From the October 2011 Issue
7 Things to Consider for Year-End Reporting
Last year at about this time, many small businesses and their accountants were worried about a part of the 2010 stimulus act that would have massively increased the 1099 reporting requirements. Fortunately, the part of the bill that required reporting of all amounts in consideration of property or “other gross proceeds” made in the course of trade or business was repealed.
Despite that change not going into effect, year-end wage and information reporting isn’t always easy, nor are the reporting requirements static. Another recent factor is the temporary payroll tax deduction instituted for tax year 2011 (extension of this tax break was under discussion at the time of this writing). This measure reduced the 6.2% Social Security withholding rate to 4.2%. Hopefully your clients were aware of this, but if not, their employees will be able to claim a credit on their 2011 1040.
Changes such as those are less frequent, however, than procedural changes, such as the continual implementation of the e-file mandate. For federal reporting, it remains the same this year, requiring e-filing of W-2s and 1099s for entities preparing more than 250 such forms. Fortunately, the companies that make W-2 and 1099 preparation software have all finally recognized the need for e-filing and have made it a central component of their systems or offer it as a module.
Among other ongoing issues for those who manage the year-end compliance needs of multiple businesses is the processing of the actual forms. Even though e-filing of the federal copies of returns has become standard, recipient copies are still generally produced on paper. For some companies, this can mean hundreds or even thousands of forms to prepare, print and mail. And for professional firms with multiple clients, the output needs can swell dramatically. This has led to a return of service-bureau style offerings from several of the providers in this market. Through these services, the firm handles the processing, but all printing and mailing, including postage, is handled by the software publisher.
The most important factor, as with most professional systems, is ensuring that the programs can actually do the job you need them to do.
- E-filing is now offered by all of the programs for Federal forms. However, state e-filing capabilities vary based on the application.
- Does the solution include all of the federal, state and local forms your clients need?
- Can the application print to plain paper, or does it require preformatted paper?
- Can users import data from various bookkeeping and payroll systems?
- How many users can it support?
- Are there limits on the total numbers of clients and recipients?
- Does your firm want to manage client billing through the program?
These are all integral components to finding the W-2/1099 reporting system that best fits the needs of your clients and your firm, and we cover each of these topics and more in this year’s review.
-------- 2011 Reviews of W-2/1099 Compliance Programs --------
1099FIRE - 1099 Fire & W-2 Fire (Overall Review: 4 Stars)
AccountantsWorld - After-the-Fact Payroll (Overall Review: 4.75 Stars)
American Riviera Software - Magtax Professional (Overall Review: 4.75 Stars)
Advanced Micro Solutions, Inc. - 1099-Etc (Overall Review: 4.5 Stars)
CCH Small Firm Services - ATX & TaxWise Payroll Compliance (Overall Review: 4.5 Stars)
EG Systems, Inc. - The W-2/1099 Filer (Overall Review: 4.75 Stars)
Form Magic - Tax-Mate1099 (Overall Review: 4.5 Stars)
IDMS - Account Ability Tax Form Preparation (Overall Review: 4.5 Stars)
Spokane Computer, Inc. - MAG-FILER (Overall Review: 4.25 Stars)
Tenenz - Laser Link (Overall Review: 4.25 Stars)