Five Great Reasons to Love Tax Forms
Would you rather undergo a root canal without anaesthesia than sell tax forms? If you answered “yes,” you’re missing out on one of the best perks of being a distributor—the opportunity to sell tax form products to every single customer and prospect you encounter throughout your career. Not only is there an undisputed marketplace need, but suppliers such as Jim Magdaleno, president, TFP Data Systems, Oxnard, Calif.; Teresa Budzynski and Paul Willard, sales reps for Broker Forms, Grand Rapids, Mich.; and Gretchen Walker, marketing manager, The DFS Group, Townsend, Mass., witness tax forms consistently generating profits for distributors who bother to take a little time and effort to follow a few simple suggestions.
The suppliers also see seasonal tax form sales creating potential for year-round benefits. Here, Magdaleno, Budzynski, Willard and Walker offer five reasons why reluctant distributors should tune in to tax forms and enjoy the returns.
1. Tax forms are profitable.
The team at TFP Data Systems has added a third entry to the list of life’s certainties—profits on tax form sales. In fact, Magdaleno said significant profitability resulting from selling the products is perhaps the one thing that has remained constant in an industry rife with change. “With new technology, a lot of [traditional] products have decreased considerably, such as mailers and long-run continuous form orders, but tax forms are still very lucrative, [considering] laser-compatible formats, envelopes and pressure-seal products, and all the different variations of W-2s and 1099s,” he asserted.
Magdaleno noted tax form sales have always proven to generate one of the largest profit margins within the business forms industry—in some instances as much as 200 percent. “It’s really [contingent upon] what the market will bear,” he added. “In the past, we have always estimated 150 percent. You are dealing with time-sensitive products and customers who frequently find themselves in a crunch, so they really won’t be price shopping.”
2. Tax forms are essential items.
Budzynski and Willard pointed out every business needs to file W-2 and 1099 forms, leading to a natural cross-sell to existing customers, and unlimited opportunities with new prospects. “Broker Forms supplies W-2 and 1099 forms that businesses process and distribute to their employees and contractors,” said Budzynski. “We don’t sell 1040-type tax forms that individuals file with the IRS to report their earnings and tax payments annually.”
Magdaleno explained although electronic filing at the federal level is encouraged by the IRS, it is still mandatory for employers to provide paper tax forms to employees, resulting in a burgeoning paperless society using more paper today than it has in years past. “While we can implement a program where we provide an electronic version of the W-2 instead of paper, we find most people still prefer to use paper,” he observed.
Banks and other financial institutions may require an array of different products, including the 1099Rs miscellaneous statements for reporting interest and dividends, broker changes in corporate control, cancellations of debt, acquisitions and government payments.
And, with the marketplace clamoring for green solutions, offering recycled tax products can help distributors differentiate themselves from competitors. “No doubt about it, recycled product is big,” said Magdaleno. “TFP has been promoting recycled tax products for the past six years. All our tax products are produced using 30 percent post-consumer recycled paper, which is what the government requests.”
3. Tax forms come with a sales formula for success.
All of the contributors agreed the best part about tax forms being a seasonal product is the window of opportunity for selling the them. Distributors who simply make contact at the right time are pretty much guaranteed success.
“We recommend distributors start contacting their customers to reorder tax forms beginning in September or October,” said Walker. “[They’ll need to find out] the type of form that’s required, the type of printer being used, what state the customer is filing in, whether they’re filing electronically and how many employees there are—including [those who are] seasonal and [those who have been] terminated. Knowing the answers to these questions ensures the customer receives the correct product, format, number of copies and number of forms.”
Budzynski and Willard reported that some businesses will order tax forms as early as July, but generally, most prefer to wait until later in the year. “However, we highly recommend staying in front of existing and potential customers starting during the summer, right through January. They’re more likely to order from the distributor when they’re ready, instead of going to an office store or finding another source,” said Willard.
When prospecting for new tax forms business, a good place to start is a company’s accounting department. For existing customers, Magdaleno pointed out contacts can change for various reasons, such as a resignation or a promotion, resulting in inquiries needing to be made.
“There is essentially a three-month window of opportunity for selling tax forms, but it’s really what distributors do prior to those three months that makes a difference in terms of solidifying your customers’ repeat business,” he continued.
“We provide distributors with an order history for each [of their] customers. They can use a copy to make the initial contact, basically saying, ‘Okay, this is what you ordered last year; would you like to repeat it or do you need to make some changes?’ This would then be followed by a reminder card or brochure and finally the phone call.”
It’s a similar process to what TFP Data Systems follows in serving distributors’ tax form needs. Said Magdaleno, “We call our distributors at least two to three times a year. First, to find out how last season went for them and if there is anything different we can do, and then to remind them it’s time to reorder.”
By making contact, stressed the suppliers, distributors remind end-users they need tax forms and already have a tax vendor. Or, they’ll uncover prospects who had a bad experience with their last tax form supplier, and there is an opportunity to capture that business. Simply discussing the changes to tax forms from the previous year helps distributors convey a level of expertise to customers and prospects.
“If a prospect says he or she already has a tax form vendor, ask if the tax forms are produced using recycled paper,” suggested Magdaleno. “It’s a great way to generate interest and maybe get a new account.”
When asked about issues that can arise with tax forms sales and how to avoid them, Walker mentioned wrong product numbers being recorded, the incorrect number of parts being requested and confusion surrounding the product received.
“W-2s and 1099s are formatted with two and three forms per page respectively, so [end-users] sometimes think they have been short-shipped. Distributors can help eliminate problems by confirming the product they are ordering by product description and placing less reliance on the product number,” she shared. “It’s important for distributors to fully understand what the customers need to order the right products, [including] the state the customer is filing in to ensure the correct number of parts. And, then confirm with customers what they will be receiving to set expectations. Tax form products are updated annually to incorporate IRS/SSA changes, and we provide an updated state requirements chart in our sales brochure.”
Budzynski and Willard mentioned that Broker Forms has an integrated, completely automated XML order system integrated with DemandBridge—formerly TopForm Software—that delivers efficiency in both front-end order placement and back-end order processing. Electronically automating the entire process eliminates many hours of manual work by the distributor, plus dramatically reduces errors and reships. This is especially important with tax forms, given their time-sensitive nature and the fact that many tax form users don’t open their orders until they are ready to print forms.
4. Tax forms are basically guaranteed repeat annual orders.
If the delivery of the product is on time and the forms work properly, the repeat orders will almost certainly come back to distributors the following year. “A satisfied customer is a loyal customer when it comes to tax forms,” Magdaleno contended. “Buying tax forms is an annual affair that does not require price shopping except on much larger orders, and customers won’t be looking for a new tax form vendor, since they won’t even be thinking about tax forms until that time comes. And, chances are that repeat orders will come back to the distributor with a referral or two, because people talk and others will have asked that customer where he or she got the tax forms.”
Make no mistake, tax forms can pose some challenges for distributors, particularly those new to selling the products who may not be familiar with compliance requirements or software compatibility—two of the driving factors behind selecting the correct form. Willard and Budzynski cautioned that mistakes with these issues can cause profits to dip due to reships and lead to customer dissatisfaction.
“We have a dedicated compliance team [that] is continually monitoring tax laws and updating our products accordingly. We guarantee that we always have the most up-to-date, compliant tax forms in stock,” said Budzynski. “We send monthly update e-mails to distributors announcing changes to forms and changes to our product line, as well as calling out form changes in our catalog and providing charts of forms, their descriptions and general guidelines for use.”
Broker Forms also provides a library of tax forms graphics for distributors to use in their own marketing materials and on websites, and free programming guides for W-2s and 1099s for software companies to develop forms for the coming year.
Between the most up-to-date materials and customer support teams specializing in tax form changes, software compatibility and envelope specs, the contributors assured distributors they have the tools and resources to make for a successful tax season.
5. Tax forms naturally create opportunities to cross-sell other products.
Having showcased their skills and value by correctly meeting customers’ tax forms needs, distributors are in a perfect position to grow the account. Walker mentioned tax season signals the holiday season, as well. “[Here is a chance ] for distributors to ask customers about other products [they] buy at year end, such as checks and deposit tickets, holiday cards, calendars and business gifts, and to make sure they have all the products they need to close out the current year and get ready for the new year,” she said.
Broker Forms offers a complete line of tax return folders and envelopes customers are likely to use. “Broker Forms also offers value-added services for tax folders and envelopes, such as imprinting, that helps to drive customer retention,” noted Willard. “And, checks could be a cross-sell opportunity [with] any tax forms customer.”
The bottom line, concluded Magdaleno, is anyone doing business requires tax forms such as W-2s and 1099s, but unfortunately, some distributors pass up sales opportunities because they consider tax forms sales too difficult. “Each year, many business forms distributors turn their backs on selling one of the most profitable forms they can offer,” he recounted. “As a result, those who do the legwork prior to the season—such as mailing a reorder form, brochure or a catalog—often face little, if any, competition, and the result is a new satisfied customer.”
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