Professional Employer Organization Tutorial General Overview: A Professional Employer Organization (PEO) is an organization that provides management tasks such as HR and Payroll processing for other companies that might not have the time, expertise or resources to perform these tasks themselves. The PEO provides their management services by hiring their clients employees, thus becoming the employer of record for tax and insurance purposes under its own employer identification numbers. The client company continues to direct the employees day-to-day activities. This relationship is often called co-employment. By outsourcing their employees to a PEO a client can often take advantage of lower insurance and Worker Comp rates and possibly inclusion in a 401k plan by being pooled with the employees from other clients of this PEO to form a larger purchasing group. With the PEO scenario multiple clients will be defined within one CYMA payroll company. Once the billing rules and rates are established for each client, employees are then linked to their day-to-day employer via a Client ID. When processing and printing checks the PEO has the option of doing so for all clients, a range or a single client. Likewise when billing, the PEO can create AR invoices for all clients, a range or a single client. In this tutorial we will concentrate on the setup of one client and create a bill for one employee belonging to this client.
Setup: SM System Registration: The first step is to acquire the Payroll module registration key from your dealer or from CYMA. This key will be based on the total number of active employees you have across all your existing and anticipated clients. A replacement key can be acquired if your client or active employee counts are approaching the registration key ceilings. SM Maintain Company: Once the payroll registration key is in place you should go to this dialog and select the Professional Employer Organization option in the Processing Category dropdown field. Note: If your company is an Administrative Services Organization (ASO) which indicates you don t have a co-employment relationship with your clients then you should also select the PEO option. With an ASO the employees are solely under the control of the client company. The ASO still prepares and submits tax and insurance filings but under the client s employer identification numbers. Selecting the PEO option will enable the following payroll dialogs and fields: Maintain Client Groups Maintain Billing Configuration Maintain Clients Process Billing Client ID on Maintain Employees
PR Maintain Client Groups: The setup in this dialog is optional. However, if you have a need to group your clients on payroll reports, or when selecting clients for: calculating payroll, printing checks or processing bills these user-defined groupings can be entered in this dialog. Once defined, a Group ID can be assigned to each of your clients.
PR Maintain Billing Configuration: The setup in this dialog is optional. However, if you have a common way of billing the majority of your clients it is recommended you setup your default billing features and rates here. These values will then default when adding new clients. Later, if you change your mode of billing you can make changes in this dialog and then copy the changes to a range of existing clients. Since the Billing and Features tabs on the Maintain Billing Configuration and Maintain Clients dialogs are virtually identical we will discuss the setup for a PEO on the Maintain Clients dialog, knowing that any values that are setup on Billing Configuration will default when adding clients. Please refer to the F1 online help for individual field descriptions on this dialog.
PR Maintain Clients: This dialog is used to add your individual clients within the one CYMA payroll company. If you previously setup Billing and Feature values on the Maintain Billing Configuration dialog they will default when adding clients. The defaulted values can be modified on a client-by-client basis. Note that there are multiple setup tabs on this dialog. Client tab: This tab is used to enter the basic information about this client including a unique Client ID, an optional Group ID, address and phone numbers and SUTA IDs and Rates if different than setup on PR Configuration. Please refer to the F1 online help for a more detailed description of all fields on this tab.
Billing Tab: This tab is used for the following: Linking this client to an existing or new customer in the AR Module. By default the program will suggest the same code as used in the Client ID field. Specifying if this client should only get billed for the Summary Markup/Fee, the Detail Markup/Fee, the Flat Fee per Employee and any Miscellaneous Charges. Specifying if you want to bill in summary mode where all features selected on the Feature tab will share the same Product ID and have the same Markup/Fee % when creating the bill. Entering a Flat Fee amount per check or employee being billed.
Adding Miscellaneous Charges to the client s bill such as for delivery charges, drug tests, quarterly/yearly reports, etc. These can be edited at the time of billing. Please refer to the F1 online help for a more detailed description of all fields on this tab. Note: When the client record is saved the program will either auto-create an AR Customer if all required fields on the customer record can be fulfilled based on the combination of setup done on the client and on AR Configuration, or take the user to the AR Maintain Customer dialog to fill in the missing Customer and Ship-To required fields. Feature Tab: Above is a simple but typical example of how a PEO might bill a client. This grid contains all features defined on PR Configuration but by selecting the Billable? sort option the features that are selected will float to the top of the grid for easier viewing and modification. In our example: The Earnings features (employee gross wages) will be billed in detail with a 5% Admin. Markup Fee. The PEO s share of the Aetna benefit will be billed in detail with no markup. Note: There are 4 Billable? column options which indicate whose share (Employee, Company, Both and Employee Amount - Credit) will be included in the billing calculation. The PEO s share of the 4 payroll taxes are being billed with no markup. Note: If a nonzero Markup % is entered for a pre-tax or tax feature there are 4 Markup Applies To options available. Each option corresponds to a different attribute (Tax Amount Only,
Taxable Wages, All Wages and Excess Wages). The option selected will then be subject to the billing markup calculation. The PEO s share of the Workers Compensation liability is also being billed with no markup. Please refer to the F1 online help for a detailed description of all columns, and specifically the options available in the Billable Portions and Markup Applies To columns. Information on either the Billing and/or Feature tab on one client can easily be copied to another client by using the Copy Billing button. Workers Comp Codes Tab: If the Use Workers Compensation Codes and Features option is selected on PR Configuration (requires a system registration key) then this tab will appear after the Feature tab. Please refer to the Using Worker Comp Codes in Payroll tutorial for a description of this tab. PR Maintain Employees: After defining the clients the next step is to link each employee to their day-to-day company by entering an active Client ID on the Employment Information page. The PEO s in-house employees would normally not be assigned a Client ID.
PR Enter Payroll: Regardless of the payroll entry dialog or import source since an employee is linked to only one Client there won t be a Client ID column in these dialogs. To continue our PEO example here are the hours entered for a weekly employee SK300 who is linked to the Walsh Brothers client (WALSHB).
Process Calculate Payroll: With CYMA PEOs are able to bill their clients either after the Calculate function has been performed in this dialog or after the checks are printed or tranmitted via EFT. Transactions that have been included on a printed check are referred to as Actuals when performing the billing. This is the Proof listing produced in this dialog. It shows all payroll calculations based on the hours entered for employee SK300. Based on our setup on Maintain Clients the billing will be based on these calculated features: Employee Gross Earnings = $1,040.00 PEO s share of Aetna = $100.00 PEO s share of Social Security = $60.14 PEO s share of Medicare = $14.07 PEO s share of FUTA = $8.32 PEOs share of SUTA = $28.08 PEO s share of Workers Comp = $10.40
PR Process Billing: This dialog is used to: select the clients for billing, review and possibly edit the calculations and then create the AR invoice records. Billing Criteria tab: This tab is used to select the clients, employees, pay frequencies, etc. you want to bill. Among other decisions it s also used to specify what the data source is for the billing. The Calc Method options are used to specify the data source. The options are: Forecast This option isn t based on any entered payroll transaction data but rather on the employee s default features that match the features selected on the client and that are setup as Amount per Period. In our example, the only feature setup as Amount per Period is the PEO s share of Aetna of $100.00 Calculated This option instructs the program to find the qualifying source data in the payroll entry files. This option should be selected if you have already calculated the Payroll in Process Calculate Payroll but have not printed employee checks yet. Actuals This option instructs the program to find the qualifying source data from the payroll check files. This option should be selected if you have already printed employee checks. If this option is selected then three more selection filters are made available: Period End Date, Check Number and Check Date. Only Miscellaneous Charges and Fees This option like Forecast is not tied to payroll transaction entries. If chosen it will bill the Misc. Charges (drug tests, etc.) and the Flat
Fee per Employee (number of employees calculated or checks printed) as defined on the Clients being billed. The Include Feature group options allow you to specify which feature types should be included in this billing session. In our Client example, we selected many feature types to bill, but if on this particular bill we just want to bill the earnings and the markup we would unselect all the other feature types. Billing tab: This tab shows the calculated results for the selected features on Maintain Clients and based on your selection criteria. Each qualifying employee is shown in a separate row of the grid. In our example all selected features on Maintain Client are being billed in detail, therefore the summary cost columns contain $0.00. By highlighting a single client in the grid the program will: Enable the Misc. Charges button if setup for this client for viewing and editing. Enable the Employee Flat Fee button if setup for this client for viewing and editing. Display all Invoice Totals for this client. The Invoice Total is the sum of the Feature Costs, Employee Flat Fee and Misc. Charges. This is the AR Invoice amount.
Enable the Detail button to view/edit individual feature calculations. (Partial grid shown) Note: These are the same calculations as seen on the Calculate Payroll Proof report. In addition, the 5% Admin Markup Fee is being applied to gross wages as defined for this client. In this detail grid the Hours, Rates, Amounts and Markup % are enabled for override prior to creating the AR Invoice. Please refer to the F1online help for a more detailed description of fields on this dialog. The final steps in the billing process is to print one or more of the Proof reports for final verification of amounts and if all looks good then create the AR Invoice records by pressing the Create Invoice button.