In 2007, around the same time when Robin Moses sold off his food and distribution business and yearned to start something that jells with his domain knowledge as a chartered accountant, the government introduced value added tax (VAT), much to the chagrin of small and medium businesses (SMBs). The SMBs, which had to prepare accounts only once a year till then, were from then on required to do so on a monthly basis, thanks to the altered processes resulting from VAT and TDS.
The convergence of these situations came as an opportunity for Moses, who quickly hit upon the idea of creating an application that could replace accountants and the daily hassles related to it, resulting in the formation of Reach Accountant, an online accounting software with a difference.
"With taxes and accounting becoming more and more painful processes, we intend to make life easier for hundreds of entrepreneurs by offering our product as a preferred replacement to accountants and desktop software," he said.
Targeting around 5 million SMBs that file tax returns electronically in India, Reach Accountant provides services related to indirect tax, which includes monthly TDS, VAT and Sales Tax and daily accounting and billing. It is different from other players like Taxspanner.com and Taxsmile.com, which serve individuals for annual tax filing. Simply put, Reach Accountant is a combination of an accounting software, an account manager, an accountant, a payroll manager and a CA.
Incubated at Morpheus Venture Partners (2010), Reach Accountant received its first round of angel funding from Rajan Anandan, an active angel investor and managing director of Google India, and Rehan Yar Khan, another serial angel investor, last year.
Reach Accountant has been improving its application with several add on benefits ever since then. It leverages the power of the internet to sync your multiple bank accounts with the application. "This reduces the data entry work of an accountant by over 60 per cent. Most of our customers spend less than two hours on their accounting," says Moses.
"Our go to market strategy will be to offer the application at very low prices and charge for the services We are basically partnering with local CA's and accountants to provide the service," added Moses.
Reach Accountant charges Rs 1,000 per month and Rs 5,999 on a yearly basis, Rs. 8,999 and Rs 11,999 per SMBs.
Apart from this, if a SMB wants Tax preparation services for up to 100 invoices, it will cost Rs 1,500 per month in addition to the annual fees, with an additional Rs 10 for each extra invoice. This service will include calculating VAT, Service Tax and TDS every month, calculating Income Tax when due, assistance for remitting these taxes, filing VAT returns every month, filing TDS returns every three months, filing service tax returns every three months and helping issue TDS Certificates at the end of the year.
Again, if a company, wants additional payroll management services, a fee of Rs 1,500 for 10 employees, after which Rs 100 is levied for each additional employee. The services include structuring and issuing payslips for employees, calculating PF, ESI and professional tax dues, assistance for remitting dues, filing PF, ESI and professional tax returns, filing employee TDS returns and issuing Form16 at the end of the year.
It competes with Tally, and other desktop accounting software. "But unlike traditional accounting software, it automatically downloads transactions from the customers' bank accounts and categorises over 50 per cent of the transactions intuitively. This saves more than 60 per cent of the time spent on data entry," explained Moses.
The way ahead
Of the five million SMBs that file tax returns electronically, about 10 per cent is Reach Accountant's addressable market. The market leader, Tally, accounts for 3,00,000 SMBs out of the 5,00,000 market.
Right now, Reach Accountant has managed to acquire 1,000 subscribers. The company is looking to have 50,000 customers in the next three years, to acquire a healthy share of the market pie.
Reach Accountant, which is now present in Bangalore and Chennai, aims to foray into six more cities by end of this year. The company is also roping in CAs and accountants to do manual accounting for companies in smaller cities also, sometimes offline, in order to expand its presence.
Recently Reach Accountant launched an app for iPhone and android and added a bank feed to get account related statements.
After having its presence felt in India, it hopes to have a global footprint. It aims to basically expand into English speaking countries like the UK and the US in another five years.
Moses says, "Our advantage is that, our supports are real accountants who speak proper English and give account related information. Tally only gives technology-related advice."
"Our key challenges are in bringing adoption of the software, to customers and the accounting fraternity which is quite low, but picking up well."
Investors like Rehan Yar Khan are buoyant, citing the growing number of SMBs in India that offers huge scope for Reach Accountant to grow. "Though the number of professionals are increasing, the recruitment for CAs and accountants are reducing. SMEs find it easier to outsource the accounting job, rather than recruiting people for this job and maintaining an in-house team. This is a full service software tool which does everything," said Khan.
Reach Accountant, which broke even last year, is also looking to raise a Series A round in the next 4-5 months.
(Edited by Prem Udayabhanu)