Are you a sole trader who’s struggled with the perils of financial management and tax returns? You’re not alone.
In fact, Dave Legion is a man who struggled to keep on top of his accounts so much that he decided to make managing them a full-time commitment with TAXO’D.
The business operates as mobile app and targets independent workers, providing them with “laser-focused support” that allows them to track what goes in and out of their accounts, all from one place.
As a finalist in the last voting round for Richard Branson’s Pitch to Rich contest, Legion is clearly committed to his vision. But why would a man with creativity in his veins turn his attention towards numbers? We found out.
As a designer and animator, what prompted you to go freelance in the beginning?
I have always worked for myself, since leaving university 11 years ago. From setting up a small company with my friends creating music videos, to creating a record label and design studio. But it was six years ago that I finally made the leap to the freelance world.
You found the tax process a bit of a minefield, so what were the biggest challenges when managing the finances?
That’s a tough one. The tax system in its entirety is a challenge. But I would say keeping track of those day to day business finances is where a lot of us fail. We each start the year with the determination to stay on top of them, but it takes one slip and you can find yourself months behind, and end up leaving it to the very last moment to catch up.
The fact that one million out of the 4.5 million self-employed people here in the UK waited to the very last day to file their tax return is a good example of that.
Who do you think is responsible for the lack of understanding available to independent workers and sole traders?
It would be easy to point the finger at HMRC but government cuts mean less HMRC staff, and under a third of the original offices remain. With the emphasis on big business, things aren’t going to get better for the independent worker any time soon. It will be down to third party businesses like ourselves that people will turn to for clarity and a solution to their tax woes.
Did you consider getting an accountant to calculate what you owed?
When I started out I couldn’t afford to pay an accountant, just so he could tell me how much money I knew I didn’t have. Luckily an ex-accountant and friend from a previous venture took pity on me. I remember turning up to our first meeting with a bag full of crumpled receipts, he took one look, smiled and sent me away with some bookkeeping tips. I have been pestering the poor man ever since.
At which point did you decide to take matters into your own hands?
I never once thought ‘right, I’m going to start an accountancy firm’. I felt I had no right taking on the tax-perts of this world. But I was determined to take control of my own finances.
I had tried every piece of online accountancy software on the market, but still felt overwhelmed by the amount of tabs, features, options and conflicting definitions between them. I didn’t want to learn another piece of software, I just wanted a simple way to record what money went in and out and be told what tax I owed. The problem was that there was nothing out there that handled it this way. Why?
Read more Real FD interviews:
- The story of an FD who chose to work part-time to fuel his passion for cycling
- Bivek Sharma: Working at KPMG makes me feel like an “intrapreneur”
- Funding Circle’s CEO on raising $65m and $150m from VCs in just nine months
Given how complicated you found the tax sector and admitting you’re not an accountant, how did you set out to develop a solution?
I had been working on TAXO’D on and off for four years. I would always be very pro-active for the first few months at the beginning of the year – having just survived yet another tax-return deadline. Over time my general tax-knowledge got stronger, and I began to connect the dots. But it wasn’t until February 2014 that I fully committed to it.
I knew if I could create something simple enough that I could use and understand then there would be many others like me who it could help too. I began that year as I did every other year; cramming tax law and tweaking the design further, only this time I kept on going. I began attending accountancy meet-ups, conferences, webinars until finally I was able to visually map out the entire self-assessment tax system.
This time when I went to see my long suffering accountant, he had nothing to add.
What were the components you considered to be absolutely key for the product?
The key is, as always, simplicity. TAXO’D is designed only for the self-employed, and to do a few things simply and effectively. Record transactions in and out as you go, see you how much tax you owe, and then we file your tax return to HMRC without ever leaving the app.
People are not looking for another accountancy tool, they want peace of mind and a simple way of staying in control of their finances. TAXO’D is not about tax, its about what you can be doing when tax is one less thing to worry about.
Did you encounter any particular difficulties during the development process?
We had come very close to releasing TAXO’D for iPhone only. However, we made the decision to start from scratch and build it on a different framework, one that meant TAXO’D would be available on all devices. This was big step back in time, but I’m glad we did.
You made it as a finalist in the Pitch to Rich campaign – did that help TAXO’D in any way?
The competition provided us with huge exposure and a platform to reach so many of our targeted audience pre-launch. We have now received over a thousand beta tester sign-ups from both the UK and rest of the world.
The tax system is a problem that really resonates with people, and competitions like Pitch to Rich are a great way to test your business idea at any stage of development.
Given why you started TAXO’D – has finance become your new business priority or will you continue to focus on design?
Thats a good question. It feels a little strange to have spent most of my life studying and working in the field I love most, only to set up a business in the area I once loathed the most.
But it is my job as designer to come up with creative solutions, and how we deal with our tax affairs, is just another problem that needs to be solved. Company branding, the user journey and how users interact with the service and product all requires design. I try to ensure every element of the business clearly steers the user down the right path and adds a little bit of beauty to the tax world along the way – if at all possible.
Do you have any other financial challenges you plan to solve for small businesses?
My focus is solely on TAXO’D at the moment. The goal is to simplify and further automate this process and work with HMRC and the government to creating a simpler and clearer tax system – one which separates big business tax from independent workers and smaller businesses.
If we can get that right then it would make a huge impact on smaller businesses, helping them to thrive as well as creating a fairer business landscape.