With its Stripe Connect product, Stripe wants to make it easier for on-demand and marketplace businesses to not only process payments from their customers, but also make payments to contractors and vendors. In an effort to bolster the tax reporting tools available to them, the company has acquired long-term partner Payable.
Payable operates a platform aimed at on-demand companies that simplified the process of onboarding and tracking payments to large numbers of contractors. But the most valuable piece of the business ended up being the company’s tax reporting, allowing businesses to easily generate 1099 tax forms for contractors.
Over the years Stripe has been strategically acquisitive, as it looks to add certain features to its product suite that customers find valuable. In the case of Payable, the acquisition came about over multiple years of partnering to make tax reporting easier for businesses that made payouts to contract employees.
Stripe and Payable first started working together in 2015, when the companies partnered to provide 1099 forms to Stripe Connect users. For large-scale on-demand companies like Lyft and DoorDash as customers, the partnership helped to massively simplify tax reporting.
Through a deep integration with the Stripe API, Payable could seamlessly generate tax forms for hundreds of thousands of vendors and contractors that Connect customers made payments to over the prior year. The companies doubled down on the partnership last year by sharing resources and even communicating via Slack, and were able to process 10 times as many 1099 forms as the year before.
As a result of that partnership, Payable realized it was better off working with Stripe than trying to go it alone. In a blog post, Payable co-founder Peter Terrill wrote that the company “brought on more users in January of 2016 as part of the partnership than we had in the previous two years combined.”
With the acquisition, Stripe will be bringing the company’s product and expertise in-house. For existing Payable customers, the company’s tax reporting tools will continue to be hosted on payable.com through the next tax season. Thereafter, Stripe will integrate those tax reporting features available free of charge to Stripe Connect users as part of the Stripe Dashboard.