Beyond the Pitch
Vaultz Inc. Solves a Taxing Problem for Workers in the Gig Economy
Millions of people are working in the gig economy. Reports indicate that in the U.S. from 4 to more than 30 percent of workers doing jobs that range from driving, to consulting, to freelance work, or owning a single employee business.
The skills and jobs vary widely, but many self-employed people in the independent workforce share a common problem: Saving for and paying taxes.
“At better than 80 percent, the U.S. has the highest voluntary tax compliance rate in the world,” said Rick Gonzalez, founder and CEO of Vaultz, a Columbus startup that offers a personal tax savings solution for the independent worker.
“People have the desire to pay what they owe, but for individuals who are compensated as 1099 employees, it can be a struggle to estimate, save for, and file taxes accurately and on time,” he said. “Our goal is not to convince people to pay their taxes, but to make it easy for people who already want to pay their taxes but can’t.”
1099 Workers Don’t Have the Benefit of Automatic Tax Withholding
Gonzalez, who has been in banking much of his career, witnessed that struggle first-hand when his son, who had graduated from New York University and was doing freelance work in addition to his regular job.
“He came home for the holidays and asked me how to pay his taxes,” Gonzalez said. “He had no idea of what he was going to make or how to estimate what he would owe. It was all guesswork. He had some thought of saving 30 percent of what he made, but then he lost track of that.”
Self-managing taxes is nothing new to many self-employed workers. However, to the wave of Millennials who are attracted to the benefits, flexibility, and sometimes the necessity of working gigs, the requirement to pay quarterly taxes (which falls on about a third of gig workers) can be a shock. Sometimes this means the cold reality of having to pay the IRS with a credit card because they didn’t keep up with saving for taxes as they went along.
Vaultz Is Designed to Give Self-Employed People the “W2” Experience
Vaultz connects to a subscriber’s bank account safely and securely.
“Smrtsvr (as the Vaultz solution is named) listens for when a subscriber gets paid whether from PayPal, with a check, or from somewhere else,” Gonzalez said. “As income comes in, money to pay taxes is pulled out of daily cash flows. We track and pay quarterlies, remind them of how they are doing throughout the year, and recommend the amount to save for each payment.”
That discipline and process to save, Gonzalez said, is one of the biggest challenges facing self-employed workers.
A savings account is set up on a user’s terms. It stops the guesswork by keeping users on track to save and pay taxes accurately. The money saved for taxes remains under user control and is accessible when and how they need it.
Vaultz has been approved by the IRS as a batch payment provider, which is a huge accomplishment for any company, much less a startup.
“That gives us the right to make payments from these tax savings accounts and pay the IRS. Subscribers can pay quarterly taxes directly to the IRS by simply clicking a button,” said Gonzalez.
“People in the Millennial generation are telling the world that they want to be independent workers,” he said. “We want to promote to individuals who want to make sure they can pay their taxes at the end of the year. From an employer’s standpoint, Smrtsvr is something they could actually provide as a benefit to the 1099 people who work for them.”
Vaultz became a company in January. In less than a year, they have a beta release in operation with testers. “We conceptualized pretty well,” Gonzalez said.
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