While many tech startups subscribe to the "move fast and break things" school of management, embedded tax solutions provider April deliberately chose a very different approach.
"In the world of tax, you want to be right before you go fast," said co-founder and CEO Ben Borodach.
Since its founding in 2022, the company has made it a point to grow deliberately and intentionally in service of its wider strategy of not pursuing a direct-to-consumer model like previous tax platforms but a business-to-business approach that gives companies tax capacities for their own customers. The overall idea is that people won't be visiting a tax platform once a year but will instead handle them through their ongoing interactions with their various financial institutions and service providers.
"Our vision in life is to embed tax in every financial decision," said Borodach. "In contrast to that direct relationship, we believe that there's a space for Americans to actually work with the institution — that's managing their money, making their payments, that's paying them — to have a more efficient tax process."
As an embedded tax solutions provider, April has built its strategy around partnerships and integrations. In the beginning, this generally included only certain financial institutions. As time went on, it began adding payroll providers and human resources platforms. Then more fintechs, especially ones related to personal finance or small business, including ones specifically involved in tax services. Over time, the partners got bigger and more complex. Most recently, the company has announced partnerships with
These developments came a year after two big changes at April: one,
"This was always the ambition of the company to be working with many of the largest and most profound and widely used financial services platforms (although we also serve medium and smaller platforms as well). We want to be an infrastructure that can really be an alternative to the status quo. To do that, you have to be trusted, and to be trusted, you have to earn that [trust] over a period of time," he said.
However, he stressed that he does not view April as competition for local CPA firms. While April does tax work, he said it's not really tax work a lot of professional accountants are interested in doing in the first place. They want to be doing advisory work for high net worth individuals with complex taxes versus simple filings that might net them a few hundred dollars.
"What we're actually finding is that work has nowhere to go, so we're absorbing that work, and rather than competing with them directly, there's an alternative that says, 'If you have a moderate to mid-complex financial use case, whether you know that there's multiple 1099s or even a couple of K-1s, you can do that directly with your wealth manager. You can do that with your bank.' I think we're providing a natural offramp for that work to go," he said.
While he has not made definite plans to do so, he did not rule out the possibility of partnerships with local CPA firms in the future, especially in the context of the new enhancements and offerings, such as the Nasdaq equity tax solution.
"You can see where we could bring that capability to accountants or financial advisors or others that might engage a client directly, not necessarily on a platform. And we also announced our professional line, so we are providing embedded services where you cannot just self prep, [so] you can actually drop off your documents and have a tax professional do that work for you. And that business is also up probably close to 10x in terms of volume, in terms of what we saw last year," he said.
While April's expansion reflects technological advancement, he added that it also reflects structural changes that have been happening within the profession itself. He pointed to the ongoing pipeline challenge, which has created labor shortages when it comes to professional accountants, and said there is a real need for more capacity overall, which drives the need for automation to increase productivity and efficiency.
"What we should be doing is making these professionals more productive," said Borodach. "If they can ultimately go on and do work that's higher value, that is great from an evolutionary perspective. We want people to be doing more creative work, higher-value work, and not doing repetitive work that can be done in a more streamlined manner at scale. And I think that's where April excels."
