Larry Devitt saw a need that was unfulfilled and took a risk, leaving a steady job for life as an entrepreneur.
Devitt launched CapellaTax Network in April, a pre-paid tax preparation service that gives employees access to a certified public accountant year-round for $312. It is, he said, an alternative to “the big-box tax firms” such as H&R Block or Jackson Hewitt.
“We’re trying to make this a year-round program, because when you look at your taxes, at a minimum they are 20 percent of your salary, if not far more than that,” Devitt said. “And you need to be looking at that early and taking proactive strategies.”
The cost of joining Capella, which is based in Columbia, entitles members to have their tax returns prepared by a CPA, as well as to three 30-minute advice sessions with that same CPA throughout the year. Devitt said Capella is the first company to offer pre-paid tax services.
Skip Falatko, the director of finance and administration at the Maryland Association of CPAs, said he had never heard of another company with a concept like Capella’s.
“It’s an interesting approach to have a guaranteed amount of work at a set price,” Falatko said. “I do wonder how they price it out for customers who have more complex tax situations. But I’m glad it’s CPAs doing the work, and I do think it’s important to have continuity with the same CPA.”
More than 20 employers have signed on to offer Capella as a benefit since its launch in April, and Devitt said he is hoping to recruit 170 total by the end of this year to reach 8,500 members. Employers already signed on with Capella include Maryland General Hospital, Baltimore Washington Medical Center and Resurrection-St. Paul School.
But in a struggling economy, the challenge comes in convincing people that year-round tax consultation is a necessary expense. Devitt said he hopes to accomplish this by maintaining high quality standards and encouraging lasting partnerships between clients and the CPAs that they choose themselves from Capella’s website.
“The real differentiator for us is we are trying to promote a year-over-year long-term relationship with your CPA,” Devitt said. “Some of the big-box firms, you just come in and get your tax return done, take care of the compliance and then they go away. We’re trying to promote that year-round advisor that you have for many years to come.”
Devitt does background checks on each CPA in his network, has set credentialing requirements and will subject each one to a yearly evaluation based on satisfaction surveys from clients. To ensure that his CPAs perform up to his expectations, Devitt said he is promising them 77 percent of what each employee pays, a percentage which he said is much higher than that of companies offering pre-paid legal services.
Although leaving a job as senior vice president for Kelly & Associates Insurance Group, a benefits brokerage firm based in Hunt Valley, to start a new company was a risk, it was one that Devitt felt confident taking because of his belief in Capella’s concept, he said.
“At first I wasn’t sleeping at night because of starting a business. I had a very solid, well-paying job. Until I had this idea, I had no plan of leaving,” he said. “Now I’m not sleeping because I’ve got over 20 employers that have signed on, and I’ve had CPAs embracing the concept in a big way. I’ve had over 150 emails this week alone from CPAs wanting to join my network.”
Though the company is still getting off the ground, many said they are enthusiastic about Capella’s potential.
Julie Franzone, human resources director for Baltimore-based plastic parts manufacturer Fawn Industries, said she wanted Capella as part of her company’s benefits package as a unique and affordable offering for her employees.
“We’re always looking for new ways to improve our employee benefit packages, and it doesn’t cost the company anything,” Franzone said. “We feel that it’s really filling a gap for people who need tax advice, and the price is so reasonable.”
Stanley Block, a tax attorney whose Baltimore based firm, Stanley H. Block & Associates, employs CPAs to do tax preparation, among other related services, agreed.
“I think it’s a great idea because clients will be directed to someone at the right price,” he said.
For Devitt, the rewards of entrepreneurship outweigh the risks.
“It’s a massive financial risk, but I just think this product is going to resonate and fill a need,” he said.