
Show HN: Painless1099 – automated self-employment taxes - deuce42x
https://painless1099.com/home
======
meesterdude
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
> 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
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
FWIW, the second account WOULD be out of sight out of mind. you would just
deposit into it, and then money would flow from it into your actual bank
account via the service. Obviously, if you can get direct deposit, it works a
lot better and you don't need such a setup.

But the very nature of 1099 means you could be working with a variety of
clients, and are more likely to receive payment via check or other one-time
method, versus direct deposit which is more common for W2 employees. I can't
tell you how many one-off gigs i've had, or on/off where they just want to
send me a check and thats the last i hear from them for months or ever; i'd
get laughed at if i asked for direct deposit. (and did by a long term client:
they like writing out checks)

If you want to actually solve this for 1099ers, your going to have to do more
than just what works for a subset of users; and supporting checks absolutely
needs to be on your roadmap at some point, at minimum. Otherwise... I don't
think you really have any sympathy or understanding of the very field that
you're trying to solve a problem for.

~~~
deuce42x
> If you want to actually solve this for 1099ers, your going to have to do
> more than just what works for a subset of users; and supporting checks
> absolutely needs to be on your roadmap at some point, at minimum.
> Otherwise... I don't think you really have any sympathy or understanding of
> the very field that you're trying to solve a problem for.

Totally agree here. We're working on getting some folks running on the current
build & making sure it's stable, but we've already identified a couple options
for remote check capture to be included when we get to building out native
mobile. It's definitely key to serving a large portion of the total market.

------
deuce42x
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!

------
pumblechook
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.

~~~
character
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.

------
mrchess
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
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.

------
melvinmt
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
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!

------
gricardo99
If they could take care of also making quarterly IRS payments, so I avoid the
underpayment penalty, this would be quite nice.

~~~
tdicola
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/)

------
jordanlev
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
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!

------
rwhitman
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
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.

------
jly
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.

------
bitdeveloper
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
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.

------
dd36
Could also be useful to partners in an LLC that can't be paid by W-2.

Smart idea.

~~~
lojack
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
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.

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

~~~
buckbova
Been using free tax usa (www.freetaxusa.com) for a decade now. Just works.

~~~
acallwood
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.

------
Ajdeanmny
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
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
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).

------
tdicola
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
The accounts are FDIC insured and held in an accredited bank according to the
website. $250k of insurance per account.

~~~
tdicola
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
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
Perfect, thanks for clarifying! Yeah it wasn't really obvious if this is an
account Painless 1099 owns or the user owns. Thanks!

~~~
acallwood
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!

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

------
ents
"Confirm Password must contain an uppercase and a lowercase letter, a number,
and must be at least 8 characters long"

C'mon.

~~~
character
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!

~~~
strictpassword
But it rejects some of the best passwords practice, Diceware
[http://world.std.com/~reinhold/diceware.html](http://world.std.com/~reinhold/diceware.html)

------
joshmn
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
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
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!

------
antjanus
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! :)

------
icodestuff
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
Currently these accounts do not earn interest. This may change in the future,
however!

------
gk1
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
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
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!

------
baus
A company doing something similar closed down last year:

[https://www.crunchbase.com/organization/zen99](https://www.crunchbase.com/organization/zen99)

~~~
acallwood
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!

------
elliotroth
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
Awesome to hear! We can't wait to have you!

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

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

