"Everybody that's in business has to have tax forms," says George Robertson, owner of Geo-Graphics and Forms, an 8-year-old distributorship in Beaverton, Ore. The distributorship sells W-2s and other tax forms to a variety of small- to medium-sized businesses such as manufacturing firms and distribution companies. "If you're not selling [tax forms] to clients, someone else is," Robertson says.
Tax forms can bring distributors tidy profits, says Jim Magdaleno, sales manager of TFP Data Systems, a manufacturer in Oxnard, Calif. "Tax forms are one of the most--if not the most--profitable forms that distributors can sell," he says. "It's a seasonal product--the window of opportunity is only about three months--and the customer really doesn't have an opportunity or doesn't want to go out and get quotes." As a result, end users often pay a premium for tax forms.
In addition to high profit margins, tax forms often offer distributors a good chance at repeat business. "If we haven't sent a customer their reorder blank by the middle of September, they're calling us up and asking if we've forgotten about them," says John Kinney, CFC, president of Pro-Forms & Systems Inc., a 25-year-old distributorship in Burlington, N.C. "There's a certain amount of loyalty built into tax forms."
For aggressive distributors, tax forms also can lead to new clients, Robertson says. For example, when a furniture manufacturer called Geo-Graphics and Forms and wanted to buy 100 1099 forms, one of the distributorship's sales reps hopped in her car and personally delivered a free box of forms to the end user. As a result, Geo-Graphics and Forms landed the manufacturer's tax forms business and also provided business forms, commercial printing and advertising work, which amounted to annual sales of approximately $80,000.
Jump in the Ring Early
Although tax-form season peaks for manufacturers in mid winter, the summer is prime selling time for distributors. Distributors who start early have a definite advantage when selling tax forms, Magdaleno says. "There's always an opportunity for distributors to lose repeat business if they're not starting early by sending out catalogs or brochures," he says. "If you start in October or November, it's too late. Your customers are probably already dealing with someone else." What's more, that competitor probably is aiming for a bigger chunk of their business.
Starting early also helps distributors avoid headaches later on, Robertson says. "There's nothing worse than having to deal with Christmas and [New Year's] freight situations when somebody needs tax forms in a hurry," he says. "In the past, I've had situations where a UPS truck was stuck in the snow in Chicago [and couldn't complete the delivery]. It's just a mess." Late in the tax season, Robertson also heads off problems by keeping a supply of forms on hand.
In August, Robertson sends customers direct mail packages that include reorder forms and updated catalogs from his manufacturer that are imprinted with Geo-Graphics and Forms' logo. The reorder forms include lists of products and quantities customers ordered the previous year, plus updated pricing information. Customers who return their forms by a certain date receive a 10-percent discount.
Kinney sends customers and prospects direct mail packages in July or early August. The packages include letters explaining tax form changes for that year and advice on which types of forms may best meet customers' needs. In addition, customers receive reorder forms, and prospects receive information about the distributorship's other product and service offerings.
Putting Fear at Bay
"The myth about tax forms is that they're hard to sell," Magdaleno says. "It's human nature [to believe that]. When I think of taxes, I cringe....But distributors can turn that myth around and say, 'If everybody else feels that way about tax forms, I'm going to sell them. Customers need them, so it might as well be me selling them.'"
Document pros agree that distributors who sell laser forms, continuous forms and mailers know enough to succeed in the tax-forms market. Distributors also can turn to tax form manufacturers for help. Most manufacturers track and can explain yearly tax form changes issued by the IRS and Social Security Administration as well as tax form requirements for individual states. (See "2002 Tax Form Changes" above.) Many also provide catalogs, sales tips, seminars, videos and marketing materials.
Some distributors who are reluctant to enter the tax-forms market cite the threat of alternate filing methods. "Ten to fifteen years ago, people were saying electronic filing was going to take over and that there would be no need for paper forms," Magdaleno says. "But electronic filing has been here, and we're still selling more paper each year."
Kara S. Carpenter is assistant managing editor of Print Solutions. Email her your comments at kcarpenter@PSDA.org.
5 Tax Form Tips
1. Choose prospects wisely. "Obviously, businesses that are using outside services such as payroll services buy their tax forms via those services," says George Robertson, owner of Geo-Graphics and Forms, an 8-year-old distributorship in Beaverton, Ore. "I don't waste my time there."
2. Ask questions. "Usually the person who's buying tax forms is thrust into that role," says Jim Magdaleno, sales manager of TFP Data Systems, a manufacturer in Oxnard, Calif. "The person who did it the year before is no longer there or doesn't want to do it. You're getting a new person each time, and they may not know what they want." Distributors should inquire whether their clients need W-2s or 1099s, laser or continuous forms, carbon or non-carbon forms, mailers or non-mailers, and 1-wide or 2-wide W-2s, and get details on the client's computer software requirements.
3. Find a reliable manufacturer. "I have a good relationship with my manufacturer, and I've been with them so long that they bend over backward for me," Robertson says. The manufacturer provides Geo-Graphics and Forms with rush orders and contract pricing, ensuring the distributorship always gets the same price for tax forms no matter the order quantity.
4. Offer alternatives. Because the majority of tax forms are dated, manufacturers strive to eliminate their inventories by Jan. 31, Robertson says. If a client needs a self-mailer that's out of stock, Robertson offers a non-self-mailer (that has the same format) and a companion envelope.
5. Sell related products. To maximize sales opportunities, tax forms distributors can offer related items such as envelopes, toner, ribbons, file folders, software and more.
