Filed Raises $17M to Automate Tax Preparation with AI

Filed Secures $17M to Revolutionize Tax Prep with AI

Tax software startup Filed has raised $17.2 million in a funding round led by Northzone, with participation from Day One Ventures and Neo. The company aims to alleviate the tax industry's staffing shortage and streamline tax preparation with its AI-powered software.

Addressing the Tax Industry Crisis

Filed CEO Leroy Kerry highlights the challenges facing the tax industry. "The tax industry is facing a genuine crisis," Kerry told TechCrunch. "Many CPAs are approaching retirement while fewer students are entering the field." This echoes findings from a 2021 report by the Association of International Certified Professional Accountants.

Kerry explains that firms struggle to process returns efficiently, with professionals bogged down by manual tasks. "Professionals are drowning in paperwork, spending nearly half their time on low-value tasks that could be automated," he says.

AI-Powered Tax Workflow Automation

Filed, co-founded by Kerry and CTO Atul Ramachandran, utilizes AI to automate the tax return lifecycle. The software reads documents, applies firm-specific tax strategies, and inputs data into existing systems. "It reads documents, uses reasoning to apply each firm's specific approach to tax strategy, and then enters that data into their existing software systems," Kerry explained.

The AI flags scenarios requiring human review, ensuring accuracy and control. "When the AI notices a scenario that requires human input, it flags it for review, keeping humans in control while eliminating the tedious work," Kerry added.

Differentiation and Future Vision

Filed differentiates itself from competitors like Black Ore and Basis by focusing specifically on tax workflows and integrating directly with existing software. This eliminates the need for clients to replace their current technology.

Filed plans to use the new funding to expand its team and hire more tax engineers. Kerry outlines the company's ambitious long-term vision: "Our long-term vision extends beyond return preparation to become the foundational AI infrastructure for the entire tax industry – transforming everything from client collaboration to document management and audit preparation."

Kerry believes Filed is poised to capitalize on the industry's need for AI-driven solutions. "The industry has been waiting for its AI moment, and we're just getting started," he stated.