State of Bookkeeping In The Independent Economy
The independent economy is flourishing. Today, 68 million individuals are following non-traditional paths as freelancers, contractors, gig workers, on-call workers, and more in order to follow their career dreams, take control over their cash flow, or give themselves more flexibility in their schedule.
But while they’re doing all of that work, they also need to manage the finances of their business of one. Traditional W-2 employees don’t necessarily need to track any business expenses, and small businesses often hire dedicated accountants or bookkeeping services to balance their accounts and keep them solvent. But what about independent workers? Have they needed to become their own bookkeepers? What tools are they using to manage their finances? Do they even know how to?
Through our past reports, we’re attempting to piece together the bigger picture of the day-to-day tasks of independent workers, and understand how they’re succeeding or struggling with things like paying taxes, how they bank, and how they handle the administrative side of their lives.
In this newest report, “Bookkeeping in the Independent Economy,” we’ve surveyed over 600 independent workers to better understand their approaches to bookkeeping — which will ultimately show founders and start-ups how they can better help this blooming but underserved market.
We hope these insights help you better understand how independent workers manage their books, and how founders building tools for the independent economy’s future can fill in the gaps.
Here are some of the major insights we found after surveying independent workers about their bookkeeping approaches, challenges, and needs:
Only half of independent workers are satisfied with how they keep their books. 50.1% are very satisfied with their approach — whether it be using a spreadsheet, software, or outsourcing to a professional — while 49.9% are either somewhat unsatisfied (33.5%) or very unsatisfied (16.4%).
They primarily use spreadsheets and accounting software for their bookkeeping. 27% of respondents do bookkeeping manually with spreadsheets, and 25.4% use accounting software or an app. 11.1% use another way to manage their finances.
13.6% outsource their financial management to an accountant or a bookkeeper. However, 56.5% are either somewhat or very unsatisfied with that approach, saying that their accountant or bookkeeper doesn’t understand their financial needs and goals, or demands too much of their time.
23% don’t actively manage their finances. Reasons they don’t include not knowing what else to manage other than making sure their income and bills clear, waiting until the end of the year or tax time to reconcile, and believing they don't generate enough income to need to manage their finances.
Their biggest challenge in bookkeeping? Separating business and personal finances. They’re also challenged by managing cashflow, organizing documents and records, remembering to track everything, and not knowing how to “get ahead” in their finances.
The bookkeeping feature they want to see most is one that allows them to receive payment. Other desired features include bookkeeping in a mobile app, a tool that automatically finds business expenses, a tool that prepares tax filing documents, and a tool that helps them budget and plan.
Their top bookkeeping priority for 2022 is getting more organized. Other priorities include finding a way to manage their finances that works for them, working towards achieving financial goals, sticking with their budget, and being better prepared for tax time.
Table of Contents
PART 1 : Current Approaches to Bookkeeping
PART 2 : Top Eight Challenges to Bookkeeping
PART 3 : Top Five Most-Desired Bookkeeping Software Features
PART 4 : Top Five Bookkeeping Priorities for 2022
PART 5 : Founders on Bookkeeping for Freelancers and Independent Workers
PART 6 : Building the Future of the Independent Economy
Who We Surveyed: Methodology and Participant Demographics
In order to provide greater context around these findings, here are more details on who we surveyed and the methodology used. Starting on December 21, 2021, we surveyed 623 independent workers who earn the majority of their income from 1099-related work. The survey was conducted online via Pollfish using organic sampling. Learn more about the Pollfish methodology here.
Section Summary
Now that we know more about our respondents — consultants, freelancers, merchants, or other independent workers, about half (47%) of whom made $50,000 or more from self-employed work in 2021, and most of whom have been working independently for one to three years — let's take a closer look at what we uncovered about their bookkeeping and financial management approaches and needs.
Part 1: Current Approaches to Bookkeeping
Being an independent worker means managing a small business of one.
Independent workers invoice their contract work or process gig work payments through an app, track their business expenses, and pay estimated tax payments along the way. With any business, solid bookkeeping is essential in order to know where the business stands, and even more critical for someone not working a traditional W-2 job, where business functions are handled by someone else.
What are the current approaches independent workers are taking to their bookkeeping?
Spreadsheets and accounting software or apps are the primary methods
Our respondents generally manage their income in two main ways: manually with spreadsheets (27%) or with accounting software or an app (25.4%). Only 13.6% say that they outsource managing finances to an accountant or a bookkeeper, and 11.1% use another way to manage their finances.
However, nearly a quarter (23%) replied that they don’t actively manage their finances or have a system to manage their finances.
Only half are satisfied with their approach
Overall, how well do they think their individual approach is working? We found that respondents are split down the middle: 50.1% say they’re very satisfied with their approach, while 49.9% are either somewhat unsatisfied (33.5%) or very unsatisfied (16.4%). While they do have processes and approaches in place, it seems that there’s wide room for improvement and opportunity.
Top Reasons Why They Use Spreadsheets
For those who use spreadsheets to manage their finances — which is the most-used method — we wanted to know why they’re choosing Excel or Google Sheets over a dedicated software or professional?
The primary reason is because it’s what they feel comfortable using or they’re comfortable with it because they’ve built up a system (40.5%), and have most likely fine-tuned a method that works for them that they don’t see replicated elsewhere.
The second reason is because respondents feel their finances are not complicated (28.6%), and believe they don’t need a more comprehensive method through which to approach it. There may also be a financial component here: My finances aren’t complicated so I’m not going to pay for an app when I can do it myself.
Finally, they say using a spreadsheet is simply cheaper (23.8%), though we will see that many are using free software and apps.
One-third use free software to manage their finances
For those who use dedicated software to manage their finances, we wanted to know how much it costs each month. Most (33.5%) replied that they actually don’t pay anything for the tool they use. 29.1% pay between $1 and $50 per month, 15.2% pay between $51 and $100, 12% pay between $101 and $150, and 10.1% pay $151 or more. The median falls within the $1 to $50 range.
Overall, our respondents are gravitating towards free or low-cost ways to manage their finances.
59% are very satisfied with their accounting or bookkeeping software
For those using dedicated software or an app, does it serve their purposes? 58.9% say yes, they are very satisfied with the software they use. However, 29.1% say they are somewhat unsatisfied, and 12% are very unsatisfied — which means there’s room for improvement in the software and app space.
Our respondents are also saying that cost doesn’t necessarily equal satisfaction. Of those who are very satisfied with their software, 37.6% are using free software, while 31.2% pay between $1 and $50 a month.
Conversely, of those who are very unsatisfied with their software, 31.6% are paying between $101 and $150 per month for it, while 26.3% are paying between $51 and $100 per month.
Top Three Reasons for Accounting Software Dissatisfaction
For those who are unsatisfied with their software or app, we wanted to better understand why.
The top reason is that they feel the software requires too much manual work and doesn’t link to their accounts (32.3%). With independent workers having to do both their work and run their business, they want software that is streamlined and that can save them time.
The next reason is that the software is just too complicated to use (26.2%). This links to the above response, in that it’s taking too much work, time, and effort that they simply don’t have.
The third reason is that the software does not have the capabilities or features they need (26.1%).
Independent workers are looking for functionality that can help them run their business better, yet they’re not finding it (and we’ll learn more about what features they do want below).
Lowest on the list is that the software is too expensive for what they’re getting (15.4%), indicating that cost isn’t causing the majority of dissatisfaction.
66% of those who outsource pay upwards of $200 per month for accounting services
For those who outsource their accounting and finance management, how much are they paying per month for this service? The largest segments are paying between $1 and $100 or $100 and $200 per month, respectively (32.9% each). After that, 16.5% are paying between $201 and $300 per month, while 17.7% are paying $300 or more.
Only 44% are satisfied with their accountant or bookkeeper
Given that the majority of our respondents are paying significantly for accounting services, we wanted to know how satisfied they are with it — and we found that they weren’t overwhelmingly positive. Only 43.5% said they’re very satisfied with their accounting or bookkeeping professional. However, 31.8% said that they’re somewhat unsatisfied and 24.7% said they were very unsatisfied.
Top Reasons Why They Use Spreadsheets
Of those who are not satisfied with their accountant or bookkeeper, what are the reasons?
The top reason is that our respondents felt that their accountant or bookkeeper doesn’t understand their financial needs and goals (20.8%). This could be just generally poor communication, or that their account or bookkeeper doesn’t understand the unique challenges of independent workers.
The second reason for their dissatisfaction is that they felt the accountant or bookkeeper demands too much of their time or asks too many questions (18.8%) — and time-consuming processes aren’t ideal for ever-busy independent workers.
Tied for the third reason are that respondents don’t trust their accountant’s accuracy (16.7%) and feel like they could do it, or do it better (16.7%), both related reasons.
Other reasons include our respondents saying their accountant’s work is not as structured as they would like it to be (10.4%), that the services are too expensive for what they’re getting (8.3%), and that there’s slow response time and bad customer service (8.3%)
Top Three Reasons Why They Don’t Actively Manage Their Finances
Of those who don’t actively manage their finances, we wanted to get some insight into why they don’t.
Here are the top reasons:
The number one reason why is simple utility: they just make sure their income and bills clear their account, and ask what else is there to manage (21.2%).
The second reason they don’t actively track is because they wait to figure everything out at the end of the year, or right before tax time (20.8%).
The third largest group say that they don't generate enough income to need to manage their finances (18.9%).
Worth noting is that the fourth largest group don’t actively track their finances because they never learned how to manage their finances (14.6%). Other reasons are that they’ve tried, but believe it to be too complicated (13.2%) and that the resources and tools to help me are too expensive (11.3%).
Section Summary
How are independent workers managing their bookkeeping? In a number of different ways, and at a number of different levels of knowledge and commitment as well.
27% are using spreadsheets to manage their finances, which they like because they’ve been able to tailor it to a system that works for them. They’ve find a way to make bookkeeping quick and painless, that they’ve customized to their exact needs — something that they don’t see current software or outsourcing approaches giving to them.
25.4% are using bookkeeping software, and gravitate towards free versions. However, only 59% are satisfied with their software overall. Reasons they aren’t satisfied are because their software doesn’t have the features they need, and doesn’t cut down on time spent doing their bookkeeping.
The 13.6% who are outsourcing their bookkeeping to professionals also aren’t finding great solutions there, either, as only 44% of them are satisfied with that approach.
Reasons for dissatisfaction again include too much time spent, and not having their unique needs understood or met.
For the nearly a quarter (23%) who don’t actively manage their finances, there seems to be a “why do I need to?” reason behind why they don’t.
Overall, only 50.1% say they’re very satisfied with their approach to their bookkeeping, meaning that half are still trying to find the perfect tool to use that will cut down on time spent on bookkeeping, have features that will cater to their unique needs, and help them stabilize and grow their business of one — not hinder it.
As we saw above, “independent workers' most valuable asset is their time,” according to Angie Moody, Founder and CEO of Ruby Money. Of future platforms that will cater to independent workers, she says that “they will go further than making your books correct — these new platforms will offer pro-active and actionable insights and recommendations to help independent workers understand how their business is doing, maximize tax deductions, access tailored benefits such as SEP-IRAs and automate workflows that enable them to stay compliant and pay themselves first.” We’ll learn more about these necessary features in our next sections.
Part 2: Top Eight Challenges to Bookkeeping
What is an independent worker’s top challenges and pain points when it comes to doing their bookkeeping, and can those pain points be solved? It seems like our respondents are all experiencing challenges in a variety of areas, but the top eight reveal the unique challenges and considerations independent workers face when managing their finances.
1. Separating business and personal finances (12.5%)
As a business of one, independent workers are challenged with whether to have one bank account for both expenses or separate bank accounts for business and personal (you can learn more about that in our report “Banking the Independent Economy”). If they’re just using one account, the challenge is keeping track of which transactions are for business and which are personal.
2. Managing cashflow (10%)
“The biggest bookkeeping challenge we're seeing for independent workers is managing multiple revenue streams from sources of varying size and organization,” says Courtney Barbee, Owner and COO at The Bookkeeper. “For example, a content creator might sell merchandise directly from their own website, but also generate revenue via monetized video and social media, paid promos, or affiliate marketing. Tracking profitability by those revenue streams can be a challenge, with an added complexity of working in a global market via the internet.”
3. Organizing documents and records (8.4%)
With different types of cashflow coming in, various invoices to track, business expenses to record as possible deductions, setting aside money for estimated tax payments, as well as managing their own work schedule and client base, it’s no wonder that keeping everything organized is a challenge to many independent workers.
4. Remembering to go into the software, app, or spreadsheet to track everything (7.9%)
Managing finances takes vigilance, as there is always income or transactions to record, and not staying on top of it can unbalance books very quickly. Having to remember to track everything every few days means more time spent on bookkeeping administration rather than working on their freelance or gig work — it also signals areas ripe for automation.
“I believe that the main reason for lack of diligence among the said audience is a hell of a lot of manual work to maintain books in order. So the future or what would solve the puzzle would never be a magic framework or knowledge — it’s going to be automation,” says Michael Popchuk, CEO and co-founder of Saldo Apps.
5. Not knowing how to “get ahead” in their finances (7.9%)
Not knowing how to “get ahead” isn’t necessarily just a challenge for independent workers, but for anyone hoping to stay on top of their finances and plan for the future. However, always breaking even or always having surprise expenses signals the need for not only more financial literacy, but tools that can help independent workers budget and plan.
6. Managing accounts receivable and collections (7.4%)
Similar to the above concern about managing cashflow, independent workers also need to track outstanding invoices, payouts, third-party vendors, supply chains for merchants, and more. It’s another way independent workers desire to be organized, and to keep on top of their balance sheet.
7. Identifying mistakes early (7.2%)
One of the benefits of hiring a professional bookkeeper is that they’re trained to catch mistakes. But as we saw above, most of our independent workers are using their own spreadsheets, where they would be the only ones to catch mistakes, or software, which may or may not have the functionality to catch mistakes. And early mistakes could lead to massive and costly discrepancies.
8. Just don’t know where to start (7.2%)
Finally, they just don’t know where to start. This is reflected in the answers above from those who don’t track their finances: they’re not sure why they should balance their books more frequently than once a year, or they never learned how to manage finances in the first place. Some independent workers may not just need a platform or app, but one that guides them through “Bookkeeping 101.”
Other challenges include finding a tool or resource for managing their finances that works for them (6.7%), categorizing and tracking expenses (6.3%), not knowing how to adequately budget for their expenses (6.3%), simplifying business finances (4.2%), keeping an eye on business financial health (4.2%), and reconciling bank statements with company books (4%).
As Lil Roberts, CEO and founder of Xendoo, points out, “’One-size-fits-all’ accounting software also falls short more often than not, as it still requires high proficiency and time for the independent worker to accomplish necessary accounting tasks just to stay up to date. This takes time away from other activities crucial for growing a business or clientele. ... The goal is for technology to help simplify and automate everything from accounting, expenses, revenue, procurement, reporting, and other bookkeeping activities, while delivering personal one-on-one advice. For the independent worker, it’s like having a team of accountants without the hefty bill.”
Part 3: Top Five Most-Desired Bookkeeping Software Features
One of the challenges independent workers face is finding apps and tools that cater to their unique needs: invoicing, receiving income, tracking expenses, preparing for tax season, and more. If independent workers were to design bookkeeping software, which features would they want the most?
1. A bookkeeping tool that allows them to receive payment (47.4%)
Independent workers manage their own invoicing and app payments, and having a tool that can receive those payments would save them time on entering information from their bank account. It also speaks to the top reason they’re dissatisfied with account software above: It doesn’t link to their account.
2. A bookkeeping tool that offers a mobile app (47.2%)
Not only are mobile apps essential to have today, but many independent workers already work through gig work or freelance apps already.
3. A bookkeeping tool that automatically finds the business expenses they can write off (46.9%)
This is key considering the top bookkeeping challenge independent workers have is separating business and personal finances. This feature would automatically identify and tag business expenses so they don’t have to manually hunt them down, and also easily prepare them for tax season.
4. A bookkeeping tool that prepares tax filing documents for them (46.6%)
Unlike traditional W-2 workers, independent workers are responsible for tracking their income and business expenses, setting aside a portion of their income for estimated tax payments, tracking their deductions, and more, so having any kind of help with taxes would be beneficial.
5. A bookkeeping tool that helps them budget and plan (44%)
Considering that a number of challenges respondents face with bookkeeping are related to general budgeting and financial management, having bookkeeping software that could help with budgeting and planning would help get independent workers ahead.
They would also like a feature that automatically withholds tax on their income (41.4%), that allows them to send invoices (38.4%), that helps them set financial goals (38.4%), and that offers time tracking (33.9%).
Part 4: Top Five Bookkeeping Priorities for 2022
What are the top priorities for independent workers this coming year, when it comes to their finances? What are they hoping to achieve to help them prosper in their work?
The top priority is getting more organized (22.3%). The way independent workers can stay ahead is through better organization, and they’re always on the lookout for tools that can help them with that — especially since one of their top challenges is staying organized.
Next, independent workers want to find a tool or way to manage their finances that works for them (11.9%). Considering that only half of those using their current method of bookkeeping were satisfied with it means that there’s a large portion of independent workers looking for better tools that are customizable, simpler, or that offer the features they need.
Additionally, independent workers want to work towards or achieve financial goals (10.3%). They can only do that if they get their tools and finances solidified today so that they can start looking to tomorrow.
Another priority for independent workers is sticking with their budget (9.2%) and ensuring that they’re not overspending or mismanaging their money.
Finally, they also want to be better prepared for tax time (9%), considering independent workers manage their own taxes. Helping prepare for tax time is also a feature they desire on their bookkeeping software as well.
Priorities for 2022 also include keeping better track of income and paid invoices (7.4%), increasing financial awareness or literacy (7.1%), automating bookkeeping as much as possible (6.3%), building their first budget (5.9%), getting benefits packages (5.8%), and hiring someone to manage their finances for them (5%).
The common theme to these priorities? Organization, preparation, planning, and streamlining. “The future of bookkeeping for independent workers will be about simplifying their financial life,” says Paola German Garcia, Co-founder, Freely.Tax. “How? By giving independent workers real-time visibility of their business cash flow that allows them to make informed choices for their business. Was their last job profitable? If they buy a new computer now, how will that lower their tax bill? ... Indeed, the most valuable commodity independent workers have is their time. Doing things that don’t help their business grow is a chore, especially when it comes to doing their taxes.”
Part 5: Founders on Bookkeeping for Freelancers and Independent Workers
We’ve already examined what 623 independent workers said about their approaches to bookkeeping, given their unique needs as freelancers, contractors, on-call workers, and gig workers. But we always wanted to gain insights from the founders and innovators working to build tools for independent workers today, and asked them the question “What’s the future of bookkeeping for freelancers?” Here’s what they said:
“The future of bookkeeping for independent workers will be about simplifying their financial life.
How? By giving independent workers real-time visibility of their business cash flow that allows them to make informed choices for their business. Was their last job profitable? If they buy a new computer now, how will that lower their tax bill?
Traditional softwares have tracked income and expenses in a more or less automated way for years. However, those softwares were initially built for accountants. They feel cluttered and are full of technical jargon. Their data is hardly useful to make informed choices in an autonomous way. The old times where independent workers had to set up a meeting with their accountant once a year to check up on their business financial health is history. Independent workers need quick answers.
Indeed, the most valuable commodity independent workers have is their time. Doing things that don’t help their business grow is a chore, especially when it comes to doing their taxes.
However, good bookkeeping is critical to make sure they pay the right amount of tax. They need a software that finds tax deductions automatically, maximizes their write-offs and pre-fills their tax documents. Bookkeeping softwares for independent workers need to have tax time in mind and offer a simple, quick, and cost-effective way to prepare for taxes as an independent worker without having to spend hours or thousands of dollars.”
Paola German Garcia - Co-founder, Freely.Tax
“The future of bookkeeping for independent workers is a relic of the past.
Through one connected system, Wingspan accelerates payments, allows companies to work with contractors at scale, and helps self-employed individuals navigate life designed around a W-2 paycheck.
Quite simply: everything you need to work for yourself—and nothing you don’t. Your payments, banking, benefits, taxes, and cash flow are synced together seamlessly and working as one. When you take payments through Wingspan, everything is connected, so accessing and moving your money is fast, easy, and automated.
The result: one connected system perfectly, functionally essential—that helps you find your way by staying out of it. Simple, seamless, and empowering.”
Anthony Mironov - CEO and Co-founder, Wingspan
“The future of book-keeping will be embedded and automated.
Independent workers' most valuable asset is their time. Elegantly designed, industry-tailored software platforms will emerge where the key accounting, finance and HR workflows needed to support a solo business owner are integrated and automated. They will go further than making your books correct — these new platforms will offer pro-active and actionable insights and recommendations to help independent workers understand how their business is doing, maximize tax deductions, access tailored benefits such as SEP-IRAs and automate workflows that enable them to stay compliant and pay themselves first. CPAs, FAs and Business Coaches will integrate these tools into their offerings allowing them to deepen their relationships with their clients and lower their cost to serve.”
Angie Moody - Founder and CEO, Ruby Money
“As the modern economy continues to undergo digital transformation, the services that support entrepreneurs and independent workers need to meet them where they live, which is on the cloud. As such, the digitization of traditional professional services, such as bookkeeping and accounting, is playing a major role in helping entrepreneurs and independent workers reach their full potential in their businesses and income generation.
Digitally outsourcing bookkeeping services is an important consideration to ultimately save independent workers time, offer financial peace of mind, and provide insight for better decision making. While traditional accounting services can be useful during tax season, a traditional CPA may lack the technological connectivity and time to support independent workers with specific relevance to their industry and expertise.
“One-size-fits-all” accounting software also falls short more often than not, as it still requires high proficiency and time for the independent worker to accomplish necessary accounting tasks just to stay up to date. This takes time away from other activities crucial for growing a business or clientele.
Finance and technology have advanced and merged in many ways, creating new cost-effective solutions that incorporate the best of both digital and traditional bookkeeping services. The goal is for technology to help simplify and automate everything from accounting, expenses, revenue, procurement, reporting, and other bookkeeping activities, while delivering personal one-on-one advice. For the independent worker, it’s like having a team of accountants without the hefty bill.”
Lil Roberts - CEO and founder of Xendoo
“The biggest bookkeeping challenge we're seeing for independent workers is managing multiple revenue streams from sources of varying size and organization. For example, a content creator might sell merchandise directly from their own website, but also generate revenue via monetized video and social media, paid promos, or affiliate marketing. Tracking profitability by those revenue streams can be a challenge, with an added complexity of working in a global market via the internet.”
Courtney Barbee - Owner and COO at The Bookkeeper
“Unfortunately, proper bookkeeping is one of the least expected things to find among independent professionals.
This leads to overlooked liquidity gaps, sales margins, inability to delegate and, effectively, to the need for a professional to be 24/7 involved in the business or even bankruptcy.
I believe that the main reason for lack of diligence among the said audience is a hell of a lot of manual work to maintain books in order. So the future or what would solve the puzzle would never be a magic framework or knowledge — it’s going to be automation.
There are tons of invoicing, payroll, or accounting apps out there. Still, as soon as each one is stand-alone, every independent professional has to go and input one info to another manually. It sounds simple but in a hustle that just rarely happens. Some big names, all-in-one solutions, are just too complex.”
Michael Popchuk - CEO and co-founder of Saldo Apps
Part 6: Building the Future of the Independent Economy
What are the next steps? Are independent workers supposed to continue to search for tools and apps they need to help them, and settle having to use expensive software that doesn’t even fit their needs? Or will independent workers — all 68 million of them — have access to the apps and features they need that will cut down on their time spent on bookkeeping, streamline their processes, and help them become more efficient in managing their career? If half of our respondents aren’t satisfied with how they’re currently managing their finances, that could scale up to 34 million independent workers looking for better solutions.
Where will they find them?
For founders who build bookkeeping and accounting software, here are some direct takeaways to help you create better tools for independent workers, and help shape the future of the independent economy in the process.
Independent workers face unique challenges — and fall through the cracks because of it
Independent workers need to care for many more aspects of their personal finances than traditional W-2 employees do, and they also don’t function in the same way as a small business does — meaning they fall through the cracks of what’s on the market today. We see this in some of the challenges they cited above: separating business income and expenses from personal expenses when they may only be using one bank account, managing their varied and inconsistent cashflows, keeping all of their deductions, invoices, and other documents tracked and organized, and identifying mistakes without a trained eye.
The first step founders can take is understanding the unique pain points and needs of this market, and creating tools that patch up the cracks.
Independent workers want features they don’t yet see
Those we surveyed essentially compiled a list of features they want in bookkeeping software or apps that would address their unique needs. They want a bookkeeping tool that:
allows them to receive payment
offers a mobile app
automatically finds the business expenses they can write off
prepares tax filing documents for them
White respondents want to pursue work they’re passionate about.
In other words, they want features that will make running their business of one easier, and founders who build these features will be helping them become better independent workers.
Look to their work-arounds and provide the solution
What’s interesting to note is that most independent workers are using a spreadsheet to manage their finances, and the top reason they do so is because they’re “comfortable with it because they’ve built up a system.”
What does this look like practically? It’s an independent worker who’s used the same Excel for years, and has tinkered with the columns and formulas so that they know where to record their income, and how to show balances that makes sense to them. Maybe they have color-coding for different client invoices or payment streams. Maybe they’ve set up a formula in another sheet that pulls in a count of their business expenses. Maybe they have another sheet that tracks tax deductions, or have a formula that shows them how much they’ll need to pay at the next estimated tax payment deadline.
It’s a picture of customization for their own unique situation, having exactly all the inputs and outputs they need, setting up lists for exactly what they need tracked, and having built it over the years so that it’s streamlined, low-maintenance, accessible, and time efficient.
So why don’t founders build customizable bookkeeping apps that offer all the same flexibility, accessibility, tracking lists, and other functionality so that independent workers don’t have to build it themselves? Take the work-around and make it a reality.
Don’t just supply them with tools — educate them, too
Finally, we uncovered a bit of a swing between those who are knowledgeable and dedicated enough to have created their own bookkeeping tools to those who don’t even track their finances, and discovered that there’s a bit of a lack of financial literacy across those we surveyed.
This lack of awareness around how to manage finances didn’t just come up in the answers for those who don’t manage their finances. It came up in top challenges, like not knowing how to get ahead with their finances, not knowing how to recognize early mistakes, or just not knowing where to begin. It came up in them wanting features that could help them budget and plan. And it came up in top priorities, including working towards or achieving financial goals, sticking with their budget, and being better prepared for tax time. (As we found in our report on the “State of Taxes in the Independent Economy,” many are unsure of the tax process for independent workers.)
This is a great opportunity for founders, as they can build the independent economy by building financial literacy. It could be through tutorials built into their app, building a knowledge library of blog posts or videos, having a simplified UI to guide users on the process, or other “Bookkeeping 101” features. This will not only give independent workers needed features, but will teach them how to be better money-managers and business owners.
The independent economy is already flourishing, yet independent workers are still looking for tools to help them easily and efficiently manage their finances on a day-to-day basis. Which founders will be the ones to answer the call for something new?
