Small businesses may need to conduct a 1099 vs W-2 test to determine how they handle taxes for each worker, but the simplest solution can also be the most cost-effective one. Getting 1099 and W-2 software that supports all of your workers should include comprehensive features for:
- Full-time/part-time employees
- Hybrid or seasonal employees
- Freelancers, consultants, and/or gig workers
Using the most affordable, comprehensive software can eliminate common difficulties that users may face without tax software. Getting detail-oriented and reliable tools help to get rid of:
- Tax form confusion (distributing a W-4 vs W-9 form)
- Missed deadlines
- Compliance risks
- Manual tracking
- Repetitive data inputting
Reduce the administrative burden that you or your team faces with Advanced Micro Solutions’ base W-2/1099 Forms Filer program. The complete database system generates the different 1099s, W-2s, and related forms that small businesses need to stay compliant.
| Area | W-2 Employees | 1099 Contractors |
| Payroll Taxes | Employer Withholds | Contractor Pays |
| Tax Forms | W-2 | 1099-NEC |
| Benefits | Often Included | Not Applicable |
| Payment Method | Payroll Schedule | Invoice or Project Based |
| Compliance Rules | Federal & State Labor Laws | Contract & IRS Guidelines |
Does My Tax Software Support W-2 and 1099 Workers Equally?
Choosing the right software, or choosing the wrong one in this case, can have tremendous and far-reaching effects on your business. There are a few steps that you can take to evaluate your software and make sure that it serves your business’s best interests.
- Confirm that it supports multiple worker classifications
- Review tax filing and automation capabilities
- Make sure it offers detailed and required reports
- Check for easy integration and set-up features
- Guarantee its scalability and growth potential
Multiple Worker Classifications
Planning ahead when you invest in tax software means confirming that your system is equipped to handle both W-2 employees and 1099 independent contractors. You should not need to deal with workarounds or risk sacrificing your business’s tax compliance. Look for a system with:
- Automated payroll capabilities
- Proper tax withholdings for employees
- Specific reporting and tax form generation
- Flexible payment distribution for workers (check printing, direct deposit tools)
Software that treats one or both of your worker classifications as afterthoughts will create more work for you rather than simplify how you experience tax seasons.
Tax Filing and Automation
Hiring both employees and independent contractors means that you will encounter two sets of tax requirements. Make sure that you get software that automates as many of your business’s compliance tasks as possible. These may include:
- The ability to create SSN verification files
- Automatic payroll tax calculations
- Federal and state tax form generation
- Electronic filing for tax documents
- Any withholding adjustments for your multi-state employees
There is a less than 1% error rate for e-filed tax returns compared to 21% for paper returns. Built-in compliance guidance can go a long way toward preventing costly error penalties that small businesses may not be able to afford.
Detailed Reports
Small businesses, or any business, will not want to invest in new software only to find out that it does not include the essential forms and/or reports. Speak upfront with a vendor and make sure their software has exactly what you need to prevent last-minute missed deadlines or oversights.
Easy Set-Up and Integration
The tax software that you use should have a relatively straightforward interface and a minimal learning curve. These qualities are especially useful for small businesses looking to save their money by not hiring an in-house accountant or outsourcing their support.
AMS’ 1099-etc software operates as a modular suite of tools and is the most affordable solution on the market.
Make sure that your tax software integrates with any third-party applications that you use during tax season, such as Excel or QuickBooks.
Scalability
Growing with your platform is a cost-efficient alternative to needing to switch platforms too soon or needing to get a larger one later. Figure out specific details, including:
- The number of workers that the software can handle
- If software supports multi-state tax filings
- Whether users can circumstantially add modules
- If the system is tiered and how that might limit you
Planning ahead is the best way to ensure that your small business does not spend more money than it can afford to dedicate toward tax software.
Get Started with AMS
If you are unsure about the type of worker that you want to hire for your business or unclear on whether you should get 1099 vs W-2 software for your small business’s 2025 reporting, it might make sense to get comprehensive W-2/1099 software. Not needing to purchase two programs can save you money on software and additional resources.
Our W-2/1099 software has features that gives users access to:
- Easily generated W-2, W-3, and 1099 forms
- Modular capabilities, like form generation and electronic filing
- Easily entering data onto entry screens that look like actual forms
- A Browse command tool that users can enter data with into a spreadsheet format
Download our free 1099-etc Demo software today and see if our tools meet your needs.