Thursday, July 24, 2014

Is Your Out-Of-State LLC "Doing Business" In California? / tax filing obligations and tax liabilities in California

D. Matthew Richardson and Dina B. Segal for Sheppard Mullin write: Individuals and entities, including those from outside California, who invest in or do business through an out-of-state limited liability company ("LLC") may be surprised to find out that they have filing obligations and tax liabilities in California as a result of California's far-reaching rules and interpretations related to when an LLC is treated as "doing business" in California.

The law:

Under California law, all LLCs are required to annually file a California tax return and pay at least an $800 California franchise tax if they:
  • Engage in any transaction in California for the purpose of financial gain or profit.
  • Are incorporated or organized in California.
  • Have qualified or registered to do business in California.
  • Are "doing business" in California, whether or not they incorporated, organized, qualified or registered under California law.
The Franchise Tax Board ("FTB") takes the position that an LLC organized in a jurisdiction outside California is nevertheless "doing business" in California if:
  • It is a member of an LLC that does business in California.
  • It is a general partner in a partnership that does business in California.
  • Any of the LLC's members, managers, or other agents conducts business in California on behalf of the LLC.
In addition, an out-of-state LLC is "doing business" in California if:
  • The LLC is commercially domiciled in California (i.e., California is the place where realistic control of the LLC's functions is centered).
  • Sales, including sales by the LLC's agents and independent contractors, in California exceed the lesser of $500,000 or 25% of the LLC's total sales.
  • Real or tangible property of the LLC in California exceeds the lesser of $50,000 or 25% of the LLC's total real and tangible property.
  • The amount paid in California by the LLC for compensation exceeds the lesser of $50,000 or 25% of the total compensation paid by the LLC.
For purposes of these calculations, the sales, property and payroll of the LLC include the LLC's pro-rata or distributive share of any pass-through entities (i.e., partnerships, LLCs and S-corporations).

Some examples that may surprise you:

  • A Nevada LLC acquires a passive minority membership interest in a Delaware LLC that owns and operates several California shopping centers.  The Nevada LLC may be treated as "doing business" in California simply by reason of its ownership of a membership interest in the Delaware operating LLC, resulting in the Nevada LLC's own California tax filing obligations.
  • A Montana LLC owns an apartment building in Montana that is managed by an on-site (Montana) property manager.  One of the three LLC managing members is a California resident.  The Montana LLC may be treated as "doing business" in California simply by reason of the existence of a California managing member.


The State can impose a penalty of $2,000 per taxable year if an out-of-state LLC is doing business in California and fails to file a tax return and pay the taxes and fees due. The penalty is due only if the FTB sends a written demand that a return be filed and the LLC does not file the return within 60 days.

Also, any contract made by an out-of-state LLC in California that is neither qualified to do business nor has a corporate account number from the FTB is voidable by any other party to that contract for the period during which the out-of-state LLC fails to file a tax return required by the FTB.

Note that the FTB's determination of when an out-of-state LLC must file tax returns is in contrast with the California Corporations Code.  Under the California Corporations Code, any entity that "actively engages in any transaction in California for the purpose of financial gain or profit" must register with the California Secretary of State.  But for this purpose, an out-of-state corporation is not considered to be transacting business in California merely because it is a member or a manager of a domestic or out-of-state LLC or a limited partner of a domestic or out-of-state limited partnership.  Moreover, the new California Revised Uniform Limited Liability Company Act, effective as of January 1, 2014, provides that an out-of-state LLC "may" register in California and does not impose penalties for failing to do so.

Non-residents of California are also not necessarily off the hook for California taxes arising from ownership of an LLC.  Such non-residents may owe taxes on pass-through income sourced from an LLC's California activities despite their non-resident status.

BOTTOM LINE:  Your out-of-state LLC may have nexus and filing obligations in California and taxes may be owed for such LLC's activities in California!
Posted on 2:41 PM | Categories:

FreeAgent makes payments easier for small businesses with PayPal Here

Online accounting provider FreeAgent is making it easier for UK small businesses to get paid faster by their customers, through a unique integration with PayPal’s innovative new payment service.

FreeAgent is the first online accounting system in the UK to integrate with PayPal Here. Their partnership makes it easier for small businesses to process credit and debit cards and take payments via their smartphone or tablet - wherever they do business, then automatically record the payments in their FreeAgent account, making it easier to manage their business finances on the go.

The integration means that FreeAgent - the multi award-winning online accounting system specifically designed for small businesses and freelancers - will enable its customers to use PayPal Here as a payment option to accept credit and debit cards when they create an invoice.

By using the PayPal Here app on their iPhone, Android smartphone or iPad, FreeAgent customers will be able to show their invoice to a client and have them pay instantly with their credit or debit card through the PayPal Here Mobile Chip and PIN card reader.

Ed Molyneux, CEO and co-founder of FreeAgent, said: “PayPal Here is a game-changing service that makes it easier than ever for small businesses to take payments on the spot, so we’re delighted to be the first online accounting system in the UK to integrate with it.

“Our goal at FreeAgent is to completely streamline small business finances, all the way from timeslips to tax return. Thanks to this integration FreeAgent customers will enjoy a quicker and more intuitive method of invoicing, getting paid and managing their finances than ever before.

“We know that invoicing and getting paid is one of the biggest issues for micro-business owners in the UK, so we expect PayPal Here to be extremely popular with the ever-growing legion of UK small businesses and freelancers who currently use FreeAgent to manage their accounts.”

PayPal introduced the ‘pay as you go’ PayPal Here app and Chip & PIN card reader for small and medium-sized businesses last year. There are no monthly fees, just the initial purchase price for the card reader and a small fee per transaction. Business owners connect the reader with the PayPal Here app on their iPhone or Android smartphone, or iPad to start accepting card and PayPal payments anywhere in the UK with mobile or Wi-Fi reception.

Narik Patel, Director of Mobile Merchant Services at PayPal UK, says, “We designed PayPal Here as a flexible, affordable way for businesses of all sizes to take card payments quickly and securely via their smartphone or tablet wherever there is 3G or wifi reception. It’s been a hit with smaller businesses as it reduces their reliance on cash and cheque payments, it’s ‘pay as you go’ and businesses only pay a small fee when they take a card or PayPal payment.

“This integration with FreeAgent supports our vision to support small businesses to focus on what’s important to them – getting paid and enabling them to focus on growth.”

Find out more at
Posted on 2:37 PM | Categories:

Well-Funded Competition Forced VC-Free FreshBooks To Take Investors After A Decade Of No's

Alex Konrad for Forbes writes: For twelve years, Mike McDerment has run FreshBooks out of Toronto to be self-sufficient. But when your market gets hot, you don’t want the smallest war chest. So even as FreshBooks announced its first major funding round today, it’s decision to take venture capital after years of growing on margins shows just how fast the market environment can change–and why the benefits of going it alone can become less attractive fast.
FreshBooks raised $30 million, it announced Wednesday, in its first institutional round from Oak Investment Partners, as well as Atlas Venture and Georgian Partners. The money’s supposed to help the company grow at a faster clip, expanding what’s currently a team of 150 to 400 in the next two years. They’ll help with engineering and sales and marketing. All that’s pretty standard as a use for funding.
But since raising $100,000 from friends and family when the company first started, FreshBooks and its CEO have eschewed venture backing. In the fall of 2012, McDerment told Bloomberg that while he had no specific rule against taking funding, venture investors didn’t have much appeal to him. VCs build a portfolio with a few bets, they look for patterns and ways to improve a company’s operations, and they expect an eventual return. And he was adamant that any investor in FreshBooks would need to be one that wouldn’t take stock with liquidation preferences that would allow them to cash out even if the company tanked.
Fast forward to 2014, and McDerment’s taken on the growth capital he was loath to consider before. What’s changed? Venture funding begets more venture funding.
By selling software to small businesses to help entrepreneurs and shopkeepers who are not professional accountants run their businesses and manage their expenses, FreshBooks has long gone against QuickBooks and its parent Intuit INTU -0.1%, a company with a market cap of more than $23 billion. FreshBooks’ user base of 10 million is centered around North America, and while it may now look more internationally, that’s allowed fast-growing competition to set its sights on the U.S.
The lead challenger, as McDerment knows, is a New Zealand company, Xero. That company’s got more than 200,000 paying customers already, and most importantly, it’s setting its sights squarely on the U.S. market. Back in October, Xero raised $150 million of funding of its own, the majority of it from U.S. investors led by Matrix Capital Management and Valar Ventures, Peter Thiel’sventure firm focusing on companies from outside the U.S. Valar’s mission is specifically to help such companies expand aggressively stateside. [snip].  The article continues @ Forbes, click here to continue reading...
You can follow the author Alex Konrad on Twitter here.  Alex writes startups, enterprise software and venture capital.

Posted on 6:21 AM | Categories:

Spree Webinar: Top 5 Tricks for Connecting Your eCommerce Store to Quickbooks / August 6th at 2:00 PM EDT

Spree Commerce writes: Is it too much to ask for a product that easily connects your store to Quickbooks? Users want to get the most out of their Quickbooks investment, but they don’t always know how. One of Wombat’s most popular features is our integration with Quickbooks. No custom code required.
Join us for a live Webinar on Wednesday, August 6th at 2:00 PM EDT to see how easily Wombat handles Quickbooks. Sameer Gulati, Chief Product Officer for Spree Commerce, will tell you the top five tricks you need to know to rid yourself of the headaches of managing your inventory and accounting with Quickbooks.
Growing your e-commerce business while you manage your inventory and accounting is no easy task. Many growing retailers use Quickbooks, but they find that it's hard to get the most out of it. Sameer Gulati, Chief Product Officer for Spree Commerce, has helped multiple stores get up and running with Quickbooks. He'll tell you the top 5 tricks you need to know so you can rid yourself of those headaches once and for all.
In this webinar we'll discuss:
  • How Quickbooks can help you with your inventory and accounting
  • How to configure Quickbooks in a way that makes sense for your business
  • Why connecting your store to Quickbooks is so hard
  • How to connect your store to Quickbooks so your data can flow easily and accurately
  • And much, much more!
In this Webinar we’ll discuss:
• How Quickbooks can help you with your inventory and accounting
• How to configure Quickbooks in a way that makes sense for your business
• Why connecting your store to Quickbooks can be so hard
• How to connect your store to Quickbooks so your data can flow easily and accurately
• And much, much more!
Register now! Space is limited!
Posted on 6:06 AM | Categories:

Why Do We Need Business Intelligence?

Brian Petersen, Director of Business Intelligence Solutions  for Jet Reports writes:  What if you found yourself needing to present a solid case in front of your boss for why you want to purchase a Business Intelligence solution? What would you say? Anything that involves asking your boss to spend money might cause you to begin to sweat.

You may never have to face this situation but, frankly, this scenario is making me nervous. So to help us both feel better, I’ve laid out a few points to help you understand a few advantages of BI.

A streamlined structure for reporting and analytics
Having a Business Intelligence solution with a data warehouse and cubes generally presents a very streamlined way for our users to get access to data. It’s widely known that ERP systems are designed and optimized for inputting information, but they are not built with the end-user in mind for getting information back out in an intuitive or user-friendly manner. A Business Intelligence solution helps ease the process of getting the data out, making it very, very easy to create stunning reports and dashboards. And most importantly, we can structure the data in a way that makes sense for the end users.

Consolidate multiple data sources into a single place
Business Intelligence allows you to consolidate data from multiple places in the same data warehouse. For example, if you have a legacy system in addition to Dynamics NAV plus Dynamics CRM, and a separate system to handle logistics, you can consolidate all of that information into a single set of tables in the data warehouse. The data warehouse would allow you to create a Finance Transactions table to present all of your financial transactions from your different data systems all in one place. In addition, this would give users one single point of access for all reporting across the organization.

Control business rules and calculations for a single version of the truth
Business Intelligence provides the ultimate control over the business rules and calculations while facilitating one version of the truth for the end users. I’ve been in multiple meetings in the past where we sit down to talk about something regarding sales, and the meeting turns into two people arguing about who has the right numbers because their numbers are different. One person was looking at gross sales, and another person was looking at net sales with returns. Business Intelligence makes sure that everyone is looking at exactly the same information, and the information is being pulled from the same place.

Data-driven companies simply perform better

An MIT Sloan School of Business study surveyed 3,000 global executives, managers and analysts to understand how companies use analytics to drive operations and strategy. In the study, they classified organizations as top performers and low performers, looking for anomalies between the two. They found top performing organizations were more than twice as likely to use analytics to guide future strategy and operations. Many people tend to look at Business Intelligence as a long-term investment, but it’s important to note how top-performing companies use analytics to guide day-to-day operations in addition to more strategic initiatives.
Posted on 6:06 AM | Categories:

Wednesday, July 23, 2014

Tiempo Labs Tiempo now integrates with QuickBooks Online! Sync Customers, Services, Employees, and Time in less than a minute. The fastest way to track time and get paid.

Description: Tiempo gets your workers to enter their time every day. Stop hounding, cajoling, and sweet-talking your team to enter time. Let Tiempo worry about that. Reminders, alerts, and a simple design ensure that you're on top of it when timesheets are due.
- Track Time
- Approve Time
- Save Time as Draft
- Mark Time as Billable
- Take Notes
- Invite Workers
- Filter by Worker or Customer
- Customize User Roles
- Create Customers
- Create Services

Posted on 8:33 PM | Categories:

The tax benefits of turning trash into treasure

Frank Mokosak for the Des Moines Register writes: If you have used clothing, household goods, or a car that you no longer need, you may be able to do good by contributing the property to charity while obtaining an income tax deduction for your contribution. Subject to certain limitations, the amount of your charitable contribution is usually the fair market value (the price that property would sell for on the open market) of the property at the time of the contribution.
Used clothing and household goodsYou generally cannot take a deduction for donations of used clothing or household goods unless the property is in good condition or better. However, you can take a deduction for these items even if they’re not in good condition, if the claimed value is greater than $500 and you include a qualified appraisal with your tax return.
A good indication of the value of used clothing is the price that a buyer would pay in used clothing stores. Used household goods may have little or no value because of their condition, or because they are out of style or no longer useful.
Used carsThe value of a used car can usually be determined using a used car-pricing guide for a private party sale. The price listed should be for a car of the same make, model, and year, and with similar options and accessories. Adjustments may be needed for wear and tear, and mileage.
However, your deduction for a donated car may be limited to the amount for which the charity then sells the car. This rule applies if the claimed value for the car is over $500, unless: 1) the charity makes a significant intervening use of or material improvement to the car before selling it; or 2) the charity gives the vehicle, or sells it for well below fair market value, to a needy individual to further the organization’s charitable purpose.
You must attach Copy B Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, (or other statement from the charity containing the same information) to your tax return. Form 1098-C shows the gross proceeds the charity received if the charity sold the car and whether either of the two exceptions for cars valued at more than $500 applies.
If the charity sells the car for $500 or less (and neither of the two exceptions applies), your deduction is generally limited to the lesser of $500 or the car’s fair market value on the date of the contribution.
Other requirements
A receipt is generally required from the charity for all noncash gifts
A written statement is required from the charity acknowledging all noncash gifts above $250
An appraisal is generally needed when you donate an item or group of items of property if the claimed value is more than $5,000
Charitable contribution deductions are generally limited to 50% of your adjusted gross income (AGI) or 30% or 20% of AGI depending on the type of charity and the property donated.
Frank Mokosak is a Principal and Investor Coach at Mokosak Advisory Group.
Posted on 3:11 PM | Categories:

Bitcoin Sign-Ups for Intuit QuickBooks ‘Higher than Expected’

Pete Rizzo for writes: While bitcoin’s headlines are often dominated by large merchants like Dell, DISH and Overstock, broader business adoption of the technology as a payments solution may be more arguably influenced by the various platform providers serving the space.
Companies like e-commerce enablerShopify and more recently financial software specialist Intuit, for example, now allow thousands of small merchants to begin accepting bitcoin simply by enabling the option.
Launched in late June, Intuit’s PayByCoin offering saw the company adding bitcoin to its QuickBooks Online payment processing service, so that small businesses could invoice customers in bitcoin.
Now, in a new interview with CoinDesk, Intuit engineer Clinton Nielsen has confirmed that PayByCoin is already gaining traction with the company’s small business customers, and that despite bitcoin’s sometimes negative press, the response to the program has been largely positive to date.
Nielson told CoinDesk:
“The only thing I heard was one customer said they’d rather having us focus on things that are right now rather than things that are far-reaching, but the overwhelmingly positive attitude from the media in general and our customers has drowned that out.”
Posted on 11:53 AM | Categories:

Xero plays long game in US

TOM PULLAR-STRECKER for writes:  chief executive Rod Drury has forecast the software firm will grow its subscription revenue by "approximately 80 per cent" in the year to March 2015.
He dismissed a report questioning its momentum in the United States market as "ridiculous", but acknowledged it would take time to crack that market.
This year it achieved revenues of $70.1 million, up 83 per cent, after forecasting at least 80 per cent growth.
Chairman Chris Liddell, a former chief financial officer of General Motors and Microsoft, told shareholders gathered in Wellington for the company's annual meeting that it would be a "logical step" for Xero to look at listing on a United States exchange "in due course".
Woodward Partners analyst Nick Lewis said yesterday that rumours had resurfaced in the past fortnight that Xero would list on the Nasdaq exchange but said he would be surprised if that was imminent.
Drury said the timing could be right once Xero was turning over more than US$100m ($115m) in annual revenues.
He reassured investors Xero was going to be successful in the United States market, but said it would take time and emphasised the importance of the Australian and British markets, where its business was further progressed. The US market "would not be decided in the next five years", he said. "It is not 'game-on' with Intuit yet."
Nevertheless, Intuit, the dominant provider of accounting software in the US, had been "spooked" by Xero arriving "well dressed" in its home market, he said. "The hypothesis we are not going to get some market share doesn't make sense any more."
Drury described as "ridiculous" a report this morning in which US accountant Michelle Long said she believed Xero had lost momentum in the US. Drury said Long was a "paid Intuit adviser".
Long, who runs her own consulting business, Long for Success, has had a long association with Intuit for whom she has carried out training since 2007. She had previously made positive comments about Xero, which paid for her to visit New Zealand and attend its XeroCon conference as its guest in Auckland last year.
Long, who has almost 80,000 followers on her LinkedIn group, said today that she valued her independence highly and was not paid to promote Intuit.
"I have been paid as an independent contractor to do training for both Xero and Intuit. I am not paid to be pro-Intuit. I have always pointed out anything good and anything bad and been totally honest. That is why I have so many followers," she said.
Long said she stopped carrying out Xero training last year after the work dried up.
Liddell said Xero was one of the most important companies to come from New Zealand. "Xero is in my mind on a path to become the best in the world at what it does. If I can play a small role in its success that is something I will be incredibly proud of."
A vote increasing directors' maximum remuneration by $350,000 to a new cap of $850,000 was passed with no questions from the floor. All but a few of the shareholders gathered at the meeting raised their hands in approval.
Liddell said the remuneration pool had last been set in 2012 and its board had expanded from six directors to eight since then.
Posted on 11:40 AM | Categories:

Why every accountant should be a Virtual CFO / Hear Reckon, Intuit, Deloitte and the Institute of Public Accountants at BoxFreeIT’s The Future Series: Virtual CFO next Wednesday 30 July.

Sholto Macpherson, Editor of BoxFreeIT for Reckon writes: Have you ever asked your clients to describe their ideal accountant? Can you imagine what their response might be? It shouldn’t be too hard to come up with a rough guess of what they’d say. Now ask yourself, are the services you offer close to that ideal?
If the answer is yes then congratulations, I’m sure you’re in high demand and rolling in hay. If the answer is no or you’re not sure, perhaps you should imagine what kind of assistance an accountant could give you in running your own practice. I’d guess that compliance is not at the top of the list. 
One of the best aspects of running a small business is working with experts you could never afford to hire as staff. I’ve contracted an AdWords expert who actually worked for Google’s AdWords department to market my events. My best consulting engagement was with a highly successful publisher who spent a day picking apart my news website to show how it could be improved. A top-notch design team I found through personal contacts crafted a striking, inspiring logo for BoxFreeIT’s upcoming name-change next week (sorry, couldn’t resist getting in a plug!).
All three experiences had something in common – great advice.

I was very happy to pay for expertise at rates that reflected their value because they genuinely helped my business grow. Accountants have always offered expertise but it is often valued very differently. Clients pay for expertise in compliance only grudgingly because it has no impact on helping their business grow. Compliancedoesn’t generate sales, it doesn’t reduce operating costs, and it doesn’t increase efficiency or productivity. Yes, there may be savings in tax paid but for the most part it’s dead money.
Now accountants must be sick of hearing know-it-all’s tell them that the future is in advisory work. Consultants have been saying this for years. However, two epic shifts in the world of business are redefining the expectations of SMEs and the capabilities of accountants. These trends are driving an urgent need for better advisory services.

1. The Information Hunger Games

One of my favourite marketing lines by a Victorian accountant is “numbers are life”. It’s never been truer in business or in our personal lives. Just take a look at social networks as they shifted online. We can’t post a picture of a panda without hungering for performance metrics.
How many likes did it get? How many comments? Which of my friends commented? How many positive comments versus negative?
Businesses are looking for the same feedback for their own actions. Not just in social media but in everything they do – every sales campaign, new service or extra hire. Did it make a difference? Did my revenue improve or decline? Should I do it again or try something else?

They are hungry for experts who can interpret the data they generate and turn it into a plan for them to follow to greater success.

2. Low Friction Contact

The rise of cloud accounting software has killed some odious bugbears in the accountant-business owner relationship, chief among these is the time wasted in opening and updating desktop software files. An accounting firm which had recently moved clients to the cloud said they had cut admin time by 25 percent because they no longer needed to ask for passwords, transport the data file between the accountant’s office and the SME, manage multiple versions of desktop accounting software, or update journals in the client’s program.
The reduced friction in basic maintenance of accounts has opened up the remarkable possibility of a full monthly close-off from an accounting perspective just days after the end of month. Match that with the ability for an accountant to view the same set of accounts as the client from anywhere in the world. Those are the kinds of changes that can reshape industries.
The two trends together make a perfect storm. SMEs are starving for expertise to turn business data into strategy. Accountants suddenly have the ability to give SMEs a complete financial picture of their business almost in real time, and discuss those numbers with them over the phone.
Some canny firms have begun offering “virtual CFO” services which consist of monthly or quarterly meetings where accountants manage the performance of their SME clients by setting and measuring KPIs. Cloud accounting software, powered by bank feeds, contains accurate and up-to-date information essential to monitoring those KPIs.
Some of you may think it’s a stretch to label this “virtual CFO”. After all, many accountants have no commercial expertise other than running their own practice. Fair enough, the distinction is real and valid. But from the perspective of a small business owner, a virtual CFO is an aspirational marketing term that perfectly summarises the mix of skills they want but can’t afford to hire full time.
How many of your clients can afford to hire a full-time CFO? How many would settle for a regular monthly call to discuss the numbers that matter most to their business? No doubt there’s a learning curve for some accountants in picking up the mantle of virtual CFO. But there is a huge demand from SMEs for exactly this, and a massive incentive with the decline in hourly rates for compliance.
Don’t take my word for it. Ask your clients. Just be prepared to rethink your business if their idea of an ideal accountant is different to you.
Hear Reckon, Intuit, Deloitte and the Institute of Public Accountants at BoxFreeIT’s The Future Series: Virtual CFO next Wednesday 30 July. Broadcast live in HD nationally. Tickets are limited; buy yours today.
Posted on 9:01 AM | Categories:

FreshBooks Raises $30-Million: Fuels Mission to Redefine Accounting for Small Business / Freelancers and Small, Service-Based Business Owners Streamline Accounting, Get Paid Faster, and Make More Money With FreshBooks

FreshBooks, the #1 cloud accounting solution designed exclusively for small service-based business owners, today announced that it has raised $30-million USD in its first institutional investment round. The round, led by Oak Investment Partners with participation from Atlas Venture and Georgian Partners, will position the company for increased growth as it helps freelancers and service-based businesses successfully build their businesses without having to learn accounting.
"Small business owners are grossly under-served when it comes to accounting software. They don't have enough choice, and vendors treat them as if one size fits all," said Mike McDerment, CEO and co-founder, FreshBooks. "The result is they are forced to use tools that are complex -- or worse, use Word and Excel to run their businesses. Neither of these options helps make running a business easy and efficient. That's where FreshBooks comes in. We're the only company exclusively focused on the needs of service-based businesses, ironically, the largest segment of the small business market."
Using FreshBooks reduces the amount of time spent invoicing by 60 percent and helps users get paid five days faster by making it easy to create and track invoices, capture expenses, track time for staff and contractors, and generate reports. With Web and mobile apps to help business owners run their business, FreshBooks is experiencing significant growth and has doubled its user base to more than 10-million in the last two years.
"FreshBooks is growing the cloud accounting software market by delivering a solution that is designed for the millions of small business owners that want to run their businesses without having to learn accounting," said Ann Lamont, Managing Partner, Oak Investment Partners. "Given our focus on high-growth financial services technology, partnering with FreshBooks is a natural fit. We look forward to helping FreshBooks realize their vision of building the market-leading accounting solution built exclusively for small service-based business owners."
FreshBooks raised this round in order to accelerate its already incredible traction, and build upon its extraordinary customer satisfaction ratings. The company, which will grow from 150 people today to 400 employees by 2016, is currently hiring developers, product managers and marketing experts. More information can be found at
About Atlas VentureAtlas Venture is an early stage venture capital firm that invests in promising entrepreneurs focusing on life sciences and technology innovation. Since inception in 1980, its partners have helped build over 350 companies. For more information, visit Atlas' website at
About Georgian PartnersGeorgian Partners is a growth equity firm investing in expansion stage Enterprise Software, Internet and Information companies that are exploiting Applied Analytics: the convergence of Cloud-based business solutions, Big Data, and broad Information Rights. Founded by successful entrepreneurs and technology executives, Georgian Partners leverages our global software expertise to be able to directly impact the success of companies. For more information, visit
About Oak Investment PartnersOak Investment Partners is a multi-stage venture capital firm and a lead investor in the next generation of enduring growth companies. Since 1978, the firm has invested $9 billion in over 500 companies around the world, earning the trust of entrepreneurs with a senior team that delivers steady guidance, deep domain expertise and a consistent investment philosophy. The firm's five major growth sectors of focus are information technology, Internet and consumer, financial services technology, healthcare services and clean energy. For more information, visit
About FreshBooksFreshBooks is the #1 cloud based accounting solution designed exclusively for small service-based business owners. The company has helped more than 10 million users process billions of dollars through its easy-to-use invoicing, expense management and time tracking features. Recognized in 2014 with six Stevie awards for best customer service in the world, the company's mantra is to "execute extraordinary experiences everyday." Based in Toronto, Canada, FreshBooks serves paying customers in 120 countries.
Posted on 8:54 AM | Categories:

Xero Limited (NZE/ASX:XRO) Chairman's Presentation - Annual Meeting Presentation Slides

Xero Limited (NZE:XRO) (ASX:XRO) (OTCMKTS:XROLF) provides the Annual General meeting presentation. Included is the Chairman's address along with the AGM Presentation.

Chairman's Welcome

Good afternoon and welcome to Xero's Annual Meeting for 2014. For those of you who don't know me, my name is Chris Liddell and I'm pleased to be speaking as Chairman of the Board for my first Xero Annual Meeting.

To begin, I would like to introduce our Board to you.

Closest to me is Rod Drury, Xero's Chief Executive and Co-founder. Next to Rod, in order, are Xero's non-executive Directors: Graham Shaw, Bill Veghte, Lee Hatton, Craig Elliott, and Craig Winkler. On the end we have Matt Vaughan, Xero's General Counsel and Company Secretary.

Unfortunately, Sam Morgan isn't able to be with us today. Sam sends his apologies. 

Before we start with the business of the meeting, I'd be grateful if you could please make sure your phone is switched off or on silent. There will be opportunities for shareholders to ask specific questions as we address each resolution in the formal part of the meeting, and there will be general opportunities for shareholders to ask questions following Rod's presentation.

I'd like to start by telling you a bit about myself, my background, and the reasons why I'm excited about the future for Xero. After that, we'll move to the formal business of the meeting, followed by a presentation by Rod. This will be followed by shareholder questions, after which we will invite you to join us for refreshments where we will all be available to answer any further queries you may have. 

As our business continues to develop, a logical step for Xero would see us list on a US exchange. While this will be dependent on internal and external conditions at the time, this would be a significant milestone in becoming a truly global company. We should all be proud that Xero, as a New Zealand company, is playing on the international stage at this level. 

Formal Business
To view the AGM Presentation Slides, please visit:
Posted on 7:45 AM | Categories:

Five Basic Tax Tips for New Businesses

If you start a business, one key to success is to know about your federal tax obligations. You may need to know not only about income taxes but also about payroll taxes. Here are five basic tax tips that can help get your business off to a good start.

1. Business Structure.  As you start out, you’ll need to choose the structure of your business. Some common types include sole proprietorship, partnership and corporation. You may also choose to be an S corporation or Limited Liability Company. You’ll report your business activity using the IRS forms which are right for your business type.
2. Business Taxes.  There are four general types of business taxes. They are income tax, self-employment tax, employment tax and excise tax. The type of taxes your business pays usually depends on which type of business you choose to set up. You may need to pay your taxes by making estimated tax payments.
3. Employer Identification Number.  You may need to get an EIN for federal tax purposes. Search “do you need an EIN” on to find out if you need this number. If you do need one, you can apply for it online.
4. Accounting Method.  An accounting method is a set of rules that determine when to report income and expenses. Your business must use a consistent method. The two that are most common are the cash method and the accrual method. Under the cash method, you normally report income in the year that you receive it and deduct expenses in the year that you pay them. Under the accrual method, you generally report income in the year that you earn it and deduct expenses in the year that you incur them. This is true even if you receive the income or pay the expenses in a future year.
5. Employee Health Care.  The Small Business Health Care Tax Credithelps small businesses and tax-exempt organizations pay for health care coverage they offer their employees. A small employer is eligible for the credit if it has fewer than 25 employees who work full-time, or a combination of full-time and part-time. Beginning in 2014, the maximum credit is 50 percent of premiums paid for small business employers and 35 percent of premiums paid for small tax-exempt employers, such as charities.
For 2015 and after, employers employing at least a certain number of employees (generally 50 full-time employees or a combination of full-time and part-time employees that is equivalent to 50 full-time employees) will be subject to the Employer Shared Responsibility provision.
Get all the tax basics of starting a business on at the Small Business and Self-Employed Tax Center.
Posted on 7:26 AM | Categories:

Xero sees 80% revenue growth this year, Intuit 'spooked'

Patrick Smellie for BusinessDesk/ writes:  Cloud accounting software firm Xero updated shareholders at the annual meeting with a forecast of 80 percent revenue growth in the current financial year in constant dollar terms, and founder chief executive Rod Drury danged an American stock market listing as being on the cards once the company passes through the US$100 million annual revenue mark.

Drury declined to put an exact dollar figure on that forecast increase, but the company turned over $70.1 million last year, implying turnover in New Zealand dollars in the current financial year of around $126 million.

"We should be through a US hundred million trailing revenue and I think that puts you in the window for doing a US IPO if we choose to," he told BusinessDesk, although he told the meeting there would be no float in the current financial year.

The exact timing of a US IPO would depend on market conditions, said both Drury and incoming chairman and former chief financial officer at US giants Microsoft and General Motors, Chris Liddell. Drury talked up the significance of the company's decision to raise $180 million last year at a time when markets were ripe for such an offering, giving the company headroom and flexibility over timing of a US listing.

Xero shares fell slightly in trading on the NZX today, down 1.7 percent to $23.50, having pushed above $45 per share in February.

"We don't control the share price," Drury told the meeting in response to questions. "We have seen a rerating of Software as a Service companies. The good thing is we raised our money last year."

Reacting in part to a Fairfax Media report questioning Xero's momentum in the US, where it faces a battle with the incumbent accounting software provider Intuit, Drury belaboured not only a belief that Xero's cloud-based product suite is outgunning Intuit's attempts to move into the cloud, but also that the company will benefit from establishing strong positions in the Australian and UK markets before embarking on the US.

"The success of the company's going to be international, it's not just the US," Liddell told BusinessDesk after the meeting. "In terms of the US, it's just a great product. It's not going to happen immediately and, sure, Intuit's a formidable, large company in the US, but it's important to recognise that of something like 30 or 40 million small, medium businesses in the US, Intuit's customer base is five million.

"There's 35 million who do something else, whether it's Excel spreadsheets or pieces or paper or localised software, so it's not only competing with Intuit, you're competing for people who've never had software before."

Drury said after the meeting the company's cost of customer acquisition had not changed significantly in any of its markets, including the US, since figures were disclosed in the latest annual report, despite reports of Intuit discounting its fees to below Xero's.

The US market differs from New Zealand, Australia and the UK, where a route to market has been built through accountants, who are used by around 70 percent of SME's in each of those markets. In the US, only around 30 percent of small and medium-sized businesses used an accountant.

"A lot of people ask us about the US," said Drury. "Because we've got Australia and the UK really firing now, we can spend some time on it. We can take time. It'll take two or three years. We've got to build a brand. I think what we've learnt is we've got to build a direct business so we can go direct to small business and as they come on, they should tell their accountants and that should accelerate accountants further."

He expected customer acquisition costs to "trend down quite quickly as the (US) market matures" after an early heavy spend on the US management and marketing team, led by US chief executive Peter Karpas, formerly general manager for PayPal's North American small and medium enterprise business, and before that chief markleting and product management officer at Intuit.

Drury also told the meeting he believed Intuit was on the wrong track trying to replicate Xero's open software eco-system approach, which sees partnerships that build new applications onto the Xero platform, by buying out eco-system partners.

"Intuit is spooked," he told the meeting. "Most of the things they do now are responses to us."
It was trying to convert five million customers using a desktop software product onto a repurposed cloud offering, "which is not really a great product."

"Maybe in time it will be," said Drury, but both Microsoft and Apple had struggled to repurpose legacy products for cloud applications, whereas Xero "has the capital and we've already beaten them (Intuit) in three countries."

The meeting was attended by around 250 shareholders, who waved through a series of director remuneration arrangements, which raised the fee pool for directors by $350,000 to $800,000 and share allocations to both Liddell and another heavyweight US-based newcomer to the board, Bill Veghte, who told shareholders of a career in which he had developed the first versions of Microsoft Office and Xbox and now heads up Hewlett Packett's US$28 billion per year enterprise group.
Posted on 6:42 AM | Categories:

Xero talks up possible US listing as Drury updates on customers, forecasts revenue at AGM

Chris Keal for The National Business Review writes: A US listing appears seems to be on the cards for Xero.
The company's AGM kicked off in Wellington at 4pm today.  In his CEO presentation CEO Rod Drury said the company, which reported $70.1 million revenue for FY2014 recently hit the $100 million annualised revenue mark, is forecasting an 80% lift in revenue for FY2015 on a constant currency basis, implying $126 million turnover.
"During the year we will pass through US$100m in annualised committed monthly revenue positioning us for a US listing when the timing is deemed right," the presentation says. 
That specific US dollar figure is significant because Mr Drury has previously told NBR that Xero has taken advice on a possible Nasdaq listing, and was told that it would make financial sense once revenue hit $US100 million.
The recent appointment of ex-pat Chris Liddell as Xero chairman has also been seen as a sign of a possible US listing. Woodward Partners Equities' Nick Lewis earlier told NBR the New York-based Mr Liddell is well-connected to major investors in the US and Europe from his time leading GM's post-bankruptcy IPO.
Profit-less Xero's revenue to market cap multiple is often remarked on.
But one slide in this afternoon's presentation — perhaps aimed at selling existing shareholders on the merits of a Nasdaq listing, or heebeejees over Xero's market cap, or both — points out Xero's value ($2.7 billion in US dollar terms) is not outlandish next to various listed US companies in the software-as-a-service (SaaS) space including Workday ($US15 billion) and Salesforce ($US23 billion), and that Xero's revenue is growing at a similar pace to their early years.
Profit-less Workday is forecasting $US750 million revenue next year; Salesforce lost $US232 million on revenue of just over $US4 billion in the 12 months to December.
Another SaaS company name-checked in the presentation, Netsuite (market cap: $US8 billion), lost $US70 million last year on $US414 million revenue. It's easy to see why Mr Drury might want to rub shoulders with such company, and in a market where dizzying revenue-to-market cap multiples are the norm for cloud contenders.
Customer number update
One possible wrinkle: Nasaq investors could have a could have a special focus on Xero's progress in North America.
The company most recently updated on paying customers on May 22, when it said it had 300,000.
Today, Mr Drury reported a new total: 334,000.
The company says it will gun for growth over profit until it hits the 1 million customer mark.
This morning, Mr Drury hinted at more detail on customer numbers amid controversy over allegedly slow progress in the key North American market, where Intuit is dominating both offline and cloud sales in its home market  (Intuit's most recent quarterly report says it has 624,000 QuickBooks Online customers, the vast majority in the US and Canada, and around 5 million total.).
But if a new Xero US customer number is being delivered, it's not in this afternoon's main presentation, which reiterates the regional breakdown delivered at the May 22/284,000 customer announcement, including the previously reported 18,000 for North America.
"The success of the company's going to be international, it's not just the US," Mr Liddell said after the meeting. "In terms of the US, it's just a great product. It's not going to happen immediately and, sure, Intuit's a formidable, large company in the US, but it's important to recognise that of something like 30 or 40 million small, medium businesses in the US, Intuit's customer base is five million. 
"There's 35 million who do something else, whether it's Excel spreadsheets or pieces or paper or localised software, so it's not only competing with Intuit, you're competing for people who've never had software before."
Posted on 6:15 AM | Categories:

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