Powering self-employment with fintech
Garrett Cassidy, Trezeo: being self-employed can be great
Being self-employed can be great. You get to do what you love and have the flexibility to set your own hours. But being your own boss introduces with it a number of other challenges that many have no experience with, find difficult or tedious, or are just unprepared to deal with; all of which distract from the work you love doing. For most, these tasks are the things that keep them away from their family and friends at evenings and weekends, or they get left to last minute, like the tax deadline.
Technology platforms and marketplaces, like UpWork, Uber and Etsy, are making self-employment a real option for many people, resulting in a rapid expansion in self-employment to almost 4.8 million in the UK.
However, whilst technology is enabling and driving the growth in self-employment, the self-employed are still being ignored by the mainstream financial industry. Consider something as simple as getting paid: cheques and cash are traditional methods of payment for the self-employed, but they then have to spend valuable time during their working day going to a bank branch to lodge their income.
The self-employed are getting used to apps and other tech solutions that help them get work, and make their working lives easier, just to then have to deal with their physical bank. In looking for a solution, the choice is generally between a one designed for consumers without the basic features they need as a business, or solutions designed for larger businesses that, quite frankly, have to have an accountant or a banker to navigate. The result is that many self-employed sole traders don’t even bother trying to open a business account, they just use their personal account.
This is where fintech comes in, delivering tech-based solutions that address key frustrations that add real value for the self-employed.
Cloud accounting solutions like Xero and FreeAgent are moving the self-employed away from spreadsheets and shoe boxes for their record keeping. And payment solutions like iZettle, SumUp, Stripe and more have simplified the process of getting paid and transacting digitally.
Having focused on consumers initially, challenger banks have emerged to reimagine current accounts for the self-employed. Solutions like Coconut and Hatch Money are focused on self-employed and freelancers with features like receipt and tax tracking, while other challengers like Revolut, TransferWise and Starling are expanding from their consumer roots to service independent workers and small businesses.
The use of technology is also essential to deal with the biggest change to taxes in over a decade as HMRC’s Making Tax Digital is rolled out. In April 2019, VAT must be submitted quarterly via Making Tax Digital using third-party commercial software. HMRC intends that quarterly self-assessment and corporation tax will follow from April 2020. Again, fintechs are at the forefront of helping self-employed deal with this change, either combined with a current account like Coconut and CountingUp, or on its own with Taxo’d or cloud accounting.
But this is just the beginning, there are many more challenges to be addressed for the self-employed, and as the foundational elements of accounting and banking get addressed, fintech is well placed to deliver innovative and sustainable solutions to challenges that the mainstream financial industry has ignored. Whether it is dealing with the variable nature of their income, accessing loans and mortgages, or saving for retirement, these are all ripe areas for innovative fintech firms to tackle to really make a lasting impact on the UK’s self-employed sector.
By Garrett Cassidy, CEO and co-founder of Trezeo
Cassidy is a computer science graduate with an MBA who has worked for Goldman Sachs, Ulster Bank and Irish VC-backed startup Marrakech. He is a former programme director at Bank of Ireland, and ran the first fintech accelerator at the NDRC. Prior to starting Trezeo, he was European MD of P2P payments technology company Circle.
Trezeo is a fintech start-up that offers a business account aimed at the self-employed, providing customers with a regular, defined income. Trezeo’s income smoothing service turns unpredictable income streams into reliable and regular payments, with no interest or hidden fees involved. The aim is to help the self-employed (including freelancers, consultants, giggers and other independent workers) build a predictable income and start to plan for a more empowered financial future.
