The Land of Milk & Honey
"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.
Another place to look for opportunities is the Internal Revenue Service (IRS).
Johnson noted the IRS requires employers who file 250 or more information returns to file electronically, which has eliminated the need for some forms that normally would be sent to the IRS. However, employers must get the relevant copies to the employees as mandated by the IRS. This has led to a host of formats including regular IRS formats, condensed formats, blank formats with perforations and backers and pressure-seal formats. The end-user will usually give the distributor a form number or a sample of the form that he or she needs.
"Every so often, the IRS would change some forms," he said. "When they do so, opportunities are open to distributors to go after new business. This year, however, the only major change is the size of Form 5498 used for reporting Individual Retirement Arrangement and Simplified Employee Pension. Two new forms have been introduced: Form 3921 {Exercise of an Incentive Stock Option} and Form 3922 {Transfer of Stock Acquired Through an Employee Stock Purchase Plan.} These may create some new sales."
And, though taxes aren't going anywhere, companies continue to come up with ways to keep things new and improved. Willard said the company stays ahead of marketplace demand by helping distributors bridge the gap between 1099 and W-2 paper forms and technology.
This can be accomplished through Broker Forms' new WinfilerEZ software, which is a desktop application ideal for filing a larger number of forms (typically more than 25). WinfilerEZ includes data import from other software applications, all types of 1099 and W-2 forms, unlimited payers and payees and e-filing capabilities. It's bundled with forms that make printing and mailing more efficient, where all employee copies are printed on the same page to eliminate separating and collating forms before mailing.
Responding to the demands of a changing marketplace, Apex Business Systems has launched a complete line of presentation folders and envelopes to complement the tax forms. This allows distributors who sell to customers who prepare tax returns, such as accountants, bookkeepers and other financial professionals, to sell them professional packages matched to their forms and software.
Regardless, Johnson explained his products are what give his company a leg up on the competition.
"In the eyes of our customers, Apex is synonymous with tax forms. They trust us to be compliant with IRS rules and regulations," he said. "Over the years, we have built a comfort level with our customers. They know that they will be supplied the correct forms. They also know that we do not compete with them. We neither sell direct to end-users, nor do we sell through direct catalogs and the Internet."
Though most companies are feeling the pinch of the unhealthy economy, both Broker Forms and Apex Business Systems have remained unscathed.
"The current economic climate has had no effect on Broker Forms as a company," Willard noted. "There have been no staffing cuts, no plant closings, no product line reductions or profit loss. In fact, we're currently on pace to increase sales over last year."
Similarly, Johnson said Apex has been able to keep all of its employees on staff.
The business of sales forms and technology seems to be on the right course, but what does the future hold?
Willard said small to mid-sized businesses will continue to demand electronic reporting solutions and move farther away from paper-based reporting. "Although we don't see paper going away any time soon, electronic reporting is certainly more efficient and will be used whenever possible," he added. "The government continues to lower the threshold for requiring e-filing (currently for employers with 250 or more forms to file), so more and more companies will be required to report electronically."
As far as predictions for the future, Johnson believes there will be some loss of business due to technology.
"To combat this trend we must seek new lines of business, new products to sell. We have added health insurance claim forms, human resource products ... tools for compliance and people management, tax presentation supplies and pressure-seal products. Our dealers are very happy that in this economy, they have recession-proof products to sell," he concluded.
Tax forms continue to be lucrative for many companies. Image courtesy of Broker Forms.
%0D%0A%20%20Benjamin%20Franklin%20was%20obviously%20on%20to%20something.%20Taxes%20have%20and%20will%20never%20go%20away,%20but%20that's%20good%20news%20for%20companies%20selling%20tax%20forms,%20software%20and%20reporting%20tools.%0D%0A%0D%0A%0D%0Ahttps%3A%2F%2Fwww.goprintandpromo.com%2Farticle%2Ftax-forms-can-reliable-source-of-income-businesses-410708%2F" target="_blank" class="email" data-post-id="4444" type="icon_link"> Email Email
0 Comments Comments