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• August 2004 Issue
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Although most advanced payroll programs generate W-2s, and many AP modules of accounting software can prepare 1099s, there is still a strong market for specialty software that can produce these returns as a stand-alone system. The reason on the W-2 side is that not all accountants handle payroll for their clients but end up being tasked with providing either quarterly state wage reporting, annual federal returns, or both. Reasoning on the need for a stand-alone 1099 preparer is more varied, but it still often revolves around the client. If they use an in-house bookkeeping program, it is probably unable to produce 1099s, and even if it is, small business clients are not likely to be knowledgeable in this area. So the data gets transferred to the accountant, either in digital or, all too often, paper form. W-2/1099 preparation programs help to bridge this gap between the client and the accountant by providing annually renewed applications for year-end information return compliance.

Because there are widely varying reasons that a financial professional may find him or herself using one of these stand-alone programs, establishing a common prototype firm is not necessary for this form of client service. However, there are a few key areas that, after speaking with professional accountants, we determined are of primary importance when selecting a W-2/1099 preparation package.