'Tis the Tax Forms Selling Season
Act now to profit from the product that nobody wants, but everybody needs.
Death and taxes. Until now, you may have thought that these were the only real certainties in life. Now you can add one more—high profits from the sale of tax forms.
"Tax forms are one of the most, if not the most, profitable items sold by a business forms distributor," said Jim Foster, national accounts manager for TFP Data Systems, Oxnard, Calif.
He went on to explain that many of a distributor's tax form orders can be small, and, "A company that makes a once-a-year, $120 purchase of tax forms and envelopes isn't going to shop around for bids. Assuming the forms arrive on time and work properly, that company will continue to purchase year after year from the same distributor, making it excellent repeat business."
Distributors interested in capitalizing on this market, however, should start soon.
"The biggest mistake distributors make is waiting too long to get started," said Foster, noting that distributors should start selling tax forms around Labor Day. "If they wait until November and December, they will have missed window of opportunity."
A good game plan is to start letting customers know they carry tax forms by mid to late July.
The bulk of the tax forms that distributors sell are W-2s and the family of 1099 forms. And while high-volume users—accountants, tax consultants and payroll services—are obvious targets for tax form sales, Foster also advised seeking out sources that may not be so obvious, such as churches and schools. "People are often surprised by the number of tax forms used by these organizations," he noted.
Finally, given the almost instinctual fear of the IRS, perhaps the most important tip of all is that tax forms are not all that complicated to sell. Despite the fact that there are approximately 16,000 different tax forms—and every year the IRS can make changes to them—a basic working knowledge of the W2 and 1099 are the only prerequisites.
"Tax forms can be a tough sell for some distributors," agreed Robert Goeden, brand manager for Topeka, Kansas-based Adams Business Forms, "I think it's because they don't necessarily understand it. But there isn't really that much to understand—people know they need 1099s and W-2s."
"Know the difference between a W2 and a 1099, be aware of the various configurations offered, use your supplier's knowledge and promotional materials and understand that it's very profitable," concluded Foster, "and you can sell tax forms."
He also stressed the importance of using a tax form supplier that is on the "cutting edge," and carries inventory late into the year—December and January.
Of course, the fact that nearly everyone needs tax forms doesn't guarantee that you're going to be the one that sells them. Like any other offering, quality of service and the ability to present yourself as a knowledgeable and informed vendor aid in making the sale.
"Choose a good supplier—one that will keep you informed so, in turn, you can inform your customers," said Foster. Many suppliers offer this information in the form of catalogs and promotional material. Some, including TFP, offer suggestions, tips and seminars outlining how and where to sell the forms.
"Tax form programming guides are also excellent sales tools when there are major changes," said Foster, explaining that they make valuable hand-outs during sales calls.
Fortunately for distributors eager to capture new business, there are a multitude of changes to relay to customers concerning this year's forms. In fact, said Foster, "The federal government is making more changes this year to W-2 and 1099 forms than they have in the past 25 years."
For instance, the depth of the 1099 miscellaneous form—the most popular of 1099 forms—is changing from 31⁄2˝ to 51⁄2˝. "Anytime you have a change that drastic, it requires reprogramming and new envelopes and the price of the form is affected," said Foster.
And it's this price increase, believes Goeden, that will be distributors' biggest challenge this year. "Distributors are going to have to be prepared to explain to their customers why they're going to be spending a lot more money—that they will have to buy a lot more paper in order to get the same number of forms."
And while both Foster and Goeden agreed that forms distributors don't have to be tax form experts, the most successful ones will make their customers aware of changes and help smooth the transition.
Foster also offered this tax form-selling advice:
- Ask for the business. If you don't sell your customers tax forms, someone else will.
- Increase the business a little every year. You're only selling this product for approximately two months a year. If you focus on adding to your business each year, you'll soon have a nice little tax form nest egg.
- Use sales aids. Some are free, others are available at a nominal charge—they are a must, especially this year.
"The bottom line is what it's all about, and tax forms are one of the most profitable products you can sell," Foster reiterated. And while he admitted that the product line is changing, "As long as hard copies [of tax forms] are mandatory, this market isn't going to disappear anytime soon. There's simply no way of getting around it."
By Misty Byers