FedTax, Norwalk, CT
5 Years In Business
To help online retailers easily calculate, collect and remit sales tax, the founders of FedTax created TaxCloud (https://taxcloud.com). Certified by state revenue departments, this free service is offered nationally and is already seamlessly integrated with more than 60 e-commerce platforms and payment processors. Almost 7,000 retailers already use TaxCloud every day, at no cost. FedTax is able to provide TaxCloud for free because they are paid by the states to make sales tax compliance easy (even for the smallest businesses) – a unique and novel twist because tax compliance has historically been a major cost burden for growing businesses.To fuel its fast growing business, this 10-person company (currently) has relied on private and institutional investors—and the Connecticut Small Business Development Center (CTSBDC) has played a significant role in the company’s success. CTSBDC Business Advisor Patty Meagher has been working with CEO and co-founder David Campbell since 2011. In collaboration with Gary Breitbart of the Business Council of Fairfield County, FedTax has refined their pitch materials and messaging to improve business development efforts, attract additional capital, and enhance the company’s relationships with the Angel Investor Forum and similar investor groups.
“The most important outcomes of our relationship with Patty and CTSBDC have been the regional connections we’ve established,” David Campbell explained. “CTSBDC keeps FedTax in the public view and introduces us to potential investors and strategic partners. It was actually Patty who first introduced us to one of the teams MasterCard.”
FedTax has raised more than $1 million since the fall of 2013—and more than $3 million prior to that. Additionally, FedTax has been selected multiple times as a “Startup Company to Watch” by the Connecticut Technology Council, and won a Silver Stevie award for Business Innovation of the Year in 2013.
To champion small businesses everywhere, FedTax advocates for technology-neutral sales tax policies in Washington DC and in state legislatures around the country – including direct testimony before the Senate Finance Committee and the House Judiciary Committee. These efforts include support for the Marketplace Fairness Act (or MFA) now pending before Congress. The MFA overwhelmingly passed in the United States Senate last year, and is a topic of intense deliberation in the House of Representatives right now. Enactment of the MFA would allow the states to decide if online stores should collect sales tax at the time of sale, just like local stores.
Since FedTax launched TaxCloud in 2010 they’ve provided more than $8 million in sales tax proceeds to state and local governments – sales tax proceeds that would not have been collected without their service. Impressive as that achievement is, it pales in comparison to the more than $23 billion of sales tax proceeds legally due and owing, but currently going uncollected each year due to this tax loophole now being addressed by Congress.
“One of the most important things that FedTax is doing is leveling the playing field for local businesses across the country. Small [local] businesses are required to collect sales tax while their online competitors can sell the same product to the same consumer, and simply ignore the collection of sales tax due. This disparity of tax treatment directly harms local businesses and needlessly subjects online consumers to voluntary self-reporting and audit risks.” said Patty Meagher of the CTSBDC. She continued, “The best part about TaxCloud is that the service is completely FREE for retailers because the company is paid by the states. The recently announced partnership with MasterCard is expected to accelerate the company’s already impressive sustained 3 to 5 percent week-over-week growth over the last three years.” Daniela Saunders, FedTax’s Senior Vice President of Sales and Marketing noted that “establishing the relationship with MasterCard has added immeasurable credibility for our company at a critical point in our growth, and would not have been possible without Patty’s help and introductions.”
“One of the most important things that FedTax is doing is leveling the playing field for local businesses across the country.” -Patty Meagher, CTSBDC Business Advisor