                     ANTHISTLE SYSTEMS & PROGRAMMING LTD.
                              563 Patricia Drive,
                              Oakville, Ontario,
                                CANADA L6K 1M4

                            Telephone 905-845-7959


                                                      10th. February, 1998



                           PRINTING ANNUAL W-2 FORMS
                           =========================

OVERVIEW
--------

We also have a separate W-2 and 1099-MISC program called TAXFORMS.EXE which
was released as a stand alone $50.00 program.  It costs less because it does
not do payroll, just taxforms, but it carries an advertisement for PAYROLL USA
and allows its purchasers full credit to upgrade for an additional cost
(depending on which of our products they want, just PAYROLL USA, and/or
Magnetic Media W-2, and/or our interface to "The General Store" point of sale
system).

TAXFORMS.EXE does not require PAYROLL USA, it allows creating W-2 and
1099-MISC files from scratch as separate entities.  However for PAYROLL USA
users TAXFORMS has been incorporated in the PAYROLL USA program with an
interface to get PAYROLL USA's year end files into the TAXFORMS format so you
do not need to re-enter data. The advantage to you being that you have the
full extended capabilities of TAXFORMS at your disposal at no extra cost, the
advantage to us being we have only one set of tax forms routines to maintain.
Please bear the above in mind as some of the text you see on the screen refers
to TAXFORMS.

Note that this part of the program is for use only by Registered Users of our
PAYROLL USA system. It uses that system's PAYUSA.CNF and the PAYW2.DTA files
for input, and is designed to process W-2's for the 1997 Tax Year ONLY. It may
be usable for 1998 tax year also, but only if the W-2 form layout is not
changed and, if using magnetic media, as long as the file layouts do not
change. These changes are determined by the IRS/SSA.


Data taken from Configuration file
-----------------------------------

Your Employer Name and Address, also IRS / State Employer I.D. Number, and Box
16 Name of State / Box 19 Name of Locality is taken from the PAYUSA.CNF file.
If you are not sure if the PAYUSA.CNF is up to date for this information then

From the PAYROLL USA MAIN PAY MENU select
  F5 CONFIGURATION & OTHER UTILITIES, then select
     F4 CHANGE CONFIGURATION - DISKS, PROMPTS, TAXES, ETC., then
        F5  Your Company Information



Data taken from W-2 source file created
in the last pay cycle of the year
---------------------------------------

The Employee Information is taken from the PAYW2.DTA W-2 source file which is
created when the last Pay Cycle of the year is processed. The location of this
file is in the output data directory (e.g. \PAYOUT ) specified in the
PAYUSA.CNF configuration file.

If you are printing 250 or more W-2 forms the IRS may require you to file on
magnetic media - this capability is built into your program, ready for use at
short notice.

Information from the Social Security Administration about magnetic media is
reproduced in file SSAINSTR.TXT in this directory (e.g.  \PAYPGMS ).


PRINTING W-2'S
--------------

The W-2 source file is created automatically in the last pay cycle of the
previous year when the program detects that the next pay date is in a
different year to the current pay date.  Also, YTD amounts on the employee
file are then zeroed to start the new year.  PAYROLL USA includes a procedure
to print W-2 forms. From the MAIN PAY MENU select choice "F6 PRINT GOVERNMENT
REPORTS" then "F4 Print Annual W-2 / 1099-MISC Forms" then (unless already
done for 1997 W-2's) select "F1 CREATE NEW PAYROLL USA W-2 PRINT FILE" then
select "F2 W-2 PROCESSING"  The F2 choice can be done as many times as
necessary, but F1 is normally a once a year operation.

At this menu you are in our in our interface from Payroll USA to our Taxforms
program.  The F2 choice leads to the Taxforms program where you should select
"F1 USE AN EXISTING W-2 FILE" then select file PAYUSA97.W2 (just press enter
if it is the only file highlighted). Then you will be at another menu with
more options including editing and printing.  You can select any of these
options, primarily though you will need "F1  EDIT EXISTING W-2 FORMS" and "F6
PRINT W-2 FORMS OR LABELS". Any of these options can be repeated as often as
you wish.

A word of caution, just to save confusion, the first Taxforms menu has a
choice "F2  CREATE A NEW W-2 FILE" but Payroll USA users do not need this menu
choice (except unless you want to create an extra W-2 file with a different
name, not related to Payroll USA), your PAYUSA97.W2 file is created in the
interface choice "F1  CREATE NEW PAYROLL USA W-2 PRINT FILE" before you get to
the Taxforms menu.


FORMS
-----

Forms can be printed as often as necessary.  Printing forms has no effect on
the file.  Forms can be obtained from your favourite business forms supplier
or from

DELUXE BUSINESS FORMS,
1275 Red Fox Rd.,
P.O. Box 64181,
St.Paul, MN 55164-9635

For Ordering Information or FREE samples, Call DELUXE Toll Free,
1-800-527-2028

If FAXing FORMS ORDERS send them to 1-800-336-1112

IMPORTANT: For fastest service please mention keycode CO5778 when
placing forms orders with DELUXE (Letters CO, Numbers 5778).

- OR -

NELCO INC.
3130 South Ridge Rd.
P.O.Box 10208,
Green Bay,  WI 54307-0208

1-414-337-1000 VOICE
1-414-336-5130 FAX

Tell NELCO that Chris Anthistle of Anthistle Systems sent you.

You need "one wide" forms designed to official IRS spacing.  W-2's are two to
an 11 inch sheet (5 1/2 inches apart), two seperate employees per sheet
(traditional style), and 1099-Misc are 3 to an 11 inch sheet (3 2/3 inches
apart), 3 seperate recipients per sheet. If pin feed, carbonless is best for
desktop printers (not so thick as carbon interleaved). Some manufacturers have
a pin feed twin set which has half of the required copies in one set and the
other half in the next set to reduce thickness even more by printing twice.
Laser forms should be the type which have the text pre-printed, not the blank
sheets.  We print the data only, we do NOT draw the text with the data in it.
On laser printers you will be printing all of Copy A's in one pass, all of
Copy B's on the next pass, etc.

If you are doing Magnetic Media W-2 reporting you can order the version of the
W-2 form that has no Copy A (or if you have already ordered the regular W-2
just destroy the Copy A).

If printing 1099-Misc forms on a laser we recommend you try it out on free
sample forms first as the print area on a page of three 1099-Misc forms is
greater than some laser printers can handle in text mode (more than 60 print
lines, print area more than 10 inches long). This problem may be resolved when
our Windows version is available as we will then be printing in graphics mode
for which a slightly longer laser print area is allowed. You may need to dust
off the old dot matrix printer and re-connect it for printing 1099-Misc forms.


MAILING LABELS
--------------

We have two options, pin feed one wide 3 1/2 inch x 15/16 inch, or laser
sheets of 20 labels (2 wide by 10 deep) per 8 1/2 x 11 inch sheet. Both are
obtainable from your local stationary store.  In January you might even find
the W-2 and 1099 forms there too.



W-2 FORMS
---------

Be sure you have forms for the 1997 tax year. Unfortunately, continuous pin
feed forms are expensive for small quantities and the free IRS forms will not
fit in the computer printer, so if you have only a handful of employees you
may prefer to print the W-2's on plain paper and have somebody handwrite or
type the information from the print out onto the free IRS forms rather than
purchase the pin feed forms.

If ordering forms from such as DELUXE or NELCO be generous in estimating
quantities of forms needed, allow for line up errors, possibly complete
reprints in case of some fundamental error being discovered after the print
phase.  Ordering more than you need is not that much more expensive, but to go
back later for a re-order is.

Instructions for completing the W2 form are available for free from the IRS,
please read them if you have any doubts. You, not Anthistle Systems &
Programming Ltd., are responsible for what is printed on the W2.  We give you
as much help as possible in this program, but the final decision as to what is
on the W2 is yours.


EDIT W2's BEFORE YOU PRINT THEM
-------------------------------

It is possible to for you to edit the W2 forms before they are printed.  We
strongly recommend you take the time to do so.  The program even allows you to
browse backwards and forwards in the W2 print file making adjustments in
whatever sequence you want so you can return to an employee later if not all
required information is available when you have that employee on the screen.
If the program finds anything unusual about the employee its comments will be
displayed just before the employee is displayed. You can press the Print
Screen key (or Shift PrtSc on older keyboards) if you want a printed copy of
those comments for reference.  If you do not fix all these errors any
remaining will be re-displayed as you leave that employee.

If you wish to suppress printing of a W2 then either put and X in the VOID box
or change "Box a" (Control Number) to "DELETE"  (do NOT type the " [quote]
marks when typing DELETE).  That W2 will not be printed and will be excluded
from the control totals.  We are not suggesting tax fraud here, there may be
times when a W2 should be legitimately suppressed (example, the person was not
an employee but a self employed contractor who had no withholding and you were
just using the payroll system to keep track of gross payments made, in which
case if you paid over $600.00 you should prepare a 1099-MISC instead of the
W-2).  Do not VOID or DELETE a W2 that has withholding on it (unless it is an
error of some kind) or your W2 control totals will not balance to your 941
remittances.

NOTE THAT EMPLOYEES WHO TERMINATED IN THE LAST QUARTER OF 1996 WILL HAVE BEEN
RETAINED ON THE 1997 EMPLOYEE FILE IN CASE OF STATE UNEMPLOYMENT QUERIES.
THEY MAY HAVE 1997 W-2's WITH ZERO AMOUNTS. THESE W-2's CAN BE SUPPRESSED
(as described above) DURING THE EDITING STAGE.

After each editing session you will be asked if you wish to see the control
totals as they then stand (reflecting your changes).  Good idea to reply Y
before printing W2's to see if they match your 941 totals (the figures
actually filed on your 4 quarterly 941's, manually added together with your
calculator).  The totals displayed will be of all printable W2's in the file -
note if you have more than 41 W2's they will be sub totalled in batches of 41
when printed (with separate sub totals for each batch) as per IRS
requirements, but the totals shown on this screen will be total of all such
batches.

You do not need to print the W2's until all changes have been completed, even
if they are not all completed in one session (your intermediate changes will
be saved providing you do NOT select the F1 menu choice a second time in the
same tax year).

The W-2's can be printed multiple times if necessary, the file will sit on
your disk until overwritten by the next year's W-2's.  You can even restart
part way through the file in case of forms coming out of alignment, printer
foul ups, etc.


MOVING THROUGH THE FILE WHEN EDITING
------------------------------------

To get out of the screen when done with an employee press one of the
navigation keys, PgUp, PgDn, Home, End, or Esc from anywhere on the screen.
The cursor starts on Box 1 Wages because usually the left hand side of the W-2
does not need editing, however press the up arrow if you need to move it onto
the left side of the form. PgUp will give you the previous employee, PgDn the
next employee, Home will take you to the first employee from anywhere in the
file. End or Esc will take you to the last employee from anywhere in the file,
so if what you really wanted was to get out of the Edit mode completely then
press it a second time to return to the menu. If you have a large W-2 file and
wish to page rapidly through it to find the one person you want to change then
hold down the PgDn key.  When first created from Payroll USA, the employees
are in alphabetical order but you can also sort them into Social Security
number order, release the key when you get close then press it one at a time
until you reach the one you want.


SDI and VDI - Definition and placement on W-2.
----------------------------------------------

SDI is short for State Disability Insurance.  VDI is short for Voluntary
Disability Insurance (State approved).  These two items are not applicable in
all States, but where applicable the contributions (premiums) withheld from
employee pay would normally be shown in W-2 Box 14 (Other).   For this program
to recognise them for regular W-2 totalling and for Magnetic Media purposes
they must have a Box 14 description of "SDI" or "S.D.I" (for SDI, note no
period after the I) or "VDI" or "V.D.I" (for VDI, note no period after the I).
In either case do not enter the quotation marks on the W-2 (example, enter SDI
not "SDI" ). There are 3 entry lines in Box 14, from the program's viewpoint
it does not matter which line(s) you put them on.


DETAIL PRINT OUT RECOMMENDED BEFORE EDITING
-------------------------------------------

Each time you start a W-2 editing session you will be asked if you want a
print out of the SOURCE detail (as it stood BEFORE you started editing).  You
only need to reply Y once per year as the figures on the print out will not
change as you edit.  This print out is similar to the YTD Payroll Register but
is in the same Alpha sequence as the W-2's.


SOCIAL SECURITY CHECKING
------------------------

Various checks are done on the W-2 Social Security and Medicare wage and
amount.  If any discrepancies are found you will be advised by the program
before the W-2 is displayed.  You are not forced to change any discrepancies,
that decision is up to you.

Social Security calculated by PAYROLL USA should be accurate. However, if a
discrepancy occurs please bear in mind that it may have arisen due to the
flexibility we give you. Some common examples:

 1. There is provision for Taxes to be manually entered and the error may have
happened then, particularly if Soc. Sec. Wage (right hand side on the 3rd of 3
current pay employee entry screens) was not entered with the manually
calculate FICA/Soc.Sec. Amount.

 2. If you started Payroll USA part way through the year the amounts
transferred into Payroll USA from your old system may not have been correct.

 3. It is also possible that a pay cycle was run twice and made permanent both
times in error, or the results of a pay cycle were lost because it was not
made permanent before running the next one. If you suspect missing or extra
pay cycles also check Box 10 Wages and all other boxes as they will also be
incorrect, and check other employees on the same file because they will have
been affected too. Note that salaried people are paid every pay cycle (as long
as they are active), so are hourly paid but their pay is dependent on hours so
if an extra pay cycle was accidentally run with no hours entered you may then
find discrepancies between hourly and salaried employees on the same file
(salaried seeming to have an extra pay in their annual total while hourly do
not.).

Checking the PAYROLL USA 60 pay history screens for these employees may help
pin down the likely cause of the error.  The is also a report which prints out
the history screens.

Note that minor differences may exist between the 941 and W-2 Social Security
and Medicare taxes withheld because the W-2 is based only on employee
contributions whereas the 941 also includes employer contributions.  The 941
Social Security and Medicare Withheld are normally double the W-2, but small
differences can exist due to rounding errors on the original calculation of
the employer contribution which is done on an employee by employee basis
rather than on the total of all employees. Such differences will be small, not
more than a few dollars, and are not errors.


TAXFORMS MENU STRUCTURE (each indent is a further level deep)
-------------------------------------------------------------

F1  W-2 PROCESSING
    F1  USE AN EXISTING W-2 FILE { Payroll USA users select file
               PAYUSA97.W2 created from your employee data by
               our interface to Taxforms }
        F1  EDIT EXISTING W-2 FORMS
        F2  ADD MORE W-2 FORMS
        F3  SORT ON EMPLOYEE'S LAST NAME
        F4  SORT ON EMPLOYEE'S SOCIAL SEC.#
        F5  SORT ON ORIGINAL ENTRY SEQUENCE
        F6  PRINT W-2 FORMS OR LABELS
            F1  Print W-2 Forms
                F1  Print PIN FEED Forms
                    F1  Print ALL W-2 Forms for this file
                    F2  Printer problem, restart part way through
                F2  Print LASER Forms
                    F1  Print ALL W-2 Forms for this file
                    F2  Printer problem, restart part way through
            F2  Print Mailing Labels
        F7  MAGNETIC MEDIA W-2 REPORTING
        F8  CHANGE CONFIGURATION SET UP
    F2  CREATE A NEW W-2 FILE { Payroll USA users do not need this
               menu choice, file is created before you get here }

F2  1099-MISC PROCESSING
    F1  USE AN EXISTING 1099 FILE  { Payroll USA users select file
               PAYUSA97.099 created from your employee data by
               our interface to Taxforms }
        F1  EDIT EXISTING 1099-MISC FORMS
        F2  ADD MORE 1099-MISC FORMS
        F3  SORT ON RECIPIENT'S FULL NAME
        F4  SORT ON RECIPIENT'S TAX ID#
        F5  SORT ON ORIGINAL ENTRY SEQUENCE
        F6  PRINT 1099-MISC FORMS OR LABELS
            F1  Print 1099 Forms
                F1  Print PIN FEED Forms
                    F1  Print ALL 1099 Forms for this file
                    F2  Printer problem, restart part way through
                F2  Print LASER Forms
                    F1  Print ALL 1099 Forms for this file
                    F2  Printer problem, restart part way through
            F2  Print Mailing Labels
        F7  CHANGE CONFIGURATION SET UP
    F2  CREATE A NEW 1099 FILE { Payroll USA users do not need this
               menu choice, file is created before you get here }

Esc EXIT FROM THIS MENU


1099-MISC (needed only if you have contractors who are not
considered employees and who you pay gross as they handle
their own withholding taxes)
---------------------------------------------------------

Apart from the difference in the forms layout, the processing is almost the
same for 1099-Misc as it is for W-2's.  Differences are that W-2's have
verification of Social Security & Medicare entries, and the name sort is on
the last name (or word) on the name line (which would normally be surname)
whereas the 1099-Misc name sort is on the entire name (because it might be a
company name and surname is not relevant).   Large W-2 files also are printed
with extra sub total W-2's per IRS requirements.

Helpful hints will appear on the screen where needed so not a lot of
documentation is required.  The best way to learn how to use the program is to
simply try it out.  We have included a couple of test files for you to get a
quick start in working with it.  If you do not want to waste forms printing
the test files do it on plain paper or send the printer output to a disk file
(as you will find out TAXFORMS can print to any device or to a file).  Start
new files for your own people.

The window for selection of files will automatically expand as the number of
files grows.  Files are listed in the window in alphabetic order. To select a
file just move the highlight bar with the arrow keys and press enter when it
is on the file you want.

In the edit modes, to find a particular employee start at the top or bottom of
the file (depending which end you think that employee is closest too) and page
up or down.  You will find it quite quickly if you hold down the PgUp or PgDn
key.  We did not include an index and direct access to named employees as the
program is normally only used on a seasonal basis and more than likely the
employees will be just entered and not looked at again.  Also you can sort
employees before searching if you think that would be faster.   If this
becomes a problem let us know and we will consider an improvement for a future
release.


MAGNETIC FILING
---------------

This 1998 version of PAYROLL USA has an option for magnetic filing of W-2's at
no extra cost.  This is a must for larger companies (the IRS require it for
250 or more W-2's) and it can also be used by smaller companies on an optional
basis.

You still need the paper forms, but you do not submit the Copy A if you are
using magnetic filing, you send a diskette instead.

NOTE: IF YOU ARE ALSO FILING STATE W-2's BY MAGNETIC MEDIA YOU WILL ALSO NEED
TO SEND A SEPERATE DISKETTE TO THE STATE.  THE SSA DO NOT AUTOMATICALLY FILE
THE STATE FOR YOU FROM THE FEDERAL.  THE PROGRAM WILL ASK IF YOU WANT STATE
INFORMATION INCLUDED - SAY YES IF FILING STATE.  YOU CAN EITHER DISKCOPY (DOS)
THE FEDERAL DISKETTE OR YOU CAN RUN THE PROGRAM A SECOND TIME TO PRODUCE AN
EXTRA STATE DISKETTE.

ALSO SEE FILE SSAINSTR.TXT for more information about how to label and file
diskettes with the Social Security Administration, and a list of local
telephone numbers for Social Security Administration magnetic media help.


                            CHRISTOPHER ANTHISTLE,
                                   PRESIDENT
                              10th. February, 1998
