Collective

Collective is an online back-office platform for self-employed business owners and single-person businesses, which it refers to as "Businesses-of-One." The membership combines software with a dedicated team of accounting and tax advisors and covers business entity formation where applicable, S Corp tax election, obtaining an EIN, monthly bookkeeping and financial statements, payroll support and tax filing, federal and state business tax returns, and quarterly tax support. Individual tax return preparation is available for an additional one-time fee.

The stated aim is to consolidate the payroll, bookkeeping, tax and accounting tools that self-employed people otherwise assemble separately into one platform, replicating the functions of an enterprise finance department for a solo operator. The company positions tax structure — particularly electing S corporation status, which allows pass-through taxation — as a primary source of member savings, and states that members saved an average of $10,000 on business taxes in 2021.

Founding story

Co-founder and CEO Hooman Radfar has said he was inspired by his parents, immigrants who both became self-employed in the United States. After they divorced, his mother ran her business as a sole proprietorship while his father elected S corporation status; according to Radfar, that single choice of formation structure saved his father hundreds of thousands of dollars that his mother did not save. Radfar met co-founder Ugur Kaner while he was a founding partner at the VC firm Expa Ventures, and the two recruited mutual friend Bugra Akcay to start the business.

Business model

Collective sells a subscription membership that bundles entity formation, S Corp tax election, bookkeeping, payroll, tax filing and advisory support, combining software with a team of human accounting and tax advisors. Members pay $349 per month, or $296 per month when billed annually, plus a one-time $199 onboarding fee that covers registration with the appropriate agencies, payroll compliance setup and catch-up of year-to-date bookkeeping. Third-party city, state and federal fees and business license charges are excluded, and individual tax return preparation is sold as an additional one-time fee.

Recurring subscription membership revenue at $349 per month or $296 per month paid annually, plus a one-time $199 onboarding fee and optional one-time fees for individual tax return preparation.

Traction

As of July 2023 Collective said it served thousands of members across the United States with eight-figure annual recurring revenue and a waitlist exceeding 100,000, and employed about 200 people. Its website states it is trusted by 12,000 solopreneurs and that members save an average of $10,000 a year on business taxes.

Latest developments

In July 2023 Collective announced a $50 million funding round led by Gradient Ventures, bringing total capital raised to $82 million, to be directed toward product development and scaling operations, including expanding its 200-person team by roughly 30% by June 2024.