Filing a tax return can be a daunting experience for an independent contractor. There’s the obligation to keep an accurate log of business expenses. There’s the dread of navigating a morass of potential deductions. There’s the need to save throughout the year to pay the government back. And with rapidly increasing numbers of people turning to contractor work under sharing-economy startups like Uber, Lyft, and any self-described “Uber of [industry],” more and more people are facing this predicament.
Enter Tabby, a Culver City-based startup that aims to ease the filing burden for contractors. Founded by CPA Derek Davis and developer Damien Sutevski, Tabby is predicated on the idea that many contractors aren’t aware of the ins and outs of deductions, an unfortunate result of a tax system that often seems labyrinthine.
“I was talking to an Uber driver one night and he was complaining about the driver rate cuts and had no idea how he would save for taxes,” said Davis. “I told him that he could depreciate up to $10,000 per year off his car and was stunned that he was completely unaware of his various tax deductions that were available to him. I realized there was a huge knowledge gap between the average 1099-er and the tax code.”
The process for a user is relatively simple. The contractor connects her credit or debit card(s) to the Tabby app, which gains access to her transactions. Once a transaction is processed by her bank or credit card company and on the app, she can classify it as a personal expense (by swiping left) or a business expense (by swiping right). The cumulative total is categorized and made available, along with a Schedule C tax worksheet, when the contractor is ready to file.
Though some might hesitate to use a young, third-party app as part of their filing process, Davis is confident in Tabby's accuracy and security. “We are very familiar with and keep up-to-date on pertinent tax codes. Special attention is given to IRS Publication 463, which details out what is necessary for business record keeping,” Davis said.
Transactions are secured with standard encryption protocols, Davis maintained, and the app doesn’t store authentication information such as passwords.
Currently bootstrapping, the startup, which was founded last summer, operates on a modest subscription-based model, providing 30 days of access for free with a $5 monthly fee thereafter. Davis and Sutevski have hired no additional employees.
Given their startup’s age and size, Davis and Sutevski plan to continue to hone the app’s functionality. However, Davis said, “We hear a lot of frustration from people about their taxes in general. In the future, we may expand Tabby’s scope to help them out.”