1099reporter helps businesses file their 1099-MISC forms with a secure e-delivery solution.
January 2008 - April 2010
Over 160 million 1099-MISC forms are filed annually, and more than 20 million of these are filed on paper. Nobody wants that.
I partnered with two colleagues from Intuit to tackle the narrow problem of appropriately filing and notifying individuals of their 1099-MISC income.
We targeted the SMB market, because these are often filed on paper with very manual processes. Critically, we wanted to make the process as simple as possible for both the payer and payee by providing an entirely digital solution. Payee notification would automatically fallback to a print and mail vendor when digital receipt couldn't be confirmed within the appropriate time window.
In short, employers could file and forget with confidence. Contractors would receive their 1099-MISCs more quickly and securely. The IRS would have fewer paper filed forms to process. Everybody wins.
Results
Simple interface designed to quickly, and inexpensively file small batches of the simple 1099-MISC form.
Our UI/UX was imitated by Intuit and other 1099-MISC filing providers later. It's unclear if they came to similar design conclusions independently, or (more likely) had seen what we did and simply copied it.
Secure, automatic electronic filing with IRS.
Recipients preferred e-delivery with over 75% adoption in year one.
Integrated service to automatically snail-mail to recipients when e-delivery wasn't accepted by a recipient.
Conclusions
Released in 2008. There were a few hundred paying customers in the first season. Many customers raved about the ease of the service.
Our contacts at the IRS were quite supportive. The paper filings are overhead intensive, and recipients are often not notified within the required timelines. Our solution minimized their overhead, and created notification audit trails.
Existing solutions failed to holistically consider the entire set of needs.
An example from the project
Research
One of our co-founders was a CPA focused on small businesses for over 25 years. He had direct experience with many of the foibles and problems related to what should be the simplest of tax-related tasks—filing 1099-MISC forms. So, we started by decomposing all of the problems he’d seen, and reviewing modern solutions to see which, if any, had been solved since. The co-founding team also had about 15 years combined experience at Intuit, so we knew the space reasonably well to start.
Once I’d finished some reasonable wireframes for key workflows, I ran a few light-weight usability tests to see how small business owners would respond. Given our audience focus, I interviewed several small businesses that typically filed fewer than twenty 1099-MISC forms per year for contractors (e.g., lawn service company). A few minor refinements came out of these conversations before we finished building the solution.
Principle skills
Team leadership
Product management
Capital raising
Go-to-market planning
SSNiF identification
Wireframes
Visual design
Full stack Development (CakePHP, Prototype/Scriptaculous, MySQL)
Key learnings
Existing solutions only delivered electronically to the IRS.
Providing electronic deliver to the IRS only partially solves the 1099-MISC paper problem. Millions of these forms are printed and mailed to recipients every year. In fact, two copies of each 1099-MISC must be delivered to each recipient. This process is expensive and susceptible to error. For instance, a few years ago a large company (that shall go unnamed) had a printing error on one of their presses. Because the forms were printed by address, the slip lead to tens of thousands of people getting one copy of their own 1099-MISC and one copy of their neighbor’s 1099-MISC!
Tracking progress throughout the process is nonexistent for the incumbent solutions.
None of the existing SMB products track progress to help filers know when the IRS has likely accepted an e-filing. This is partially a lack of digital feedback from the IRS, but there are reasonable signals to convey to filers. Additionally, the recipients are totally opaque unless the filer takes massive additional effort and costs to send via registered mail or something similar.
Product overview
Filing 1099-MISC forms with the IRS is complicated and prone to errors. To make matters worse the form is only filed once a year, so people tend to forget all of the details between filings and need to relearn the entire process.
1099reporter simplifies this process by managing the communication between all parties involved.
What was previously an opaque, confusing process easily forgotten between filings, became streamlined, simple, and painless with notifications at each step delivered straight to your inbox.
Project results
Released in 2008. There were a few hundred paying customers in the first season. Despite a few hick-ups in our payment gateway, many customers raved about the service. Unfortunately, we lacked the necessary funding to muster a proper go-to-market strategy in this highly fragmented SMB space. The initial customer base was very positive, but we needed an estimated 10,000 customers to realistically approach self-funding levels. Our timing to seek funds couldn't have been more difficult with the recession. So, we decided the project had to be shelved after one tax season.
We developed several novel approaches for this product. For example, our approach to supporting e-delivery as a first-order solution for recipients provided a much better experience for both our customers and the recipients. By using a print and mail vendor to automatically fallback to snail-mail gave filers peace of mind. And, it created economic incentives for 1099reporter to optimize e-delivery adoption, because that would directly improve our profit margins. Over 75% of the recipients in year one accepted e-delivery, which I believe represented a huge proof of concept win.
The product ultimately failed to take hold for three reasons:
Difficulty in marketing to a fragmented customer base with extremely limited funds. This was a completely bootstrapped operation, and we underestimated the cost and effort needed to market to small businesses likely to need a few 1099-MISC forms filed.
Overly ambitious MVP that added a lot of cost. We could have (and considered) a version of the product without the print vendor. In retrospect, that would have been less expensive to build and given us more time to focus on marketing.
Incomplete MVP. Although we did complete the solution for 1099-MISCs, we decided to push the W-9 component to v2. The W-9 is a simple form with demographic information that a contractor gives an employer, so the employer has information needed to file the 1099-MISC at the end of the year. Had we pursued this side of the equation instead of the print vendor, we would have been able to push the product 12 months a year from the contractor side… instead of being limited to about 4 weeks of viable marketing time in late December and early January.