Rich Preece, Europe VP and Managing Director, Intuit
You don’t have to go far to find reports on the ‘sharing economy’, the rapid rise of self-employment and how easy it now is for individuals to offer up goods and services to an immediate marketplace. The sharing, gig or on-demand economy is making waves across industries as far-reaching as travel, cleaning and even legal and it’s made possible by the rise of innovative and new online platforms. Individuals are sharing access to their property, resources and even skills, with services like AirBnB, Etsy, Uber and Zopa, proving the most popular.
But, as the number of self-employed individuals continues to increase – a figure that currently sits at around five million according to the ONS – there is a growing opportunity for accountants to get involved and help them battle through the minefield of self-assessment tax returns. Of course, most individuals turning to self-employment will do so for a passion for their business and not to get into the nitty gritty of getting the books done. How therefore can accountants capitalise on the growing sharing economy trend to better serve their self-employed clients?
Sizing the sharing economy opportunity
Our recent research shows six per cent of Brits have already started to monetise previously untouched assets and use sharing economy services to supplement or create income. This is being driven by the proliferation of mobile technology, which is giving them immediate access to huge customer bases, all within their pocket. It’s also causing a shift to more flexible working patterns, with many individuals looking to take greater control of their work-life balance. Full-time 9-to-5s with a benefits package in tow are becoming increasingly rare. In fact, just 13% of Brits expect to be working in a traditional role in a decade.
As a result, the sharing economy is playing a more pivotal role in the health of the UK market. PWC last year calculated the total value to the UK economy to be £0.5bn, rising to £9bn by 2025.
Tackling the tax minefield
There is a flipside, however. While the rise of sharing economy services in such a short timeframe has been impressive, its growth has been stifled by a lack of infrastructure and clarity on regulations to support these new business models. Issues such as tax, salary, pension and insurance are all based on a model of employment that, for these workers, simply isn’t relevant anymore.
Back-office admin can also be overwhelming for these individuals. They suddenly have to deal with managing business and personal finances, handling taxes throughout the year and meeting compliance requirements. This is where the accountant’s role becomes critical while tools, such as QuickBooks Self-Employed, are also starting to come to market to help them address these challenges.
Clients shouldn’t have to bring in a shoebox of receipts or have to guess what an allowable expense is. Using tools specifically designed to address self-employment requirements makes this process far simpler, in turn, enabling accountants to quickly review their clients’ year-end reports before filing with HMRC.
The less time accountants have to spend on completing their clients’ self-assessment forms, the more time they’ll have to focus on growing their practice by offering more strategic services and generating new revenue streams, such as consultancy. In addition, moving finances to the cloud will help accountants to better engage with their client base, as everything from their invoices and expenses to income to tax payments can be stored in one place; making any interaction much more efficient and accurate.
There’s a growing force of self-employed individuals that are changing the face of business as we know it and accountants must now step forward to offer them the support they need to truly flourish. In turn, the sharing economy offers a wealth of opportunities for the accounting industry, and those willing to embrace these new ways of working will surely reap the rewards in years to come.