Paying the taxman in the on-demand economy

Apps from Uber and Airbnb to TaskRabbit and Instacart have jumpstarted the so-called “sharing economy” in the U.S., but they’re also created a whole lot of self-employed on-demand drivers, landlords and “rabbits” who are suddenly responsible for tracking their income and expenses and paying quarterly taxes.

[company]Stripe[/company], which handles the payment transactions for many of these new startups, and tax and accounting software giant [company]Intuit[/company] are hoping to ease that transition for all of these newly minted contractors by linking their respective technologies. Apps that use Stripe to collect their fees can now automatically categorize driving or errand-running income for its employees and populate that financial data into Intuit’s new QuickBooks Self-Employed software.

Us schlubs on the company payroll take the W-2 form for granted, said Alex Chriss, VP of Intuit’s self-employed finance products. We pay our taxes once a year, our employers generally cover our work-related expenses, and most if not all of our tax liability is deducted straight from our paychecks. As more workers transfer over to the on-demand economy, not only are they facing the foreign concept of tracking their own income and filing tax forms four times a year, they’re often dealing with some very complex reporting situations, Chriss said.

Take the driver that takes fares for multiple car services, or someone who drives in the evening for Lyft and shops on demand for Instacart during the day. Not only are they getting checks from multiple companies, they’re incurring expenses related to multiple jobs, Chriss said. By law, these companies can’t give their contractors any financial advice beyond “get an accountant,” he added.

Chriss cautioned that Intuit’s work with Stripe won’t magically solve your finances and pay your taxes, but he said the integration will make things much easier. The free version of QuickBooks Self-Employed will not only track your income, but also connect to your credit cards online allowing you to label any purchase a business or personal expense with a swipe of the finger.

The software also will help a contract worker get a better idea of what their actual take-home income is every day so you don’t wind up spending the tax collector’s share, Chriss said. While the basic software is free, Intuit will sell more advanced finance features, including TurboTax. Though Stripe has a large stable of collaborative consumption app customers, including Lyft, Shopify, TaskRabbit, Instacart and the newly landed Kickstarter, it didn’t say if they would all automatically support Intuit’s technology or if they have to elect to use the service individually.

Getting it right if clouds must be taxed

In his Weekly Update, David Linthicum, the Gigaom Research curator for cloud, warns as ‘Governments take another hard look at taxing public clouds’. He looks at proposed regulations to capture tax revenue lost to new cloud services–and takes issue with the structure of some of them.

The Great Cloud Computing Tax Debate of 2013

However, those who are pro cloud tax would argue that the shift in leveraging software and infrastructure installed locally, to software and infrastructure delivered over the Internet, should also mean a shift in how software and infrastructure services are taxed.

Australia wants $29M in back taxes from Apple

The tax bill is notable because of how profitable Apple is and how at the same time it has managed to out-maneuver many tax laws in the U.S. and Europe by building a complex web of subsidiaries in lower-tax countries.

Today in Connected Consumer

Back in the e-commerce 1.0 days, there were high hopes among brick-and-mortar retailers that the bricks-and-clicks model would make them competitive against pure-play e-retailers. Those hopes were mostly unfulfilled, however, as e-retailers were able take advantage of cost savings and the lack of sales taxes on web purchases to grab significant market share. Things have only gotten worse for brick-and-mortar merchants with the emergence of “showrooming,” in which consumers use mobile devices to buy products online that they see in stores. But bricks-and-clicks may be making a comeback. EBay is courting brick-and-mortar merchants to get them to set up virtual shops on its e-commerce platform in a bid to take on Amazon. Starbucks’ $25 million investment in mobile-payment processor Square could also signal the start of a rush by brick-and-mortar merchants to stake claims in the mobile payment space, which could help connect them with broader e-commerce opportunities. Congress may also give brick-and-mortar shops a big boost soon if proposed legislation to allow states to tax online sales goes through.

Lightbank makes first non-US deal by backing FreeAgent

Groupon might be suffering some financial turmoil, but Lightbank — the investment group formed by two of its backers — has decided to make UK accountancy cloud startup FreeAgent the target for its first foreign deal.