A Columbus fintech company gets exposed to a much wider client base – while bringing its mission of helping small employers collect the same tax credits as giants – through an exclusive partnership with a San Francisco unicorn.
Arvo Tech LLC is expanding the relationship started a year ago with Gusto Inc., a software platform for payroll, benefits and HR. Gusto's clients will get alerts about credits they might be eligible for, and if they hire Arvo, its software will be able to pull the needed documentation data from Gusto.
"We’re very excited about taking these tax credits to small businesses," Arvo co-founder and President Terracina Maxwell told Columbus Inno. "Large businesses take advantage of these tax credits because they have tax departments and HR departments.
"(Small businesses) also qualify for these tax credits, but it's hard to administer what it takes behind the scenes to qualify," Maxwell said. "We can carry the lion's share of the load."
The wider exposure to Gusto's more than 300,000 clients could bring small businesses to up to half of the client base for Arvo, she said. Currently, small business makes up 10% to 15% while the rest is medium and large employers.
Over the next two years, this and other growth pipelines could help Arvo double or triple its revenue base, she said.
The company quadrupled revenue while helping companies take advantage of a pandemic-era tax credit for retaining employees, but that credit will gradually wind down through 2025.
Arvo used the boost to invest in technology that automates the process for many more types of credits that will last, Maxwell said.
Gusto first chose Arvo as the software to help clients apply for that pandemic job retention credit a year ago, she said.
This week, the companies announced an exclusive integration for other credits, the largest being the federal Work Opportunity Tax Credit for hiring members of disadvantaged groups such as people who have disabilities, were previously incarcerated or spent a long time receiving public assistance.
"At Gusto, we're focused on helping small and mid-sized businesses thrive. That's why we've been building solutions to help them easily access tax credits – vital capital they've earned and are eligible for, " Joshua Lee, head of R&D tax credits, said in a release. "We're excited to partner with Arvo to now expand our customers' access to employer tax credits, which are key for any business with employees."
Automated data gathering is key for applying. The IRS form for each Workforce Opportunity hire notes that record-keeping can take 6 1/2 hours.
"This was so burdensome," Maxwell said.
Arvo first worked with staffing companies to help employers claim the opportunity credit, she said. Now it's seeking more partnerships with payroll platforms and "level the playing field" for small business.
Besides San Francisco, Gusto has Denver and New York City offices. Founded in 2011, it surpassed $1 billion valuation seven years ago, the San Francisco Business Times reported. In February, it joined the wave of tech layoffs when it cut 5% of staff nationwide, the Denver Business Journal reported.
Based at 1500 Lake Shore Dr. off Dublin Road, Arvo has some 50 employees.
Revenue, a percentage of credits clients collect, is not disclosed. The company raised $3 million from outside investors when it started but has bootstrapped since then.
Arvo is the Finnish word for "value." Renamed in spring from Clarus Solutions LLC, the nearly 9-year-old company was one of two tech spinouts from co-founder Brent Johnson's former accounting firm Clarus Partners, which was acquired by the firm Blue & Co.
The other spinoff focused mainly on tech industry clients, Clarus R&D Solutions LLC, was acquired last September by publicly traded TriNet Group Inc. for $48 million cash, according to the California company's annual report.
