Post sponsored by efile4Biz
By Rick Roddis
If I told you that you could reduce your company’s tax errors by 19%, would you be interested? Well, that’s exactly what happens when you shift your tax reporting from paper to the cloud. When businesses use paper tax forms, there’s an average 20% error rate. When filing online, that number drops to just 1%. It’s a no-brainer.
For that reason—and many more—employers are switching from time-consuming, traditional paper filing to streamlined, modern W-2 and 1099 cloud processing. In fact, electronic filing is fast becoming the preferred choice for small businesses.
But what exactly is it?
Electronic filing, or e-filing, is the online transmission of required tax information (such as 1099s and W-2s) directly to the Internal Revenue Service (IRS) or Social Security Administration (SSA), rather than completing and submitting traditional paper tax forms.
Over the past several years, the demand for paper tax forms has declined, while electronic filing continues to grow. Businesses are looking for the smartest alternative—and e-filing is it. Let’s examine the reasons for this shift.
3 cloud processing benefits
E-filing is a popular method for filing 1099s, W-2s, and other business tax forms because everything is done online, eliminating the need for paper forms or software.
Specifically, people prefer e-filing because it is:
- Accurate. In addition to the numerous prompts that ensure compliance with the latest tax rules, e-file sites do the complicated calculations. Data entry errors are caught and mistakes are prevented. That’s why the IRS considers e-file returns to be virtually error-proof.
- Convenient. Instead of installing software or handling mountains of paperwork, you simply follow a few easy prompts from your desktop. No more struggling with paper jams and misaligned forms in printers. And say goodbye to last-minute trips to the office supply store and post office.
- Helpful. Online filers appreciate the regular communication during the e-file process, including email notifications when the IRS and/or SSA receives filings. Plus, you can check the status of a specific filing any time from any computer, laptop, or tablet.
What about recipient copies?
E-filing does not eliminate the need for paper completely. Recipients (i.e., independent contractors and employees) still must receive a paper copy of the W-2 or 1099, or opt in to receive an electronic version.
This means e-filing with government agencies is only part of the process. The other is printing and mailing copies to recipients, a labor-intensive task that many businesses struggle with, especially since it occurs at the beginning of the year, a traditionally hectic time for employers. Fortunately, the right provider will recognize these demands and offer an all-inclusive print, mail, and e-file service.
3 outsourcing advantages
Many businesses choosing to e-file will seek a provider that can also print and mail recipient copies. Using a full-service partner is appealing because:
- It saves you money. When considering the dollars and cents impact of paper filing, don’t neglect to include labor costs. Online filers who select an all-in-one tax reporting partner save on payroll associated with having an employee manually print and mail forms.
- It saves you time. The data is entered or uploaded online and then the provider handles the rest. The time that you and your staff save can be put to better use in growing the business.
- It gives you security. Printing forms like W-2s on the office printer and having employees handle mailing isn’t the most secure or confidential process, especially when you consider these documents contain sensitive information like annual salary and Social Security numbers. Mismatching forms and envelopes is a concern, too. Imagine what would happen if an employee received a coworker’s W-2. Outsourcing to a specialized and reputable provider can give employers valuable peace of mind.
Security makes the difference
Security is of critical importance when filing taxes electronically. There are several factors you should consider when choosing an e-file provider for cloud processing. First and foremost, you need to verify they are an IRS-authorized e-file provider.