Tax talk with a solo entrepreneur who shares what it’s really like to work with Collective
PS: Use my refer-a-friend code MORGAN when signing up for Collective to get your first month free (a $297-$349 value).
I hate keeping up with self-employment taxes. And “hate” is an understatement.
I didn’t even like doing taxes and all the legal stuff it entails when I was a regular salaried employee with a handy dandy W2 and a couple of 1099s from my weekend side hustle. When tax time arrived each year, I marched myself over to H&R Block, forked over about $200 and relied on someone else, who is much more well-versed in tax law than I am, to do the heavy lifting.
Then in 2017, I became a full-time freelancer. Don’t get me wrong, I love being a freelancer. There are so many perks, such as being in charge of your destiny, the ability to set your own rates and enjoying flexible hours.
But if you asked me to describe what I thought my personal Hell would be like in the afterlife, I would imagine it would at least partially involve a mile-high stack of 1099s. So, when it came time for those oh-so-dreaded tax filings, I didn’t even attempt to do it on my own. I just started making phone calls.
Taxes and accounting are the bane of my existence. I love letting Collective take the reigns of my ridiculously complicated taxes. and bookkeeping. If they ever stop existing, I’d cry. I highly recommend the company and they are worth every penny. They understand what it means to be a freelancer and solopreneur.
IN THIS ARTICLE
I tried two other accounting firms before Collective – they both failed me
I should preface this portion of the story by pointing out that my husband is also a self-employed contractor. Yup, double the tax fun. So finding the right accountant who could take on a pair of self-employed contractors was key.
And so, I began my tax journey as so many others have done before me – by turning to Google. I left messages with about a half dozen area CPAs. Two called me back, and I immediately set up the introductory appointments.
The first accountant offered scammy, questionable tax advice
The first accountant, who shall remain unnamed, set off all the red flags. He instructed my husband and me to resurrect an old LLC we held back in 2009 and had since closed. I was immediately confused as to why we should follow this bizarre advice. That LLC was nothing but a fluke that never made any money. It was a premature LLC filing for an app idea between myself, my husband and one of his college buddies. It never even made any money. Additionally, the old LLC had nothing to do with graphic design (my occupation) or computer programming (my husband’s occupation).
The accountant went on to discuss all the different loopholes that we could employ to save money on taxes. I thanked him for his time, and his highly questionable advice, and moved on to the next appointment.
The second accountant charged us over $7,000 for filing only, without bookkeeping or S-Corp formation assistance
The second accountant – who works for a major nationally recognized firm who shall also remain unnamed – offered what seemed like much more sound advice. He suggested we each open our own LLCs. His firm offered to host quarterly check-in meetings and help us file our quarterly and annual taxes. He would teach us how to do our bookkeeping. But he warned if we wanted one of their staff to assist we’d be charged an additional $100-$200 per hour.
It can sometimes be difficult to convey the correct sentiment when writing a blog article, so when reading the next line please be sure to do so with a sarcastic tone: The firm’s annual fee was only $7,000 sans bookkeeping.
You might be thinking: what idiot would pay that fee if all the firm is doing is filing your taxes and not even managing your bookkeeping? Well, this idiot did. I felt panicked when only two CPAs returned my calls, and I was completely overwhelmed by the pending tax deadline swiftly approaching. “Might as well bite the bullet if we want this done correctly,” I said to my husband. I thought we had no other option. So, that’s what we did for nearly two full years.
Following an argument with my husband, I decided to try Collective
I am one of the lucky ones. My husband and I rarely argue. But when we do, it’s usually about one of three things: sharing a workspace, real estate or taxes.
Each quarter, my spousal unit would become frustrated with me, and justifiably so. I always waited until the last minute to update my bookkeeping and reconcile my accounts. And for a procrastinator who barely understands QuickBooks and has several hundred transactions each quarter, I can assure you, that my records were not a pretty sight.
The overwhelming frustration I felt over taxes every 3-4 months was blinding. And the fancy overpriced firm was making things worse instead of better. They were slow to answer our questions and seemed to be missing things.
For instance, we received an $11,000 correction check from the IRS in the fall of 2019. (Refunds, for self-employed individuals, are not the norm. This is usually an indication that something was not filed correctly). They told us that they had failed to record our Q3 payment to the IRS. We overpaid by $11,000 in the prior quarter.
In case you’re wondering, I don’t tend to keep an extra $11,000 lying around just in case my $7,000 per year accountant forgets to record one of our quarterly payments. To make matters worse, it was also around this time that our accountant informed us our fee would be going up in 2020 if we wished to continue doing business with the firm.
That’s when I drew a line in the sand. I saw an ad about a new San Francisco-based startup, founded by freelancers, for freelancers, called “Hyke” (now Collective). The ad made the bold claim that their advisors could make taxes, back-office operations and S Corps for self-employed people “easy”. It was seemingly an all-in-one solution to my tax-related issues. My husband was beyond skeptical, but I made the call. I was done overpaying a lazy accountant to get my taxes so very wrong.
My initial impressions of Collective
Ugur Kaner, the founder and CPO of Collective, was the person who originally took my call. Kaner told me he had also spent the majority of his professional career being self-employed and understood the unique pain points a freelancer experiences when it comes to doing taxes. After talking through everything we had been through with our last accountant, the call almost felt like a therapy session.
He said that Collective could do more than just handle my taxes – they could help us save money on taxes by helping us file as S-Corps and run payroll. Then came my favorite phrase: “full-service bookkeeping”.
PS: Anyone who tries to tell you bookkeeping isn’t a valuable or time-saving service has never run a complex business. I work with dozens of clients each year and have to categorize hundreds of transactions with so many receipts it makes my head spin.
Within about a month or so, the team at Collective had both my husband and me set up on Gusto payroll, had my (horrendous) bookkeeping completely sorted and had already started working on our Q4 January 2019 estimate.
Collective discovered we had been overpaying by almost $8,000 each quarter
This is the part of the article that’s going to sound like an ad, or that I am gushing over this company a little bit too much. But when I tell you that Collective changed my life, I mean it.
My first year with Collective was a game-changer. We saw instant results and started saving money before filing our 2019 tax returns. Within weeks of joining, Collective discovered that our previous accountant had been regularly overestimating our quarterly taxes by almost $8,000 (each quarter), meaning that we had more than $30,000 worth of tax credits with the IRS.
That made sense because, for two self-employed people who make a decent amount of money, my husband and I felt like we were killing ourselves every quarter just to pay our taxes. That instant adjustment took a huge weight off our backs.
Collective also absorbed the costs of our QuickBooks ($240 per year, per person) and Gusto subscriptions ($46 per month per person) as part of their service. And I haven’t even talked about the tax savings yet. The S Corp election allowed us to take advantage of tax rules for small businesses like ours, saving us thousands of dollars.
Once a month I upload bank statements to my dashboard and fill out a simple reimbursement form. And I make a note of any unusual expenses. After that, Collective does the rest. My bookkeeper keeps everything running smoothly each quarter and sends me quarterly reports for my stamp of approval. (Much easier than trying to do it myself!) I can also check the status of my returns at any time by logging into the Collective user portal or sending someone on the Collective team a quick message via e-mail.
Collective.com pricing and features
At the time of this writing, Collective is only $297 per month (with the annual option) or $349 per month (when you pay month to month). And if you use the referral code MORGAN you’ll get your first month free.
The subscription includes:
- Full-Service Bookkeeping: Year-round bookkeeping services including distribution and expense tracking (big firms charge $100+ per hour for this service)
- Quarterly Tax Estimates: Estimates are sent to your email inbox each quarter so you know exactly what to pay.
- Tax Filings: Business and individual income tax returns
- Free Software & Tools: Access to Collective-proprietary technology including bookkeeping software (approx $40 per month value)
- Training: Training on QuickBooks and payroll
- Free Gusto: A Gusto subscription (a $46 per month value)
- Entity Formation & Setup: Help with company formation, LLC formations, S-corp filing, compliance, operating agreements and Tax ID/EINs
- Concierge-Level Support: Immediate answers to all of your questions with a dedicated account manager
- Legal Guidance: Guidance on reasonable salaries, 401k contributions, expenses and deductions
It’s not a bad deal at all, especially if you factor in the $86 worth of subscription services (bookkeeping software and Gusto) and full-service bookkeeping (which usually runs between $400-$800 a month by itself) that are included with your Collective subscription.
Collective pros and cons
Now you may be wondering – after four years on the platform, like the transparent reviewer I am – what are the pros and cons of using this service?
The benefits of using Collective are pretty much everything I’ve gushed about earlier in this article. But for the sake of clarity, I’ll summarize my favorite aspects below:
- Access to a dedicated human assigned to my account (no generic customer service here!)
- Free full-service bookkeeping
- The way they held my hand when setting up my S-Corp/Payroll
- My dedicated customer care CPA is always just an e-mail away (I use this feature on a regular basis)
- They usually reply to emails in less than 24 hours
- They never make me feel stupid, or feel like I’m a burden
- They send me an e-mail every quarter telling me exactly what to pay on my estimates
- They handle both my business and personal, jointly filed, returns
- The convenience of their intuitive dashboard
- Their awesome refer-a-friend program (get paid to talk about what you love)
I have to admit, I had to get super picky to come up with any cons for this review but I wanted to be as fair as possible. Below are the only things that have ever caused me the slightest inconvenience with this service – most of which, admittedly, have been corrected in recent years (startup growing pains).
- They don’t work with multi-member LLCs (only single member)
- They formally used Slack for correspondence (I’m so glad they switched to e-mail)
- On the rare occasion, they got my husband and myself mixed up (two married solopreneurs was, apparently, a unique use case that’s required some special accommodations in the system over the years)
My Collective referral code
Ready to take your first step towards stress-free taxes? Don’t forget to use the refer-a-friend code MORGAN if you want to try them out and get your first month free.
PS: The referral program is for real, active customers only. This isn’t a service I can “sell” like an affiliate. Referral codes are only given to active users. Which is more proof that I’m practicing what I’m preaching in this article.
Frequently Asked Questions
Is Collective available in my state?
Yes! Collective is now available in ALL 50 STATES.
Can anyone benefit from Collective’s concierge level tax service?
Collective is designed for solo entrepreneurs, business owners and freelancers who make over $80,000 per year and like to save money and automate their annoying tax-related tasks. Note: At the time of this writing, Collective only works with sole proprietorships, not multi-member partnerships.
Is the cost of a Collective membership ‘worth it’ for a small business owner?
I highly recommend Collective to anyone and everyone in my situation. My Collective membership has been worth its weight in gold. I sleep better at night, keep more money in my pocket and have fewer quarterly arguments with my husband over business finances. And the best part is – I’m no longer strapped for cash because Collective’s accountants are experts in their field. They know what they are doing. They’ve given me the greatest gift you can give a business owner – peace of mind.
Share your tax horror (and success) stories in the comments and don’t forget to connect with me on social using the links below. Also, if you are already a Collective member, let me know if you agree with my review!