WP1099 by Scott DeLuzio

WP1099

One of the unappreciated difficulties with running affiliate programs, or dealing with vendors, is the need to issue them 1099-MISC forms each year. Collecting the data necessary for yourself, or your accountant, to generate those forms in time can be an arduous process. WP1099 is a WordPress plugin built specifically to solve these data collecting problems.

The story of WP1099 is an interesting one. It was originally conceived by its creator, Scott DeLuzio, as a traditional SaaS application. He found himself in need of a pivot to keep the idea alive though.

Scott answered my questions about how the idea for WP1099 originally came about, the difficulties of starting as a SaaS application and switching to a regular WordPress plugin and the challenges of marketing and selling a season product.

How did you get started working with WordPress?

I first started working on websites when I was in college studying accounting of all things. My father was starting a business at the time and I asked him if there was anything I could do to help him out. He said “build me a website”, to which I replied “I have no idea how to do that.” He said, “well, go buy a book and figure it out.” So I did.

At the time I had no idea how to get a domain name, what hosting was, and I had never written a single line of HTML, but I figured it out. The seed was planted after seeing a blank screen turn into a functional website. I slowly started doing other websites for local businesses as a side job while in college and got better at what I did over time.

The first few sites I built were done using Microsoft Frontpage, which got the job done, but was still rather tedious to create each page individually. Eventually I started to hear about WordPress, and how I could have one template that would make every page on the site look the same – and I could change it on the fly without losing any content.

This was like a dream come true! Once I started using it, I never looked back!

What was the original inspiration for WP1099?

Around this time last year I was looking at payouts to affiliates for one of my products. While I didn’t have any affiliates who were close to requiring a 1099 for the year, I knew that if I had a hard working affiliate that I’d need to get them one. I took a look to see if there was a plugin or something that would help prepare the 1099’s if I needed it. I was fairly surprised to find that there were no solutions out there, but since it wasn’t something that I needed right away I sort of dropped the issue. This was mostly research for the just in case moment if I ever needed a solution.

Fast forward a week or so, and I was at Pressnomics speaking with Andrew Norcross at the speaker’s dinner. The conversation started going to our financial backgrounds and how we both somehow landed in the development world. Figuring he might have heard of a solution, I brought up the 1099 issue that I was researching and how surprised I was that AffiliateWP and some of the other plugins didn’t have this sort of reporting mechanism built in. As far as he knew there weren’t any solutions, but he knew Pippin Williamson, and said he’d ask him the next day. The next day he said that Pippin would be interested in talking to me about a solution.

Later that night I got in touch with Pippin, and he confirmed that a number of his AffiliateWP customers have asked for this sort of reporting. Since Pippin isn’t an accountant and has no aspirations of becoming one, he said he really didn’t want to build out a solution.

I told him that I’d get started working on a solution and hopefully get back in touch when I had something that worked.

WP1099 started out as a SaaS application but you’ve since shuttered that and shifted to a more traditional WordPress plugin. Can you talk a little about why that change was made and any complications that arose with the switch?

Initially, my goal for WP1099 was to make it as easy as possible for the end user to file 1099-MISC forms for their affiliates and vendors. What that meant was that I would create a turnkey solution that did everything from collecting W9 taxpayer identification information, to aggregating payments at the end of the year, to actually filing the 1099-MISC forms for them.

I had a working SaaS solution in place that did all of this. However, as time went on I realized that there were some major problems with this model that traditional SaaS applications do not typically face.

First, the information that I was required to collect from my customer’s affiliates and vendors on the W9 form was highly sensitive information. Names and addresses are one thing, but social security numbers are a totally different can of worms. Collecting that data required a much higher level of security than collecting something less sensitive like a phone number. This actually posed two problems:

  1. I needed to come up with a bulletproof way to collect and store this information, or risk becoming the Equifax of the WordPress world.
  2. Nobody was willing to give me this information even if I guaranteed that the data was 100% secure.

Without this piece of the puzzle, the ease of using a SaaS solution sort of falls apart. My customers would then need to do the legwork of collecting this information and getting it to me somehow.

Another problem I had was that there was no way for me to know if the 1099-MISC forms I was filing were actually correct. The software was solid, and collected the payouts from the affiliate program correctly, but it had no way of integrating with offline payments. For example, say you have an affiliate who promotes your product but they also do some other work for you. On the 1099-MISC form, you’d have to report the total of all these payments. WP1099 would have no problem pulling out the affiliate payments, but it would have no way of aggregating the other payments. By making this a “set it and forget it” solution, I’d likely be setting my customers up for failure by potentially filing incorrect information on their behalf.

Finally, I had to manually submit all of the 1099-MISC forms to the IRS and state agencies, and make sure my customers and their affiliates or vendors were able to get the forms by January 31st. Granted, I could bulk upload all of the forms to the IRS, so that wasn’t terribly difficult. But, since I was storing sensitive information on a different server than the 1099 information for security purposes, I’d need to combine the data before filing. This would likely be a very labor intensive process to make sure that the names and social security numbers matched exactly. And while the bulk upload to the IRS took care of a good number of state filings, but there were still about 20 states that required filing in some other manner. Some of them require special formatting, others require additional documentation, etc.

Basically, the SaaS side of it was a security and administrative nightmare.

One of the key features of WP1099 is tight connection with all of the major WordPress affiliate and marketplace plugins. What are some development challenges that come with integrations like that?

One of the biggest challenges is that no two affiliate or marketplace plugins store their data in the same way. Some have a custom table for all transactions, while others break out commissions and payouts into separate tables. The biggest challenge was playing around with each of the plugins to figure out exactly how the data was being stored so that I could retrieve it when it was needed. Then I had to develop a solution that could identify which plugin(s) were in use on a site and pull the correct data on those sites.

WP1099 is, in a sense, a seasonal product. How has that made marketing it and generating sales easier or more difficult?

WP1099 is definitely seasonal. It is essentially a product that is needed in January, and really not needed again until the following January. The nice thing about that is that I don’t need to worry about what my Fourth of July sale is going to look like for this particular product, because unless I’m basically giving it away, no one is going to buy it then anyway. The other nice thing is that I don’t need to spend a ton of development time during the year on it. And really it wouldn’t make a lot of sense to work on it very much unless there are obvious bugs that need fixing. The tax law can change from time to time, and working on updates can be sort of a moving target. Until the IRS publishes their documentation for the next year’s 1099-MISC forms, I really don’t want to put too much effort into updates.

The challenging aspect is that I have a very small window of time to sell the plugin. That time period is also very saturated with ads for every other product imaginable with the Black Friday/Cyber Monday sales, and all of the other year end Christmas/holiday sales. This past year sort of felt like I was screaming in the middle of a rock concert. Sure I was making a lot of noise, but it was getting drowned out by the larger crowd.

Ultimately, I think the success of the product will be through partnering with developers of other affiliate and marketplace plugins. When their customers ask them for a solution to their 1099 problem, those developers can refer them to WP1099.

I always ask people to give me one piece of advice they wish they had been told before they started on their plugin. Aside from the SaaS approach, is there anything you with you had done differently with WP1099?

I wish I was more patient when rolling out WP1099. The initial idea came in April 2017 and I had the initial SaaS released in mid June 2017. The release got some traction in WordPress industry news sites like Post Status, but generated almost nothing in sales during the first few months. Like I mentioned before, no one cares about a tax related product in the summer. If I had waited until later in the year to release it I’m sure it would have done much better.

What’s the future hold for yourself and WP1099?

About a year and a half ago I was growing tired of building client sites, and decided I wanted to shift my focus to selling plugins full time. Since then I’ve boosted my marketing efforts on the existing plugins that I have, and done a lot of work to improve them. I’ve also acquired a plugin, Full Screen Background Images, from Pippin Williamson, which I’m happy to add to my portfolio.

However, at times I feel like I’m a little all over the place with my plugins. None of my plugins fit into any one category very well:

At some point, I may try to narrow my focus to a more specific niche. This may include selling some of my plugins to another developer, or acquiring other established plugins that are complimentary to each other.