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The Key to PEO Profitability

There is an arch bridge in Greece from 1300 B.C., and it’s still standing. There are hundreds of arch bridges from the Roman era across Europe and the Middle East, many also still standing.

The arch is a very simple structure, yet it has great strength, stability, and endurance. Building it requires a frame to support the side stones until the keystone is placed, but then the arch is self-supporting and maintains its strength through the weight of each of its parts.

Although it is very complicated, the PEO can build a strong financial structure based on these principles. Each element—balancing costs and revenues, finding and keeping the right employees for your PEO, using the right technology and workflow processes, focusing on client fit, and matching your service profile to your client base—works together to support the PEO, held together by comprehensive and granular reporting, analysis, and decision-making.

This structure is the key to a strong, stable, and enduring PEO.

Know More

Departments

IRS Certification

IRS Opens PEO Certification Program

On July 8, 2016, the Internal Revenue Service (IRS) opened the portal to allow PEOs to apply for certification and released the draft surety bond form. The IRS opened the PEO certification website on July 1 and published frequently asked questions (FAQs) about PEO certification thereafter. So, what should you be doing to get your PEO certified with the IRS?

Legal Currents

ESOPs, PEOs, and Client Employers

As the baby boomers age and seek liquidity events for their businesses, Employee Stock Ownership Plans (ESOPs) have gained renewed popularity. This increased use of ESOPs means that some ESOP-owned companies are becoming clients of PEOs. When they do, PEOs need to be aware of how ESOPs operate and their peculiarities.

Human Resources

The New Overtime Regulations are Here

We all waited with bated breath for the U.S. Department of Labor’s (DOL’s) final changes to the Fair Labor Standards Act (FLSA) overtime regulations for nearly a year. Now they are here. As predicted, they will make more than 4 million previously exempt employees eligible for overtime pay.

Benefits

Developments in the Retirement Plan Arena

For many people, a modest six-figure account balance would be pretty encouraging. The perspective changes, however, when that money potentially has to last for 10 to 20 years. Multiple employer plans (MEPs) provide small business owners a cost-effective way to offer employees the flexible features and benefits of a traditional 401(k) plan without requiring the internal expertise to manage a stand-alone plan

Risk Management

Workers’ Compensation and Client Profitability

Workers’ compensation claims experience is a key component of profitability for PEOs but is too often an afterthought when analyzing individual client employers. When calculating client profitability, it’s relatively easy to concentrate on the flow of cash received and paid out on behalf of each worksite employer. Most payroll systems have standard reports that provide this information at your fingertips. Yet limiting the analysis to cash flow ignores many costs that drive future performance.

Marketing

Marketing Strategies for A Variety of Markets

While some PEOs operate in a limited geographic area, others serve clients and worksite employees across the nation. Universally, we strive to build our client base through various forms of marketing. While its components have changed dramatically over the last 30 years, at its most basic, marketing is simply the way you communicate information about your company and its services


Columns

The Inside Word

‘The problem is that agencies sometimes lose sight of common sense as they create regulations.’

It was no surprise that when the IRS finally released the regulations under the Small Business Efficiency Act (SBEA), they had some unexpected elements—they even created standards that were intentionally and carefully crafted out of the SBEA passed by Congress. Throughout the process, the IRS was very concerned about the possibility that a company certified under the IRS program would go out of business and take tax funds with it. Beyond the loss of revenue, the IRS was apprehensive about political fallout. However, that fear was balanced against the need to create a program that would be inclusive for the entire PEO industry and within reach of even small PEOs.

NAPEO Notebook

Election Year Legislation, the New Overtime Regs, and the SBEA Patrick J. Cleary

The first full week of June found me in Des Moines, Iowa, for our Mid-West Leadership Council Forum (LCF). Joel Duncan graciously hosted the LCF at Aureon’s corporate headquarters. We had a good turnout and some great content. Leadership Council Chair Bob Cerone of Cognos HR runs a good meeting. Two things stood out to me. One was the presentation by Bill Kramer of the Council of State Chambers on the burgeoning minimum wage, paid sick leave, and state retirement legislation in the states. This is an election year, which is why you are seeing these initiatives proliferate.


Up Front

NAPEO Launches New Online Ad Series Kerry Carruthers

In July, NAPEO launched a new series of online ads designed to boost the visibility and awareness of the PEO industry, drive traffic to NAPEO’s Find a PEO search tool, and, ultimately, bring potential customers to our members.

Capitol Comment

It’s an Election Year Thom Stohler

Just about every month, I provide an update on the federal legislative and regulatory activity of NAPEO. I also try to add information on the political realities inside the beltway. If I simply focused on the ongoing activities of Congress, it would be a short update. The only bills that stand a chance of becoming law are the various appropriations bills that fund the federal government. That’s all there is time for, as Congress is scheduled to be in session a grand total of 30 days between mid-June and election day (November 8). Every other legislative activity is designed with an eye on the election, as both parties attempt to position themselves in a positive light with voters.


NAPEO Advisor

Workplace Harassment, Persuader Rule, OSHA Electronic Reporting Farrah L. Fielder, Esq.

Q. Has the EEOC been studying workplace harassment? I heard of a recent report and want to know if there is any truth to it. A. Yes, for the past 18 months, the Equal Employment Opportunity Commission’s (EEOC’s) Select Task Force on the Study of Harassment in the Workplace has been studying how to prevent workplace harassment.

PEOs in the Community

Sheakley Helps Build a Better Future for Disadvantaged Youth Stuart Manning

At Sheakley, we’re in a position to help people in need. As a PEO, we serve companies by helping them with essentials like HR, payroll, and risk-related needs. Because we believe in giving back, we also make that same commitment to helping people in need throughout the communities we serve.


Small Business Perspective

Government Working Overtime to Complicate Small Business Juanita Duggan

The White House recently approved a new regulation that could affect millions of small businesses, driving up their labor costs and creating more layers of red tape. The Department of Labor’s (DOL’s) proposed overtime rule raises the salary threshold for eligible workers from $23,660 to $47,476. That means salaried employees earning less than $47,476 will now be eligible for time-and-a-half for every hour they work beyond 40 hours per week.

PEO Spotlight

Employer Advantage: Nylen Lee Allphin Stephanie Oetjen

Lee Allphin is somewhat of a paradox. His first love is chemistry. He’s always been fascinated by it and decided it was what he wanted to do when he was young. Chemistry was his first career. Why then, is he running a PEO—one he launched himself and has been running for 27 years—when he readily admits that he never learned to love it? If you let Lee tell you why, then he might not be so much of a paradox after all. It all has to do with Lee’s circuitous route to PEO and the scientific method.


The Big Picture

How Cities Attract Innovators, Entrepreneurs Thomas J. Donohue

Entrepreneurship starts at the local level, in neighborhoods and in cities. That’s been true throughout our history, and it’s true in today’s digital age. But communities that thrived in the past aren’t guaranteed success in the new economy. Increasingly, that success is dependent on public-private cooperation, smart public policies, and a web of partnerships and collaborations.

 

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