Ladenburg Thalmann is investing in tax technology for the gig economy.
The Miami-based broker-dealer and advisor network announced on Wednesday that it will make a strategic investment in Track Technologies, a digital provider of tax automation for independent contractors, freelancers and other workers generating self-employed income.
"We see benefits here for our advisors, but we also think this will be a good investment," said Dan Sachar, Ladenburg's head of enterprise innovation. "Keep in mind that many advisors use 1099s themselves, just because a person makes freelance income doesn't mean that they don't need financial advice. We believe this is going to be a macro trend, more and more people are going to be receiving at least some of their income from a 1099 source, and we're trying to invest for the long haul."
According to Sachar, Track's technology will be made available to Ladenburg Thalmann advisors over time, and offered to others as well.
Track Technologies calculates, withholds and submits estimated tax payments for workers who receive income on IRS Forms 1099. The software can connect to bank or credit card accounts to expedite transactions like deposits and expenses and notify users about taxes owed and potential deductions.
"There really isn't a product on the market that does all of this," said Trent Bigelow, CEO of Track Technologies. "There are other applications that can tell a freelancer how much they owe, but it would still be up to the individual to set aside that amount, then each quarter go online to the IRS and state entities and make a payment to avoid incurring late payments and penalties. Track automates the whole process."
Bigelow said that Track selected Ladenburg Thalmann over more traditional Silicon Valley investors because Sachar and his team took more time to understand his firm and it's technology.
Further details of the investment were not released.
The investment is the first outgrowth of Ladenburg Thalmann’s Innovation Lab and Innovation Symposium. In May, the Symposium connected Ladenburg advisors with several fintech start-ups in Silicon Valley, including Track Technologies.
The Lab and Symposium are part of an enterprise innovation initiative launched by Ladenburg earlier this year to connect the Ladenburg network, its subsidiaries and its advisors to emerging financial technology.