The Land of Milk & Honey

By Melissa Busch

It’s Not Always Easy

Tax forms are certainly money makers for companies, but every niche comes with challenges.

Paul Willard, sales manager for Grand Rapids, Michigan-based Broker Forms, breaks down those challenges for distributors and businesses.

Challenges for Distributors:

• Wage reporting, and taxes in general, are complicated and daunting; regulations change frequently and distributors aren’t always sure what businesses need to ensure compliance, and fear they may lead them down the wrong path, which could lead to penalties.

• The distributor marketplace hasn’t done a very good job of helping to deliver better solutions. It’s a very paper-based industry where businesses are looking to automate processing using technology.

• It’s an annual sales cycle that makes December and January very busy.

• Small employers need a small number of forms, which can be prohibitive to deal with because of minimum orders and other order processing costs.

Challenges for Businesses:

• These businesses need to report wages to federal and state governments and provide recipients with copies to file with their own income tax returns.

• It’s an annual task, so it’s relatively foreign, and regulations change  frequently.

• Traditionally, it’s a labor-intensive, time-consuming task.

• Sensitive data, such as social security numbers and wage and income information, must be secured.

• Businesses typically have this data in an accounting software package, like QuickBooks, that doesn’t offer many options for printing and e-filing information efficiently.

• There is a time crunch involved, with only one month to gather all of the data (annual wage summary information is available only at the end of December) and file it with the recipients. Forms must be in the mail each year by Jan. 31.

"Certainty? In this world nothing is certain but death and taxes."Benjamin Franklin was obviously on to something. Taxes have and will never go away, but that's good news for companies selling tax forms, software and reporting tools.

In a time when every business is trying to make ends meet, the selling of tax forms is something they can count on to keep the money coming in.

Neville Johnson, vice president of the Richmond, Virginia-based Apex Business Systems, said tax forms account for a major portion of the company's business, which has been around for more than 50 years. He went on to say tax forms provide a niche in the marketplace because they are required by all businesses, institutions and associations.

"Distributors who sell tax forms are our best customers," Johnson announced. "They know how lucrative selling tax forms can be. It is one of the few products that command a high profit margin. It is a once per year product that is extremely easy to sell. Most end-users already know what they need. This makes it easy for the distributors who are going after new accounts. They only have to ask for the business. For old accounts, distributors cannot wait for the repeat business, which comes back year after year."

Paul Willard, sales manager for Grand Rapids, Michigan-based Broker Forms, piggybacked on those comments, saying there is a huge opportunity for distributors to sell 1099 & W-2 reporting tools. This is because every employer must file W-2s for current, former and temporary employees who were employed by the company during the tax year.

In addition, he noted tax forms and software provide significant profit margins with "forms typically generating profit of two to four times the cost."

"Loyal customers can be easily developed by providing reporting tools that increase efficiency, and are likely to reorder these products every year," Willard added.

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