wasn’t making money, and wondering how I was going to pay my rent that month. Not even a week later, I found myself face to face with my first client. Granted, I didn’t know he was my first client at the time. He was just a buddy starting a new gig who needed a website and for some reason decided coming to me for said website made sense. In his defense, I’d cofounded a web company by then, so I probably seemed like the right person to ask. I honestly can’t say I was qualified by any means to make the internet for anyone, but he asked, and for some reason I committed to the work. I made a decision, accidentally ended up doing client work, and haven’t really looked back since.

Freelancing is a fickle beast. To outsiders, what we do seems like such a sexy way of life. We don’t have a boss, we go on vacation when we want, we can hang out at coffee shops all day or work in our pajamas from home. Yeah, right. Some of us dive into doing client work on purpose while others of us stumble into work, but regardless of how we get started, we all know this: freelancing is hard. Full stop. Between managing clients, expectations, and our workload, it’s a fulltime job and leaves very little time to clear our heads or take a mental break. For the longest time, I embraced the idea of being a lone wolf and eating what I killed, but more recently I’ve found that hunting with a pack is great for the belly and healthy for the mind.

For that first project, I had no idea where to start, so I did what any self-respecting entrepreneur does. I called someone smarter than me. Fortunately for me, that smarter person was a talented designer, knew enough to hack together a Wordpress site, and was looking for new clients. This was my first experience with how giving the freelance community can be. Sure, I reached out to a friend, but more importantly, I built a relationship with a peer and it was possible the best thing I did for my career in doing client work.

Over the years I’ve continued to do strategy, brand, or copy work for clients or as a speaker talking about innovation and entrepreneurship. I can attribute most of my work to referrals from other freelancers or previous clients and it’s debunked this idea that freelancing is a zero sum game and that there’s only room for one player in any given game. What I’ve really learned is that most of us in the freelance community are not only trying to grow our network of potential referrers for work, but we’re also looking for that group of peers to trade war stories from the trenches. We’re looking for a community to belong to and for those of us with the shared experience of working for ourselves, this is one of the strongest bonds that exists in the professional world. That bond is something I took for granted when I started, but a piece that I’ll never let go of now.

Beyond freelancing, I’ve also spent a fair portion of my time building products and tools for people like us. Coffitivity, for instance, plays the sounds of the coffee shop so we can feel that boost of productivity even when we’re not in our favorite cafe. My most recent project, Painless1099, handles taxes for freelancers so we can focus more on work and stress less about taxes. The commonality in both of these projects is that their growth can almost solely be traced back to that sense of community I mentioned. Coffitivity went from 120 visitors the first day we launched in 2013, to 49,000 visitors the second day. The growth was organic and largely based on word of mouth. The tight-knit crew of creatives and technologists we ran with shared the site with their friends, and their friends shared it with their friends, and so on and so forth. In my experience, we (freelancers) are the fastest group to share tips, tricks, and information with each other and it’s inspiring to be a part of. Interestingly enough, Painless1099 stemmed from the millions of global users we have at Coffitivity. Again, the highly engaged community was quick to plug in and share the bits and pieces of their day that could be improved. From the conversation we had with the “Coffitivity Crew”, we were able to identify taxes as a major pain point for most of us, and we started building a product that tackled the problem. Yet again, friends told friends who told other friends and we had our first cadre of beta testers and volunteer guinea pigs. The feedback and enthusiasm has been phenomenal and makes me proud to continue to be a part of the freelance world.

If you take nothing else away from my ramblings, I want you to take this one piece of advice: Find your people and grow with them. Seek out the people who support you and your work. Rely on them, ask them questions, turn to them for advice, lean on their shoulders after a hellacious day. That’s the only way to survive in our world and it’s the best way to hone your craft. Freelancing is only as hard as we make it and if you’re diligent about finding peers who not only support you, but also push you, you’ll be so much better for it. I was fortunate to learn this early and it’s possibly the largest contributing factor to me being able to continue in the world of self-employment without losing my mind. It’s awesome to be a part of and I’m glad to be here. I think I’ll stay for a while.

Ace Callwood is the co-founder and CEO of Painless1099, a smart banking solution that automatically withholds taxes for freelancers. Prior to Painless1099, Ace co-founded Coffitivity, an ambient sound website and app that was named one of TIME Magazine’s Top 50 Sites of 2013. Ace is a graduate of Virginia Commonwealth University and lives in New York, NY.

[painless1099]

Why Automation is Essential to Any Freelance Career

Being a freelancer comes with a laundry list of business administrative duties. While you may have gotten into freelancing to focus on delivering your best work to clients, doing daily upkeep on your business can add a ton of extra pressure!

In order to build a successful career as a freelancer, you’ll need to create systems to be able to manage all of these tasks as efficiently as possible. This means focusing on the work that you do best and outsourcing tedious tasks that require valuable time and attention. Luckily, new technology makes it super easy to automate a lot of the time consuming tasks that come with being a solopreneur. 

Managing the financial obligations that come with self-employment is an area where we as freelancers tend to get bogged down the most. Most of these responsibilities are things that the HR department would handle at a typical W-2 job – like tax withholding, setting up health insurance, and getting into some kind of retirement plan. It can be tricky to handle some of this stuff on your own. Luckily, companies like Honest Dollar and Freelancers Union have made it super easy for freelancers to find coverage and retirement plans that best fit their particular needs.

However, this is only half the battle. Making regular contributions to a retirement plan, covering monthly insurance premiums, and then remembering to set money aside for self-employment taxes can feel like a full time job all in itself. Throw in fluctuating income throughout the year and keeping up with your budget, juggling it all is, well, damn near impossible.

This leads to huge segments of the self-employed working without the benefits necessary to build a stable career. With 20% of freelancers completely uninsured and even more folks working without saving any money for retirement, it’s important to make sure you create a system that allows you to work with the coverage you need.

At Painless1099, we’ve found that automating the process of saving for and remitting payments for these financial obligations the best way to ensure that you stick to your budget. And we’re not alone! A recent white paper report released by Etsy shows that individuals are much more likely to save and fund their benefits when there is a system in place to allow them to “set it and forget it”.

Not only is this our motto at Painless1099, but we truly believe that this is the best way to manage your financial obligations and focus on the work that matters most. That’s why we’ve built a tool that automatically withholds a portion of your income for financial obligations.

In looking at which of these financial obligations is the most time consuming throughout the year, we realized saving for taxes is an on-going struggle for freelancers. With large portions of 1099 earners reporting spending upwards of 35 hours on taxes throughout the year, we decided to create a smart savings account that automatically withholds the percentage of your income that you need to save for taxes and transfers the rest – what’s safe to spend – directly to your personal checking account. It’s essentially the W-2 withholding but designed for your self-employment income.

Obviously taxes are only one piece of the puzzle. Being able to automate the process of saving for all of your financial obligations is where the true value is at. That’s why we recently launched PainlessBENEFITS. Now you can easily create your own self-employment portable benefits package and automate payments for all of your financial obligations. Once you have everything set up, you can go back to work without the stress of keeping up with a handful of due dates each month.

There’s nothing easy about being a freelancer, but the reward is well worth it. That’s why it’s so important to make sure you’re always working as efficiently and have the benefits in place to maintain a stable career.

[painless1099]

What If I Can’t Cover My Tax Bill?

Tax day takes on a whole new meaning when you’re self-employed. When you’re the employee of a company, you simply file your returns and cross your fingers that you get more back than last year. When you’re self-employed, it means pulling together all of your receipts from the entire year, making sure you’ve made all of your quarterly payments, and crossing your fingers in hopes that you’ve saved enough to cover your bill. Any miscalculations along the way could lead to getting blindsided by larger bill than expected on tax day. Due to a major lack of resources available to help folks who are self-employed manage their tax obligation, this year end surprise is actually more common than you may think.

If you find yourself coming up short on tax day, don’t panic! Take a deep breath, and follow these steps to keep the tax man off your front porch:

File your return

The absolute worst thing you can do if you don’t have enough cash to cover you bill is to not file your return at all. For each month your return is late, you’ll automatically be charged a failure-to-file fee of 5% percent of what you owe. This penalty won’t exceed more than 25% of that total amount, but I think it goes without saying, having to pay a dollar over what you owe sucks. The best thing you can do is file your return on time and pay as much of the obligation as you possibly can. You’ll still have to pay a failure-to-pay penalty of 0.5% of the amount owed each month but with at least paying some of that obligation, this penalty will be a lot more palatable.

Apply for the IRS installment agreement

If you know you’re going to need a little bit of time to pull together some cash, the IRS allows for you to make monthly payments through their installment agreement. As long as you’ve already filed your return and owe less than $50,000 you probably qualify, however, there are still some fees and penalties associated with this method. Depending on the how you choose to actually remit cash to the IRS, you’ll be charged a setup fee ranging between $31 (direct debit - online payment agreement) and $225 (regular installment agreement). You’re also still on the hook for late payment penalties, but with the acceptance of your installment agreement this will be cut back to 0.25% of the amount owed.

Apply for an offer in compromise

If you experienced a financial emergency or simply don’t have the means to cover your tax obligation, you can potentially settle your debt for less than the full amount owed. To do so, you’ll  need to submit an application for an offer in compromise. This is the IRS’s way of giving a fresh start to taxpayers who’re unable to pay or have run into special circumstance that hinder their ability to pay off their debt. The IRS is fairly strict on the applications they accept so you’ll want to make sure that you’re qualified before submitting your offer and paying the $186 application fee.

Know your obligation

At Painless1099, we know all too well how complicated calculating your obligation can be. Not to mention, any miscalculation can land you right back in the same position of not having enough saved to cover your bill. Current forecasting worksheets and tax estimators out there generally only focus on either the federal or state portion of your obligation, leaving you to with a half-painted picture of what’s to come. Not to mention just working through those resources alone can be so complicated that you’ll feel like you’re filing your actual tax return. That’s why we took it upon ourselves to build a one-stop-shop self-employment income tax calculator. Calculating your obligation only takes a minute or two and you’ll have everything you need to make an informed decision on how to best pay for you obligation.

Avoid ending up in the same position

The best way to make sure you don’t come up short on tax day is to separate some cash into a dedicated tax savings account each time you earn 1099 income. Having a dedicated account keeps your tax savings out of arm’s reach so you know you’ll have enough saved to cover your obligation at the end of the year. The good news is that we’ve made this super easy to do! Painless1099 is a smart savings account that automates this entire process. When you sign up, we’ll set you up with new savings account with our banking partner. As your clients deposit your income into your new account, we’ll automatically calculate and withhold the amount you need to set aside for taxes right in your Painless account. The rest, what’s safe for you to spend, is transferred directly to your personal checking account. It’s essentially the W2 withholding you’d have as an employee of a company, but it’s designed specifically for your 1099 income. Avoid that “Oh, Sh*t!” moment on tax day - automate your tax withholding with Painless1099.