We’re sitting down with leaders on the business side of the creator economy to get their best advice for creators looking to launch and develop their careers. This week we spoke with Kristen Anderson, the CEO and co-founder of Catch.
Catch is a U.S.-based payroll and benefits company for creators, freelancers, contractors, and other self-employed people. It provides free health insurance shopping assistance, free automated retirement and paid time off savings tools, and free tax withholding services. Catch doesn’t charge users anything for its services and instead makes money through commissions from health insurance providers.
We spoke with Anderson about the “antiquated” financial system in the U.S., why creators sometimes struggle to plan their finances; what creators need to know about securing healthcare in 2023, and more.
Catch is on a mission to help creators set up services that employees working at a traditional company would normally receive—tax withholding, retirement plans, accumulated paid time off, and health insurance. While Catch is not a health insurance provider, it allows users in the U.S. to shop for federal marketplace health insurance plans. Users can also enter and track their income streams, and automatically set aside money for retirement, vacation time, and taxes.
“Unfortunately, our financial system in this country is built off of this fairly antiquated model of connecting employers to employees through benefits, right? … And what we found, and sort of why we started the company, was we don’t think that that’s how the world has to work,” Anderson told Passionfruit.
Anderson said she believes Catch provides an opportunity for passion-pursuing people to get the imperative benefits they would traditionally receive working at a company, despite having multiple, ever-shifting income streams.
“Sometimes it’s, you know, partly through YouTube, partly through, you know, Venmo, partly through picking up a DoorDash delivery here and there. … We see a lot of customers who want to be writers or, you know, who are writers but aren’t able to make a full salary out of writing. And so they do some of these other things on the side. That’s what we think is the core of the creator economy, it’s people really exploring those sorts of things and putting together this portfolio of income,” Anderson said.
Anderson said Catch trains itself to track all the income streams creators receive and automatically pull out a proper percentage of taxes to send quarterly to the Internal Revenue Service [IRS], the U.S. federal tax collection agency. Anderson says creators can set up their recurring payments, like from Patreon or Substack, to be automatically pulled from their bank accounts. Anderson said other irregular payments, like income from one-off brand deals, can be manually entered.
“Let’s put this system on autopilot. … Most employees don’t think about their taxes on a quarterly basis. So if you’re a creator, you shouldn’t have to have that extra burden because again, none of us like thinking about taxes,” Anderson said.
Anderson said Catch also can automatically pull a percentage of your income for retirement savings and vacation time. Due to variable income, Anderson said she thinks many creators don’t end up putting money aside for retirement. She said Catch makes recommendations on how much people should put aside for retirement and what kinds of accounts they should consider based on their age.
“There’s a lot of administrative burden towards setting that up or because again, just the volatility in how and when they’re paid makes it really hard to know, like, how much can I put aside and how much, how much should I put aside. … We recommend younger people on average are going more aggressive because they have a longer time horizon. Folks who are older, we put more towards the conservative portfolios because they’re gonna retire in less time,” Anderson said.
Treyton DeVore (@treytonwrites)—a freelancer, financial planning entrepreneur, and creator who produces business advice content—told Passionfruit he personally loves Catch, and started using it due to its automated percentage-based withdrawal system for personal benefits and taxes. He said he started posting about Catch and recommending it to his followers on Twitter, and soon built an amiable online relationship with the company. He said he then made a video breaking down Catch’s services, despite not being affiliated with the company.
“With freelancers, all your income is pretty much variable. … I have a little percentage set to transfer money to a travel savings account so that comes off the top before the money even comes to my personal account, and I have my tax automation set,” DeVore said.
DeVore said he thinks the only downside for Catch is its retirement plan offerings, which he believes are somewhat limited and do not include solo 401K retirement plans, an option with high contribution limits for self-employed people. DeVore has a written financial advice blog about choosing between retirement options as a self-employed person.
Catch offers a traditional individual retirement account [IRA], a Roth IRA, and added a simplified employee pension [SEP] IRA in June 2022. An IRA is a retirement savings investment account set up with a bank or other financial institution. Traditional IRAs allow people to make retirement contributions tax deductible and then pay taxes on money once they withdraw it in retirement. Roth IRAs require non-deductible, post-tax contributions, but don’t require taxes to be paid when the money is withdrawn down the line. A SEP IRA is similar to a traditional IRA, although it offers higher contribution abilities and is tailored towards small business owners with few employees and self-employed people. Employers using the plan must contribute on behalf of their employees, and contribute the same amount towards themselves as they offer to employees. Other retirement options out there include employer-sponsored 401K or solo 401K plans.
In a statement to Passionfruit via email, a Catch representative explained the company’s retirement offerings: “Catch offers traditional, Roth, and SEP IRAs. These accounts vary based on contribution limits and whether the funds are pre or post-tax dollars, so it was important to us at Catch to provide options to make sure we are best supporting different needs and lifestyles. The core focus of our retirement offering is automation—getting people started investing in their future without having to really think about it. By simply telling Catch the percentage you’d like invested, the platform can put your income to work for you. Automation removes the burden and helps you get started and create positive habits.”
For healthcare services, Anderson says Catch has built into the backend of the government’s health insurance marketplace (found at healthcare.gov) to show all of its available Affordable Care Act (ACA) health insurance plans that fit a Catch user’s income level. ACA plans are made cheaper by tax credits, which reduce the cost of monthly health insurance premiums and are dependent on a person’s income.
For those shopping for health insurance through the government’s marketplace, you must sign up during the open enrollment period from Nov. 1, 2022 to Jan. 15, 2023 to receive coverage in 2023. Unless you have a major life event—including having a baby, getting married, or losing employer-based insurance—you must sign up during this time period or you will not be covered the following year.
“Open enrollment is once a year, and I think sometimes people aren’t always thinking about that, you know, for very good reason, but it’s really important that folks who buy their own health insurance know when open enrollment is and why it matters. … If you need health insurance, please be sure to get it during this window. There are tax credits available that can make it much more affordable and health insurance is a really important way to protect against the unexpected,” Anderson said.
Anderson said Catch provides an improved shopping experience and more easily accessible licensed support staff than the government provides. Most importantly, Anderson said Catch also reviews a user’s income changes throughout the year to adjust their health insurance plan so they are receiving accurate tax credits from the government.
“If your tax credits are inaccurate, you can end up 1) not getting all the tax credits you are qualified for, which means you’re overpaying for your health insurance or 2) you can end up getting more tax credits that you’re qualified for, which means that you end up having to backpay those on your taxes the next year,” Anderson said.
Typically, people have to submit a form to the IRS to report income changes and adjust the tax credits they receive, but Anderson says Catch can help make those adjustments on its end.
“We do all of that behind the scenes. So all of that happens is your health insurance premium, let’s say it was, you know, $150 a month drops to, let’s say, $100 a month. And we do all of that for you and tell you what your new premium’s gonna be. You don’t have to talk to your insurance company, you don’t have to talk to the IRS. And as the year progresses, we help you stay on track with those credits,” Anderson said.
Catch makes its money by receiving commission payments from insurance companies after a Catch user purchases a health insurance plan. Anderson says these commissions do not influence what plans are shown or recommended to users.
“We don’t make any adjustments to our recommendations based on our commissions. It’s a completely separate system. … We make sure that we’re making recommendations based on what’s good for you, not based on what we make money on. It’s this weird thing that we call long term value and we think that our customers are gonna be better if we like do right by them,” Anderson said.
Beyond urging creators to remember open enrollment begins on Nov. 1, Anderson also advised creators to just “get started” saving for retirement and said “there’s nothing that’s too small to start.”
“Try and get something set up and try to get started, and if and when possible use automation, right? Take it off of your plate so you don’t have to like mentally put the bandwidth into thinking about it. … Start where you are, start small, and set yourself up with the systems that’ll help you succeed,” Anderson said.
Creator DeVore also advised creators to just get started by setting time aside each week or month to plan their finances. He advised creators to get organized, laying out their business expenses, personal expenses, and investments. Also, he said creators should pay attention to their taxes.
“Taxes in general kind of trips up a lot of people. One, they’re either not aware that they even have to pay quarterly taxes. … And then two, if they do know, they don’t know how much they should be withholding or really what to do about it. … If you’re spending all your money and not really setting anything aside, to then come up with that tax payment next year, that’s going to be a little tricky,” DeVore said.
Are you a leader on the business side of the creator economy? Reach out to [email protected] for a chance to get featured in an upcoming newsletter.