Every January, 67% of firms used to lose six weeks to 1099 processing. The firm in this story used to be one of them.
Twelve thousand 1099s. Thirty-eight hours. Zero corrections. That was 2026 filing season at a 22-person CAS firm in Indianapolis. Three years ago the same volume took six weeks of all-hands processing, two seniors working through MLK weekend, and an average of 180 corrected filings after the fact.
Here's what changed, in order.
Year 1 (2024). Manual everything. Vendor W-9s collected by email. Three different spreadsheets per client. Junior staff keying EINs from PDFs. Firm filed roughly 9,500 1099s and spent the first two weeks of February on corrections. Total firm hours: ~720. Per-form loaded cost: ~$13.50.
Year 2 (2025): they bought Tax1099 and called it transformation. Filing got faster — the software handles the actual IRS e-file. But the data collection problem didn't move. Vendors still emailed PDFs. Staff still keyed EINs. Pre-filing prep ate the same six weeks. Firm hours: ~540. Per-form: $10.20. A real improvement, not a transformation.
Year 3 (2026): they added Lido for extraction. Lido does template-free extraction from any 1099 variant or W-9, pulls EIN, address, and payment data, pushes structured records into Tax1099 for filing. The firm also built one Karbon workflow for W-9 collection — clients upload to a portal, the portal triggers Lido, Lido populates the workflow, and a junior reviews flagged exceptions only. Classification ran at the documented 97.8% accuracy. The remaining 2.2% went to human review.
The number that mattered: 38 hours total firm time for 12,000 1099s. Per-form loaded cost: $0.71. The seniors who used to lose January slept through it. The associate who used to key EINs filed her CMA exam application instead, because she finally had the time.
What broke: year one of Lido produced ~14% errors on construction-vendor W-9s where contractors used DBA names that didn't match EIN registration. Two weekends went to retraining the extraction. Year two dropped under 2%. The firm now keeps a construction-vendor review queue separate from the rest, because the false-positive rate is higher there than anywhere else.
The math: the stack savings don't work for a firm doing fewer than 500 1099s a season. Below that, the subscriptions eat the labor savings. Break-even is somewhere around 800–1,200 forms. Above that, the curve goes vertical.
Up from 38% in 2022. But 44% of automation users are dissatisfied with what they have — usually because the tool handles filing but not collection. If your firm bought a filing tool and called it done, you're in the dissatisfied 44%. The collection step is where the hours actually live.
The platform auto-emails missing W-9s, follows up on a configurable schedule, and flags vendors who haven't responded in 14 days. Useful for firms doing 1099s for clients with 200+ vendors. It still can't tell you whether a 1099 is required in borderline cases. That's still your call.
If you're already using Tipalti for client AP automation, the 1099 layer is now built in — no separate platform to manage. Worth a side-by-side with a Tax1099-plus-Lido stack if your CAS clients already use Tipalti. Don't double-pay.
Aggregation means a firm with 30 clients each filing 9 forms is now over the e-file threshold even though no single client is. Most automation tools handle this automatically. Manual filers should check before January.
The percentage of total 1099 processing time the typical firm spends on data collection — before the form is even drafted. Filing software made the last 30 minutes of the workflow fast. The first six weeks are where firms are still bleeding hours.
What it is: A document extraction platform built for tabular and form-based source files. Template-free — adapts to any 1099 or W-9 layout without pre-mapping. Plays in the data-collection stage, before filing software takes over.
What it does well: EIN, address, payment amount, and box number extraction with 97.8% accuracy on standard W-9s and 1099-NEC/MISC variants. Pushes structured data into Tax1099, Track1099, or directly into Karbon/Canopy workflows. Saves the data-entry step filing software doesn't touch.
What it doesn't do well: Borderline judgment calls — DBA vs. legal name, sole prop vs. LLC classification, foreign vendor edge cases. You still need a reviewer queue. It also won't collect missing W-9s from non-responsive vendors. That's a chasing-tool problem (see Track1099 above).
Pricing: Volume-based. Roughly $0.20–$0.40 per document at firm scale (negotiable annual contracts). Free 50-doc trial. Lido.app for demo scheduling.
This week's In Practice: a reader from Iowa runs solo bookkeeping for 14 small clients. She wrote in after Issue 5 asking how Claude fits a one-person practice. Her stack and what she's stopped doing by hand:
The setup. Claude Pro ($20/mo), QuickBooks Online, a Trello board for client status. No firm management software. Three things changed.
Monthly recon notes. She uploads the bank reconciliation report and asks: "Write a 2-paragraph note for the client explaining what reconciled cleanly, what required adjusting entries, and any items needing their attention. Friendly tone, no jargon." Used to take 12 minutes per client. Now 90 seconds plus 30 seconds of review.
1099 vendor triage. Mid-year, she pulls each client's vendor list and asks: "Which of these vendors look like they'll need a 1099-NEC at year-end based on the payment patterns? Flag any that look like corporations versus sole props." Not perfect — she still reviews — but it cuts her year-end scramble in half.
The Friday status update. One prompt converts her Trello columns into a client-facing weekly update. She used to skip it half the time. Now she ships every Friday.
What she stopped trying: anything that resembles tax advice. Solo bookkeepers should never let AI write a sentence that could read as an opinion on the return. Different skill, different license. Total monthly Claude spend: $20. Time recovered: ~4 hours a week. She used it to take on a 15th client.
Pull last January's time log. Calculate two numbers: (1) total firm hours on 1099 prep and (2) total forms filed. Divide. If per-form loaded labor is over $5, the extraction-software math starts to work at your volume. Over $10, you're leaving real money on the table. Bring both numbers to the next partner meeting before Q4 budgeting closes.
P.S. Solo bookkeepers and small-firm owners: reply with one task you wish Claude handled and I'll feature the best in a future In Practice.
