On the first morning of Accountex 2018, IRIS Software Group announced the acquisition of cloud tax developer Taxfiler to expand its portfolio of online applications for professional practices.
Taxfiler was founded in 2012 by James Reeves and a team of developers who previously worked at CCH. Starting with personal and business modules, the company is now a genuine small firm alternative to the likes of BTCSoftware, TaxCalc and IRIS.
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Taxfiler has since added statutory accounts production tools for companies, partnerships, individuals and trusts. It has a live link with QuickBooks Online to create a workflow from trial balance figures through to online filing of accounts and tax returns for all these entities.
IRIS will integrate Taxfiler with its KashFlow cloud accounting program and OpenSpace portal to provide small practices and tax agents with an end-to-end digital compliance solution..
According to IRIS Accountancy Solutions CEO Sion Lewis, Taxfiler “provides an exciting opportunity for us to offer a new generation of professionals tax and accounts compliance in the cloud”.
Rather than competing with its existing Keytime, PTP and IRIS practice products, Taxfiler will open the door to smaller firms, he said. “We recognise the requirements and challenges of small practices are different to those of larger ones and look forward to simplifying the lives of more accountants to help them become more effective and productive.”
Return to the cloud for IRIS
This deal will send a jolt through the accountancy software market. IRIS has been the champion of integrated practice software for two decades, but has seen the suite model come under attack in recent years from smaller, more nimble cloud upstarts such as Capium, Gbooks – and Taxfiler.
When IRIS announced in 2017 that it was pulling back from developing its OpenTax cloud program, the rationale was that its customers preferred to complete tax returns with desktop systems. That may be the case for existing IRIS users, but startups and firms looking to move into the cloud started going elsewhere for their practice applications.
While still firmly entrenched among mid-market practices, IRIS is banking on the Taxfiler deal to re-establish its appeal to smaller practices.
IRIS chief product and marketing officer Nick Gregory told AccountingWEB that while Taxfiler will cater for smaller practices, there will still be a need for a single database that will bring the benefits of integrated practice tools and apps to more sophisticated firms. “It’s what the practice of tomorrow needs, not just the firms we’re serving today,” he said.
After experiences with previous IRIS acquisitions, customers are likely to ask whether Taxfiler can be as nimble and responsive under new ownership. But this is how consolidation works in the software industry and the extra resources, customer base and product support IRIS can provide could cement Taxfiler’s position as the market leader for cloud-based tax and practice software.