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43North runner-up Painless1099 launching service Tuesday

With tax season wrapping up on Monday, the runner-up in last year’s 43North business plan competition is hoping to get independent contractors to start thinking about next year’s taxes.

Painless1099 is developing an automated way for independent contractors to have money withheld from their earnings so they’re not hit with a big bill when their income taxes come due.

The six-person company, which relocated to Buffalo from Virginia after winning $500,000 from 43North last October, is launching its tax management platform on Tuesday after testing it with about 100 early users.

“It’s a big day for us,” said Ace Callwood, Painless1099’s CEO. “With this release, we’re opening it up to the public.”

Painless1099’s system allows independent contractors, freelancers and other workers who receive income that is reported on IRS Form 1099 to automatically set money aside for taxes. The money from a user’s pay is deposited into a separate account in the user’s name at Iowa-based Lincoln Savings Bank, where funds are withheld to cover income and Social Security taxes. The rest of the pay is then deposited into the user’s personal checking account.

Painless1099 gives users the option of calculating how much to withhold based on their pay, or to have a fixed amount deducted from each paycheck, Callwood said.

Callwood believes Painless1099’s system can be a helpful tool for a wide range of workers, including real estate agents, Airbnb hosts, independent consultants or freelance Web developers.

The company’s system, which initially supported only electronic deposits from a bank account, has been expanded to allow deposits from other payment sites, including PayPal, Chase QuickPay, Venmo and Quickbooks Invoicing.

“The way we get money into accounts has expanded,” Callwood said.

The challenge now for Painless1099 is finding users. The company plans to market Painless1099 through search engine advertising, as well as on social media sites from Facebook and Twitter to LinkedIn.

For now, Painless1099 isn’t looking for revenue from its customers – a luxury that its 43North prize winnings allow, Callwood said. Instead, the focus is on building the company’s user base and further refining its software platform.

“As we expand, we’re letting people give it a run for free,” Callwood said.

Users who sign up during the company’s launch phase will be entitled to free lifetime tax withholding service. There are no setup fees, minimums or recurring monthly fees. Eventually, Painless1099 hopes to earn revenue by establishing a subscription-based service, Callwood said.

The 43North competition, part of Gov. Andrew M. Cuomo’s Buffalo Billion economic development initiative, is aimed at bringing promising startup businesses to the Buffalo Niagara region and helping them develop their businesses through their prize winnings and other support services.

email: drobinson@buffnews.com