by Roger Russell
With many rival developers of professional accounting software entering into alliances or making acquisitions to expand their product offerings and theircustomer bases, TaxSimple is sticking to its origins as an independent developer of tax preparation software.
John Vora, president of Randolph, N.J.-based TaxSimple, said, “We do have general ledger, accounts payable, accounts receivable and payroll, but we’re not actively promoting them. Since the Internet took over, we have been concentrating more on Internet technology than on accounting packages.”
Meanwhile, rivals have been actively expanding their offerings. For example, ATX, the Caribou, Maine-based software manufacturer, just announced a development and distribution partnership with AccTrak21 to market the Total Accounting Office suite of products.
Moreover, CCH and CSI are regularly adding functionality to their suites.
Vora contrarily believes that, for his company to stay competitive, it must concentrate on tax prep.
Tax Simple Inc.8 Emery Avenue, Randolph N.J. 07869
“The only way we are going to compete with the big companies is if we can excel in price and performance,” he said. “We have to be at least as good as the big companies in performance, and we have to beat them on price.”“At the same time,” he noted, “we do have interfaces to accounting packages, so that our clients have the flexibility of using whatever accounting package they want to use.”
According to Vora, TaxSimple will link with any accounting package that exports data into an ASCII text file, which includes virtually all of the well-known suites. “So we compete by providing a flexible accounting interface that the customer can use to interface our tax software with any accounting package that exports data, and we beat the big companies on price and performance.”
“If our customers can get better performance from us than from a bigger company,” he added, “then they don’t care about having an integrated accounting package.”
Vora began his company 21 years ago with help from his wife Vicki. “She is an accountant, while my background is heavily in computers,” he explained.
“We were living in a one-bedroom rental apartment, and had saved barely the minimum to buy a house,” said Vicki. “John asked me if I wanted to buy a house or go into business. We decided to start the business in September 1982, and incorporated in January 1983. We were late in the market that year, and only sold one package for $69.”
Vora sees the retail market as a growth area over the next few years. “We have been concentrating more on Internet technology than on accounting packages, especially Internet retail packages, because we believe that’s where the greatest amount of expansion will take place. That’s where we’ve been putting most of our resources.”
Although he is marketing a tax preparation product directly to consumers, he sees no conflict with his professional customer base.
“We believe that people go to a tax preparer not because the preparer has a computer and a program, but for their knowledge and experience,” he said. “It’s easy enough to walk into Staples and get a tax preparation kit, so whether it’s made available on the Internet or at Staples doesn’t matter much. There’s no substitute for knowledge and experience, so I don’t see any conflict.”
Vora said that his consumer product is not as comprehensive as the professional one. “The retail version contains all the forms of the desktop but doesn’t have other features that the professional requires, such as transmittal letters.”
The professional Internet version allows the tax preparer to prepare tax returns on TaxSimple servers. “We have a new product that, for a flat fee, allows the preparer to prepare as many returns he wants,” Vora said. “This product is identical to the desktop model, but it’s much cheaper than desktop because you are preparing on the Internet. If you have cable, DSL or broadband, you won’t see a difference between the desktop and the Internet professional products.”
The Internet model is a true application service provider, according to Vora. “The data sets are on our server but everything else is locked out,” he said. “When the preparer is finished with the tax return, we transfer the data to his computer and delete it from our server, so the client data is most secure. When the preparer comes back the next time, we read the data from [the preparer’s] hard drive and then bring it back to our server and let the preparer update client returns.”
This type of hosting makes it more comfortable for the end users, Vora believes, because “it gives them a sense of control, knowing that their valuable data isn’t hosted and stored at a remote location.”
TaxSimple began with a target market of small and midsized firms, according to Vora. “However,” he said, “as the years passed, we started adding more and more forms and features, so now the program has become very sophisticated as well as very comprehensive. Virtually any complicated return can be prepared using our system.”
In fact, some large firms are TaxSimple users. “Our in-house analysis shows that the average user prepared from 450 to 500 returns during tax season, but a number of users have prepared from 2,500 to 3,000 per office.”
The total number of TaxSimple users puts it in the same category as AccountantsWorld in the tax prep spectrum. Although TaxSimple toyed with the AccountantsWorld portal concept, Vora said, “We looked at that and don’t think there’s a huge market over there. Most of their features are on our Web site for free. Our main concentration is to develop the desktop market and Internet tax preparation.”
For the future, Vora fends off speculation that he is positioning the company to be sold, despite the number of recent tax prep acquisitions by the larger players. “Becoming public is the next step,” he said. “However, we believe it will take two or three years, when we will have a leading role in the Internet market, and at that time, we will think about going public.”
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