The first smart bank account solution just launched exclusively for freelancers
The traditional workforce is changing. Today, there are over 60 million freelancers in the United States. Covid-19 has further accelerated this change, as many full-time employees have been made redundant or have actively started seeking side scrambling to support themselves. Anyone who is currently in this stressful situation and trying to manage their finances knows how difficult it is throughout the year. It’s a constant guessing game that tries to plan and remember the right amounts so you don’t run out during tax season.
Enter Oona Rokyta. A former freelance writer, Rokyta co-founded Lance Bank in 2018 based on the familiar problems freelancers and secondary scammers have in managing their finances. Rokyta said that when she was a freelancer I delved into my finances with an accountant, Quickbooks, and other tools, but found nothing really guided my approach or told me how to organize my finances.
Rokyta realized it was time for a new model. Created as the first smart business bank account for the self-employed, Lance’s unique business bank account and success model automatically award personalized personal salary, withholding tax, business expenses, and cash amounts. savings from inbound deposits for sole proprietorships. With basic bookkeeping, entry-level bookkeeping, and tax payments, freelancers get what they need to grow compliant and successful businesses.
The story deserves to be noted. Lance was built by a team of former freelancers based on the idea that today’s market still struggles to help solopreneurs manage daily cash flow and income documentation across multiple income streams. The solution evolved into creating a bank account to automatically identify deductibles and manage tax withholdings, set aside savings, and pay a monthly salary, all based on a freelance’s generally volatile monthly income.
Barclays, BDMI, Great Oaks Capital, Imagination Capital, Techstars, DFJ Frontier, along with other fintech and creative industry angel investors, participated in the $ 2.8 million funding round, with funds for product development and marketing.
To refine the idea and the product, the team had to do a lot of research over the past year, including talking to thousands of freelancers. They found that even the most savvy solopreneurs paid monthly surcharges for standard commercial bank accounts and sometimes multiple accounting software solutions. Despite their efforts to educate themselves and organize their finances, these business owners and freelancers still had to spend too many resources on solutions and were still not able to show their 2019 income or easily fill out the forms in the lender. Annex C for tax returns and loan offers. .
Rokyta explained that it is âtime to recreate banking solutions that take into account the financial goals of different people. Lance’s approach brings together banking and accounting in one business account, because that’s what solopreneurs need today. They are already juggling multiple sources of income and evolving passionate projects. What they need is a financial partner to support their growing ambitions. “
The key differentiator of the Lance Bank product is different from traditional solutions and other neobanks that still only offer a passive bank account that freelancers then have to manage with accounting software, Lance takes a more active approach.
Rokyta noted that “with over 30 million freelancers earning middle-class incomes or more and still trying to put together bank accounts with turbotax and spreadsheets, most of them no longer feel organized. “
With his business bank account, Lance solves this problem by capturing W2 and 1099 payments, then assigning them to predetermined, custom settings to the sub-accounts: a sub-account temporarily holds a personal salary before being sent to the personal checking account. of the account holder. , another holds tax withholding, and yet another withholds a small amount of savings or profit, which is essential for year-end planning.
The result is that account holders benefit from an allocated business expense balance that interacts with their automated tax deductions. All of these sub-accounts, automatic allocation and responsiveness are included in the basic account at no cost. Lance has also developed a pro version to which account holders can purchase a monthly subscription which then pays quarterly IRS taxes from source deductions, pre-fills out a Schedule C form at any time. , etc. Lance estimates that this approach can save freelancers 100 hours per year annually and $ 7,500 in fees and deductibles.
Finally, in addition to creating a new smart bank account solution, Rokyta has five important financial tips that freelancers should consider if they are to move forward and improve their financial outlook. Take a moment to see if you are currently following any of these best practices.
– Allocate yourself a salary and put the rest in savings. This is great advice that is worth following throughout your career.
– Separate your account (s): have a professional account and a personal account. It’s a practical twist on the old adage, don’t mix business with pleasure.
– Try to find the tool that gives you the most financial structure instead of using several financial tools that do not necessarily correspond to each other.
– Try to find a bank employee and an accountant who understands the world of a freelance writer and how you make money. It is not easy but they are there and ready to help you.
– Monitor your spending closely and make sure you recognize and categorize deductibles. The average freelancer misses 10% of their deductibles annually.
Rokyta said, âNone of the banking or accounting solutions currently available can manage cash flow in real time. Bank accounts and accounting software only provide records of expenses paid and how they should be classified. That’s why Rokyta believes it’s so important to find stand-alone banking solutions that keep your business and personal finances on par throughout the year.