Tax day is upon us, and the weeks of struggling through complex accounts and filing jargon have ended.
Throughout the country, an almost audible sigh of relief that the ordeal is over for another year can be heard, perhaps the loudest of which from owners of small businesses.
According to a study conducted by QuickBooks, almost nine in every 10 small business owners take on the responsibility of at least one financial activity, including tax filing and accounting. For payroll tax alone, calculating and filing can take an average of almost five hours every pay period, amounting to 21 days a year.
The bookkeeping process, for many, is such a burden that many consider it the worst part of owning a business.
“Our small business owners have shared that tax management and accounting is the most frustrating aspect of owning a business,” said Lilac Bar David, Lili’s co-founder, and CEO.
Despite accounting and taxes being an integral part of running a business and deeply intertwined with banking, historically, the activities have been separated.
“Legacy banks have the resources to provide these tools to their customers, yet they haven’t,” she continued.
But legacy banks have been notoriously tone-deaf when addressing the needs of small businesses.
Making up 99.9% of companies in the U.S. and generating more than half the nation’s GDP, the small business sector constitutes a large sector of the U.S. market. However, their diverse needs can pose a problem for legacy banks with strict processes.
Approaching small businesses similarly to retail clients, products from traditional banks have fallen short of the diversity of requirements small businesses may need to run their business efficiently. Studies by Deloitte and McKinsey found that the more customer-centric approach of fintechs, adapting to needs as they became apparent, had won them favor with small business owners.
Bringing accounting and banking together
Lili, a neobank focused on the small business sector, has used their digital position to bring banking and tax preparation into the same place. Today, April 18, 2023, the company has launched its ‘Lili Smart’ solution, adding accounting software to the platform.
“Doing everything a business owner needs to do to manage finances is confusing and incredibly time-consuming,” said Bar David. “With the addition of accounting and Lili Smart, small business owners can view their finances as one process, saving them time, money, and frustration. By capturing the customer’s transactions, both money in and out, ‘Lili Smart’ can categorize transactions as they happen.”
With the introduction of the software, banking movements can be identified and categorized in real-time, streamlining many of the financial aspects involved in running a business.
“‘Lili Smart’ allows small business owners to manage their bookkeeping without the help of an accountant, and in a click of a button generate profit and loss statements, cash flow statements, expense reports and send invoices,” stated the company in the product launch.
“This gives small business owners, for the first time, the advantage in managing outstanding invoices, assisting in reconciling payments, and tracking past due invoices to provide less hassle and more financial visibility.”
Isabelle is a journalist for Fintech Nexus News and leads the Fintech Coffee Break podcast.
Isabelle's interest in fintech comes from a yearning to understand society's rapid digitalization and its potential, a topic she has often addressed during her academic pursuits and journalistic career.