Intuit buys Homestead, a business web services company, for $170 million

Intuit, a large financial software company, has purchased Homestead, a provider of web services for small businesses, for $170 million.

Homestead was founded during the previous web bubble, in 1997, providing web site hosting services for small businesses. Over the last ten years, the company has gradually expanded its services. Today, it competes against against Yahoo Small Business, Go Daddy and Network Solutions.

Read chief executive Justin Kitch’s blog post on the sale for more background.

Intuit, like Microsoft, Oracle, and other aging software companies, is expanding its web offerings to stay relevant to the growing number of businesses that rely on web-based services to manage internal processes.

Depending on how you count, as some note, Intuit has up to five million small business customers in the US, making it one of the largest small business service providers.

Intuit is also moving on other fronts. It has been launching services that help you aggregate and analyze all of your bank accounts in one place, competing against startups like Mint, Wesabe and Geezeo. See the Kelsey Group for an optimistic take on its efforts to date.

The company has a long list of VC backers, including Draper Fisher Jurvetson , Intel , Redpoint Ventures , IVP , Global Retail Partners , Meritech Capital.