Freelancing can be liberating, but with that freedom and flexibility comes a major downside.
"When you're an employee at a traditional company, you get the benefits stack," said Gabriel Garza, co-founder and chief technology officer of Everlance, a San Francisco-based technology startup, regarding the tax, health, and retirement help typically offered by employers. They're more than mere perks; they're essential services from human resources (HR) departments "that allow you to focus on your job."
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When you're a freelancer it's all up to you. And as the newly self-employed quickly discover, it takes a lot of work—on top of your paying gigs—to sort it all out.
"When you're self-employed, you have to recreate all these benefits," said Garza. So he and his crew set out to unburden independent contractors and other go-it-alone types from the complexities of earning an honest buck without HR, payroll, and tax professionals at their beck and call.
The idea came to Garza and his friend Alex Marlantes, Everlance CEO and co-founder, after Marlantes received a 1099 form in the mail from a summer stint as a Lyft driver. Lo and behold, they quickly found that the software market let freelancers down when it comes to navigating their taxes and business expenses.
"We were convinced that we were on to something here," said Garza. "It was evident that there weren't any good tools being built for [freelancers]." So Garza and Marlantes got started on their idea of creating a toolset, a "freelance operating system" of sorts, that would "make it frictionless" to earn a living as a self-employed worker.
The first step in that journey is the Everlance mobile app.
Everlance, a free app for Apple iOS—and recently released on Android—is a revenue-, expense-, and mileage-tracking app that simplifies a freelancer's finances and takes the hurt out of tax time. Once installed, Everlance lets freelancers log their income, and the expenses they paid to generate revenue, which helps to maximize deductions and save money when it comes time to pay Uncle Sam.
The app lets you store physical receipts as photos, and all the information the app collect is securely synced to the cloud. Everlance enlists Amazon Web Services and the "highest standards of security" to ensure that user data is easily accessible on the go while remaining encrypted and well-protected, assured Garza.
Everlance's most innovative feature is the automatic mileage tracker. "You don't have to do anything at all," said Garza. "Download the app; leave it open; and it automatically detects when you start and stop driving."
Everlance uses a smartphone's GPS and proprietary, built-from-scratch algorithms to automatically and accurately log car trips in the background without draining batteries. Every ride shows up as a card, complete with a mapped summary of distance traveled and the dollar amount that the freelancer can deduct. You simply "swipe left if the drive was personal, or you swipe right if it was for work."
Driving Small Business Tax Savings
Those miles and deductions can really add up. Every 1,000 miles traveled equals a $540 tax-deductible business expense. It's not uncommon to rack up thousands of dollars' worth of deductions, Garza reported.
"We're logging millions of miles every day," he added. "We've been growing fast, and it's all been through word of mouth."
And because today's freelancers typically work a handful of gigs, the Everlance app can tag separate income items, expenses, trips, and even vehicles for a precise and IRS-compliant accounting of their revenue streams. Self-employed professionals often have "fragmentation of income," said Garza. For example, a real-estate agent may drive for Uber to make ends meet or to earn a little extra money, he said.
Everlance's approach seems to be working. The app carries an enviable 5-star rating in the Apple App Store. A Web version of the app is in the works, as well as an expanded suite of value-added tools that will act as a freelancer's personal HR department, said Garza.
Pedro Hernandez is a contributing editor at Small Business Computing. Follow him on Twitter @ecoINSITE.
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