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Human Resources & Payroll

New Laws and IRS Rules Make Year-End W-2 and 1099 Reporting More Challenging

With more businesses utilizing contractors to perform services traditionally relegated to employees, the need for sound 1099 processing and reporting is more important than ever before. There are numerous types of 1099 forms processed and filed ...

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With more businesses utilizing contractors to perform services traditionally relegated to employees, the need for sound 1099 processing and reporting is more important than ever before. There are numerous types of 1099 forms processed and filed yearly, with 1099-MISC remaining the most frequently used form.   And while W-2’s, like 1099’s, are processed and filed at year end, 1099 forms offer a level of complexity that W-2’s do not.

Without a system in place to ensure that these forms are filed promptly and properly, business owners run the risk of being non-compliant, and possibly beholden to the IRS or other state and local agencies for income not reported or reported incorrectly. With businesses frequently overwhelmed by the varying year end filing requirements, it falls on accounting professionals to step in and assist their clients.

One of the most recent challenges to face accountants in recent years are the new requirements put into effect as a result of the implementation of the Affordable Care Act (ACA), and the numerous reporting mechanisms that have been put into place as a result.  While many of the products reviewed already have these additional reporting mechanisms put into place, vendors typically continue to add new features until the product release date, which is typically in late fall. In fact, many of the products reviewed this month have not released a final product. Many of the products also offer a demo, so users can take the software for a test drive, prior to purchasing.

2015 Reviews:

When reviewing these products, we looked at four different areas, which include:

Basic System Functions – where we looked at product format and ease of use and tried to address common issues and attempt to answer questions such as does the product offer anywhere or mobile accessibility or do users need to install the product on their computer? Are network versions of the product available? Are user data entry screens easily navigated? Does the product offer forms-driven data entry? What forms does the base product support, and are there options such as add-on modules available to support additional forms or functionality?

Reporting – In this area, we looked at reporting options that were available in the product. Does the product print on both pre-printed and blank forms? Is there an add-on module available for users to purchase that will allow printing on blank forms? Can forms be saved as a PDF file? Are there summary reports available? Under reporting, we also looked at the availability of electronic form filing. Does the product file all forms electronically, including state forms? Is an additional module required to e-file forms?

Import/Export/Integration options looked at what options were available to import data from other applications. Some of the questions we answered include the ability to integrate with popular third party accounting applications such as QuickBooks and Sage 50. Can data be imported to Excel or CSV file formats? Can data be exported to those formats as well? Is the W-2/1099 product part of a suite of products that offers full integration with client accounting data? Can reports be exported to Excel or PDF?

Help/Support options were also looked at. This included covering product support options as well as questions such as are product updates available? What about email and chat support? What are the training options available, and does the product contain good help functionality, getting started wizards, users manuals, or any other tools designed to assist new users?

While we attempted to answer many of these questions in the following reviews, the needs of each firm plays a large role in deciding what product to ultimately purchase. While some products are an excellent fit for firms processing a small number of forms for clients, or even for small business owners that wish to process forms in-house, many others are more complex, and designed to work within a suite of products.

In any case, whether you’ll be processing 70, 700, or 7,000 W-2’s and 1099’s this season, there’s a solution available to suit your own particular needs.