Coconut notes that starting a self-employed business is “easier than ever, but the finance tools available haven’t improved for decades.” New laws mean 4m+ UK taxpayers will “have to do 5x more tax returns.”
Coconut’s accounting software is “helping accountants get their sole traders & landlords ready for the change.”
Based in the United Kingdom, Coconut has raised 130% (£392,390) of its £300,000 target with 20 days left in the firm’s crowdfunding campaign, carried out via Crowdcube (with 299 investors making contribution to the raise so far).
The company clarified that “rather than investing and immediately receiving shares, in this round payments will be transferred directly to the company and shares issued at a future date.” A convertible “allows a company to raise funds without having to agree a valuation.”
As explained in the update, “starting a self-employed business is easier than ever, but the finance tools available haven’t improved for decades.” New laws “mean 4m+ UK taxpayers will have to do 5x more tax returns.” Coconut’s accounting software is “helping accountants get their sole traders & landlords ready for the change.”
Key Business Highlights are as follows:
- MTD ITSA coming April 2024 meaning 5 tax returns per year
- Grown from 10 to 100 Partner Practices this year, inc. 2x top 40 firms
- Accountant channel licences growing at 50% per month (Aug-Oct)
- B2B SaaS business model with profitable unit economics
As noted in the update, 4m sole traders & landlords “will be required to complete 5 tax submissions a year instead of 1, because of HMRC’s Making Tax Digital for Income Tax Self Assessment (MTD ITSA).” What’s more, they will be “required to use a digital product like Coconut to do this.”
The firm added:
“Since building a much-loved accounting app for self-employed people in 2018, we have turned our focus toward the accountants & bookkeepers that serve them.”
They also mentioned:
“With MTD ITSA on the horizon, accountants are looking for solutions to digitise their sole trader & landlord clients. Since Jan, we’ve grown our Partner Practices 10X, with licence growth averaging 50% per month since Aug. A sticky product with recurring revenues & less than 1.5% churn means unit economics are profitable & improving (Rev: £784k, EBITDA: -£1,882k for 12m to Oct 22).”
They added that their partners “report Coconut is up to 4x faster than using traditional cloud software to gather, categorize & prepare financial information for filing.”
As an early Open Banking pioneer, Coconut connects “to 30+ different banks & credit cards so we have features that uniquely address the accounting challenges for sole traders & landlords.”
The firm also mentioned
“We believe these legislative changes present a great market opportunity for Coconut. Having developed software that’s winning deals against Xero & Quickbooks, this round is to fund sales & drive license/revenue growth , with a model that has a strong product market fit.”
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