Payroll processors are companies that help businesses with their payroll.  Payroll is a broad topic that covers everything under the sun.  But, their most important function is to take care of your employees (W2s).  Our goal is to manage and efile your contractors (1099s). Focus Payroll processors such as ADP and PayChex are great companies that are incredibly effective at their niche – W2 employees.  It’s a question of focus.  They’re great companies for large businesses that hire more than 100 W2 employees because they focus all their attention on that goal.  Awesome services for large businesses with more than 100 W2 employees. Autotax focuses on all small-to-mid sized businesses with 1099 contractors.  Our focus is to help businesses that make 80% of annual new hires in the United States.  Some of the most common industries that use us are:

1. Real Estate
2. Catering
3. Event Planning
4. Temp Agencies
5. Personal Services

1. Providing paychecks to your employees
2. Withholding income taxes for the federal, state and local governments
3. Withholding social security, medicare, unemployment and workers compensation taxes
4. Filing quarterly and annual employment tax returns

1. You pay the payroll processing company a giant ball of money.
2. The giant ball of money includes all of the wages, taxes and their fees.
3. They also offer great rates on health insurance that they underwrite for you at a commission.
4. Payroll processors hold onto a ton of cash, so they also earn interest on short-term bonds or debt.

Entrepreneurs hate time sinks that come from paperwork and bureaucracy. The independent contractor accounts saves an owner time and makes them efficient.  The owner managed contractor account gives entrepreneurs the traditional process that all business use, but requires a large amount of data entry and labor. Independent Contractor It’s ironic that independent contractors require so much work on an owner’s time.  We free entrepreneurs from having to constantly update their contractor information and tax documents.  We make independent contractors – truly independent of the owners.

• Contractor Information is Entered & Updated Automatically – Without You
  • The owner’s account is automatically updated for any information that the contractor changes without you having to think about it.  Its out-of-sight and out-of-mind.  We let your contractors take responsibility for their own information to save you time.
• Tax Documents Are Signed Electronically & Recorded
  • Scanning, emailing and faxing tax documents (W9s, 1099s and etc.) is a giant waste of time and incredibly dangerous.  It’s annoying and completely unnecessary.  If you hire a part-time contractor to manage your contractors an hour a week, then that’s another $1,560 dollars a year!  The system automatically allows you to sign the tax documents and we keep them on file for you over the next 7 years, until the IRS statute of limitation ends.
• Electronically Deliver 1099s and Other Tax Forms
  • Electronic delivery of tax documents requires explicit consent from the contractor according the IRS’ rules and regulations.  Our system, maintains the permissions and consents necessary for you to seamlessly transfer and mail your contractor’s 1099.  Never lick a stale stamp again!

Autotax was created for businesses that want to make sure that they do things right the first time.  Everyone is annoyed, afraid or confused by taxes.  Did you know that most accountants and CPAs never do their own taxes?  If the professionals hate taxes, then what is everyone else supposed to do? Autotax was made for people who want to get rid of their tax problem on a long-term basis. The problem with 1099s is simple:

1. Paper filing them is horrible because it’s repetitive and it never prints without jamming your printer on every other page.
2. Employment tax audits for 1099s are one of the fastest growing tax audits because there are too many people doing them wrong.
3. No one knows how to defend against the inevitable tax audit.

1. E-Filing makes all of this go away.  E-Filing makes it so that the process is painless and easy for everyone from a newbie to the most advance professional.
2. Preventing 1099 employment tax audits is as easy as making sure that the forms are properly filed.
3. You don’t need to know how to defend against a tax audit because we built the process for you.  We provide the reports and audit notice answer templates for you to make the process seamless and timely.

1. If you’re looking for a compliance monkey to just file your 1099 returns super cheap.
   • We are NOT for you.
2. If you don’t care about protecting your business from tax audits that could lose you money.
   • We are NOT for you.
3. If you’re not interested in using a tested and proven human resourcing process.
   • We are NOT for you.

Summary

The IRS will charge you penalties mainly for using the wrong tax forms that they can’t scan.  Providing incorrect information will not cause you to pay a penalty as long as you have a reasonable cause.  A reasonable cause is that you didn’t know because you filed the 1099 according to the W9 you got from the contractor.

Detailed Explanation

There are a ton of reasons why the IRS will penalize you for everything related to 1099s and contractors.  You’d be surprised, but the main reason why the IRS will hit you with a penalty isn’t for providing the wrong information.  The IRS is most worried about you using the wrong form!

What do you mean the wrong form…?

Every year the IRS gets millions and millions of 1099s for contractors all over the country.  Every form is entered into a giant scanner that’s older than grandma.  This scanner needs you to use “special paper.”

What’s special paper?

Special paper has an acidity level of 6.5ph, non-reflective black ink, specific margins and about 20 to 30 other requirements.  This special paper is meant to make sure that the scanner will read the form clearly.  It costs the IRS $3 dollars to process a form manually and about 20 cents to scan a form.

What if the 1099 I sent in is wrong?  Will I be penalized?

Generally – No.  Shocking!  The IRS knows that it’s more expensive to them to track, punish and collect the penalties for 1099 mistakes than it’s worth.  The IRS ends up punishing themselves.  But, avoiding a penalty requires that you have a “reasonable cause” to have provided incorrect information.

One of the best reasons is that you followed the W9.  This makes it all the more important to have good W9 records to keep track of your 1099 contractors.

What do I do if the 1099 information is incorrect?

You can re-file a corrected 1099 form, if you discover that the information was wrong.  If the IRS discovers that the information is incorrect, then they’ll send a notice asking for the right information.  But, you can avoid a penalty by having the proper documents.

One of the most important things for a business to do is keeping their documents and tax information up-to-date.  The best way to do this is to have a system.  Software is the easiest way to do this, but you could also go the old fashioned analog method as well.  Keeping paper documents is also a reasonable option.

Conclusion:

E-filing is the best choice because there’s zero room for you to make a mistake.  The IRS gives you more time to file the 1099s and you’re required to file fewer forms because software lets you automate the process efficiently.  But, going old school and filing paper forms is another option that businesses can take.

The problem with paper forms is the inconvenience they cause during paper jams and the issue that they lead to greater chances of tax audit due to improper filing.

Summary

The IRS will charge you penalties mainly for using the wrong tax forms that they can’t scan.  Providing incorrect information will not cause you to pay a penalty as long as you have a reasonable cause.  A reasonable cause is that you didn’t know because you filed the 1099 according to the W9 you got from the contractor.

Detailed Explanation

There are a ton of reasons why the IRS will penalize you for everything related to 1099s and contractors.  You’d be surprised, but the main reason why the IRS will hit you with a penalty isn’t for providing the wrong information.  The IRS is most worried about you using the wrong form!

What do you mean the wrong form…?

Every year the IRS gets millions and millions of 1099s for contractors all over the country.  Every form is entered into a giant scanner that’s older than grandma.  This scanner needs you to use “special paper.”

What’s special paper?

Special paper has an acidity level of 6.5ph, non-reflective black ink, specific margins and about 20 to 30 other requirements.  This special paper is meant to make sure that the scanner will read the form clearly.  It costs the IRS $3 dollars to process a form manually and about 20 cents to scan a form.

What if the 1099 I sent in is wrong?  Will I be penalized?

Generally – No.  Shocking!  The IRS knows that it’s more expensive to them to track, punish and collect the penalties for 1099 mistakes than it’s worth.  The IRS ends up punishing themselves.  But, avoiding a penalty requires that you have a “reasonable cause” to have provided incorrect information.

One of the best reasons is that you followed the W9.  This makes it all the more important to have good W9 records to keep track of your 1099 contractors.

What do I do if the 1099 information is incorrect?

You can re-file a corrected 1099 form, if you discover that the information was wrong.  If the IRS discovers that the information is incorrect, then they’ll send a notice asking for the right information.

Conclusion

E-Filing and having a system that helps you track your contractor’s W9 on a consistent basis is what’ll help you avoid these migraines.  You can use Autotax or you can do it the old fashion way and just keep a copy of the hard-copies.  What’s important is doing what works for you.

We took a lot of effort and thought to build Autotax for you personally as a small to midsize business.  Tax is something that takes time away from the important things like serving your customers and building your business.  Autotax is made to stay out of your way. Autotax is built through weekly sprints where we test our features at the end of each week.  The features are tested by your small businesses peers to make sure that we get it right.  The last thing we’re trying to do is make you annoyed with another level of frustration because of tax. The most important thing that we do for you is…

Keeping track of your contractors!  We do this by keeping copies of your W9s.  Making sure that the W9s are complete.  If they’re not complete, then we send reminders to them until they have.  Lastly, we remind you of when you all your important tax deadlines

Employment tax is something that companies never really think about, until it’s too late.  Payroll tax audits on 1099-MISC Contractors are costing us 824 billion dollars a year.  The IRS has just spent billions in hiring hundreds of new IRS agents to audit 1099 independent contractor employers.  Out of every company that get’s audited, 87% of them end up losing.

1. Having copies or records of your contracts
2. Having copies or records of your tax returns (1099-MISC and 1096)
3. An industry standards report to show that you operate according to the business norms
4. Having all of the above in an audit report ready to ship to your IRS agent within 24 hours

How Do We Help You? Autotax is here to help you solve the annoying 1099 problem that you have every year.  We know that you hate dealing with all of the paperwork for the awesome contractors that you hire.  The contractors are great, but the taxes are horrible.  We’re here make pain disappear - for you.

1. You Get Simple & Fast 1099 E-Filing.
2. You’ll Be Reminded of All Your Tax Deadlines!
3. We Save You Money From HR Staff & Tax Audits.
4. You Can Easily Track 1099 Contractors.
5. Lots of Contractor Reports and Histories.
6. No More Lost, Incomplete or Obsolete W9s.
7. You Don’t Need to Print Anything Anymore!
8. You Get Standard Contract Templates.
9. You’ll Always Be Ready for The IRS!

Hey, this is our blog and frequently asked questions area.  The goal is give you as much clarity in tax as possible.  We’re looking forward to doing more for you =)