Should I use a Webservice for my website for commonly used functoins between 2 web projects(WebApp and WebService)?

I have a ASP.net web application that currently generates various Crystal Reports. The coding for those reports are in about 2-3 modules.  I have been presented with the task of having to generate the same reports from a new web service.  All sites
are hosted on my own IIS server, which I manage.  As far as I see it I have 2 options. 
1. Migrate the functions and reports needed for my reports into a WebService aka "MyReportEngine".  This "Engine could then be accessed by both my website and the other web service.  I would then no code duplication overhead.
2. Copy report code to the 2nd web service.  IN this case, if I ever made a change to a function in 1 project I would need to make the same change in the web service. 
Option 2 doesn't seem very efficient to me...
If someone has another opinion or idea I would love to hear their thoughts.
All of these web services would only be accessed by my website. They are not intended for public usage.
Thank you in advance.

Hello,
Welcome to MSDN forum.
I am afraid that the issue is out of support range of VS General Question forum which mainly discusses
the usage of Visual Studio IDE such as WPF & SL designer, Visual Studio Guidance Automation Toolkit, Developer Documentation and Help System
and Visual Studio Editor.
Because your issue is related to ASP.NET Web Application and web service, I suggest that you can consult your issue on ASP.NET forum:
http://forums.asp.net/
 for better solution and support.
Best regards,
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