Tide x Coconut: A partnership designed for the self-employed

As one of the leading digital platforms, Tide is committed to helping small businesses simplify their business banking needs. To further embrace this mission, we are delighted to have joined forces with fellow digital app provider, Coconut to launch an exciting new initiative aimed to help the self-employed and accountants, save time and money with their finance admin.

In this article, we will introduce our partner, Coconut, meet one of its founders and explain how the new partnership has been designed with those who work for themselves at its heart.

Table of contents

• Who are Coconut?
• Meet Sam O’Connor, one of Coconut’s founders
• Why is Coconut moving away from the provision of e-money accounts?
• How will Coconut be supporting the self-employed in future?
• What’s behind the Tide and Coconut partnership?
• How Tide supports the self-employed with business banking and much more
• Wrapping up

Who are Coconut?

Firstly, let’s introduce our partner, Coconut and give some background on the services they currently provide, as well as how they align with Tide. Just like Tide, Coconut is app-focused and consists of an accounting and tax app that helps accountants to manage their sole trader clients.

By securely connecting their bank accounts to Coconut through open banking, self-employed individuals can easily track their income, send invoices, categorise expenses, and work out how much tax they owe.

Through the Coconut Portal, accountants can get instant access to all of their clients’ real-time accounting information, whenever they need it—so they can spend less time chasing paperwork, uncover opportunities to grow revenue, and prepare their sole trader clients for ‘Making Tax Digital & Income Tax Self Assessments’, without lots of training or process change.

A significant challenge that sole traders commonly face is that they don’t often use software to manage their bookkeeping and traditional cloud accounting is more suited to limited companies. Unlike a ledger for each legal entity, which you would find with cloud accounting, Coconut’s software has been designed so that you don’t have to treat each income stream as a separate entity.

Sole traders also often have transactions across a range of different accounts, e.g. business, personal or credit cards, and the Coconut app makes it easy to gather the data and simplify their finances. The Coconut app enables multiple income streams to be handled and helps to organise transactions for both the client and accountant. As with Tide, Coconut is all about making finance admin as simple as possible.

Meet Sam O’Connor, one of Coconut’s founders

Both Sam O’Connor and his co-founder, Adam Goodall, understand the needs of accountants and sole traders better than most. Both are accountants themselves, having met whilst undertaking their training at PwC. Following the sale of their first fin-tech business, they both became self-employed, which gave them a unique perspective on how sole traders operate. Sam says:

“We found that the world would benefit from a much simpler accounting and tax product for sole traders than what was on offer by cloud accounting companies. That’s why we built Coconut.”

Since developing the Coconut app, Sam and Adam have made it their mission to solve the problems that accountants face in trying to organise their sole traders. These include encountering transactions across both personal and business accounts, clients who are perhaps less tech-savvy than larger businesses, as well as the forthcoming government ‘Making Tax Digital’ requirement to submit quarterly summaries using a digital product.

As Sam acknowledges:

“Accountants are looking for a simple cost-effective solution.”

And Coconut provides this.

Why is Coconut moving away from the provision of e-money accounts?

When Coconut was first founded, Open Banking – the practice of being able to securely connect your business bank account to other authorised banking providers in order to be able to share your financial information, was in its infancy. Therefore, Coconut took the decision that it would be best to offer a current account product that would enable transaction data to be easily viewed. Over time, Open Banking, such as the service provided by Tide, has become more sophisticated, as well as more readily available.

Coconut has taken the view that, instead of continuing to provide e-money accounts, it makes more sense for customers to choose a banking provider that best suits them and then to connect their account to Coconut’s accounting app using Open Banking. The app itself will enable seamless connection to more than 25 different banking and credit card providers, including, of course, Tide.

As Coconut founder, Sam O’Connor states:

“Our focus is on accounting and tax tools, regardless of where people bank, so it makes sense for us to focus on this, and leave the banking to others, like Tide.”

How will Coconut be supporting the self-employed in future?

As well as the advances in Open Banking, digital change is on the horizon for the submission of self-assessment tax returns too. Since 2019, most VAT-registered businesses with a taxable turnover above the VAT threshold of £85,000 have had to keep digital VAT records and submit their returns using MTD (Making Tax Digital)-compatible software. From April 2022, this rule has now been applied to all VAT-registered businesses, regardless of turnover.

Of particular note to sole traders, MTD for Income Tax Self Assessment (ITSA) will also apply to individuals from April 2024 if their total gross income from self-employment and property exceeds £10,000 during a tax year. The current Self Assessment process will be replaced by quarterly tax submissions and an annual declaration. To help accountants get ready for the impact of this change, Coconut offers tailored software for sole traders.

What’s behind the Tide and Coconut partnership?

With a joint focus on making life simpler for sole traders and entrepreneurs with their smart approach to finance admin, Tide and Coconut are a great match. It is this shared value that is at the heart of the partnership. Coconut is primarily focussed on the relationship between accountants and sole traders, so working together makes a lot of sense.

As Sam O’Connor, founder of Coconut says:

“Whilst we would always encourage sole traders to have a business bank account like Tide, and that’s why we’re partnering, many don’t do that yet. Coconut works just as well if you use a business account as if you use a personal account. So you can get started today and we grow with you as you get more formalised as a business.”

Opening a free Tide FSCS-protected business bank account, provided by Clearbank enables those who are self-employed to, not only enjoy the benefits of a smart current account that can be managed on the go through the Tide app, but sole traders can then securely connect their Tide account to Coconut through the Open Banking feature to take advantage of the tailored software designed to help them through the challenges of MTD and quarterly tax returns.

How Tide supports the self-employed with business banking and much more

Tide is there to provide support every step of the way for those starting out on their own. We offer a business current account for start-ups with no monthly fees, so you only pay for what you use.

The Tide app is your own personal toolbox, packed full of free features to help you manage your business affairs. Set up and amend standing orders and Direct Debits, label your transactions to help you keep track of your income and expenditure and electronically upload receipts. Create your own customised invoices for free and stay on top of your financial health with our Cashflow Insights feature, which provides real-time forecasts up to 30 days ahead. Connect other business bank accounts to your Tide account using Open Banking to analyse your transactions and receive recommendations on actions you can take to improve your cash flow.

And, as your venture grows, Tide will grow with you. Tide Plus and Cashback accounts are perfect as you scale up, as they include extra benefits, including a number of free transfers every month, telephone support, and 24/7 access to legal support. We’re always at the forefront of new features to save you time and money with your finance admin.

Note: Members, on any plan, can call the Fraud Rapid Response team by calling 159. Use +44 20 4587 0366 if you’re calling from abroad. Lines are open 24/7.

Wrapping up

In summary, the Tide and Coconut partnership provides a great opportunity for two digital platforms to come together and unite in their support of the self-employed. By combining Tide’s business banking services designed specifically for start-ups with Coconut’s knowledge and expertise of supporting sole traders with their MTD reporting requirements, this really is a partnership that will help those who work for themselves at its very core.