Bench, the accounting and tax startup that was acquired by Employer.com in a fire sale last December, has conducted a significant round of layoffs, the company confirmed to TechCrunch. The exact number of affected employees was not disclosed, but a source estimated that dozens of positions were eliminated, which is a substantial portion of the company's approximately 300 employees.

The layoffs primarily impacted the client success and tax services departments, with one person familiar with the matter stating that most of Bench's U.S.-based tax advisory team was let go. Employer.com, the San Francisco-based HR tech company that acquired Bench, acknowledged that the decision to make the cuts "was not made lightly." In a statement, Employer.com CMO Matt Charney expressed appreciation for the contributions of the affected employees, who had worked diligently to maintain customer accounts.

Bench's struggles are well-documented. Under previous ownership, the company raised over $110 million in venture capital funding and $50 million in debt, but failed to achieve profitability. It eventually burned through its cash reserves, shut down abruptly, and laid off its entire staff, leaving thousands of customers without access to their financial records. Employer.com stepped in, acquiring Bench for $9 million and rehiring most of the startup's workforce, with a pledge to revive the business.

However, sources close to the matter revealed that Bench has been keeping most of its workforce as independent contractors, renewing their 30-day contracts every month instead of hiring them as full-time employees. This arrangement was initially presented as a temporary measure, but it has raised concerns among employees. Additionally, Bench has reportedly stated internally that a majority of its workforce would be based outside of North America, although Charney denied that the recent layoffs were part of a strategic outsourcing initiative.

Bench has faced other challenges, including a significant customer churn after tax season ended on April 15. The company also struggled to complete many customers' taxes on time, according to sources. Some frustrated customers alleged that Bench charged them for services they had already paid for under prior ownership, although the company maintains that it honors all pre-paid services.

Charney attributed some of the customer churn to an intentional effort to let go of unprofitable customers, citing legacy pricing and servicing decisions made before Employer.com's acquisition of Bench. He emphasized that the company plans to grow both its features and headcount in the future.

The layoffs and restructuring efforts at Bench serve as a reminder of the challenges faced by startups in the accounting and tax services space. As the company navigates its new ownership and works to revamp its operations, it remains to be seen how it will address the concerns of its employees and customers.

For more information on the layoffs and Employer.com's response, read the company's full statement here.