I S SUE 6 4 • SUMME R 2015

BIZGROWTHS T R A T E G I E S

I D E A S T O H E L P G R O W Y O U R B U S I N E S S

our businessis growing yours

Why Your Business Needs Prevention & Protection Measures

CYBERSECURITY:

Expanding Your Wealth:

THE BASICS

The 21st Century HR Professional

Avoid Surprises: Plan Ahead When Tax Planning

Stop Calling Health Plan Administrators Health Insurers

REINVENTING YOUR HR:

In This Issue…

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You can also call us at 1-800-ASK-CBIZ (1-800-275-2249).

@cbz CBIZ BIZ Tips Videos

Management & ......................2 PerformanceCybersecurity: Why Your Business Needs Prevention & Protection Measures

Personal Wealth ...................... 4Expanding Your Wealth: The Basics

Employee Benefits .................. 5Stop Calling Health Plan Administrators Health Insurers

Human Resources ................... 6Reinventing Your HR: The 21st Century HR Professional

Tax Strategies ........................ 7Avoid Surprises: Plan Ahead When Tax Planning

CBIZ in the News

For complete articles, visit cbiz.com/news/in-the-news.

MainStreetWhen your maternity leave ends: how to strike a healthy balance between work life and motherhoodMay 8, 2015

The Wall Street JournalU.S. stocks reboundMay 7, 2015

MarketWatch5 things not to buy with your tax refundApril 20, 2015

2 | BIZGROWTH STRATEGIES – SUMMER 2015 CBIZ, INC.

BY CHRIS ROACH

Information security is the safeguarding of your organization’s information and information systems from unauthorized access, use, disclosure, disruption, modification or destruction to ensure its

availability, confidentiality and integrity. Loss of one or more of these attributes can threaten the continued existence of even the largest organization.

Any business provider that uses technology to conduct business and manage client information needs to know what’s at stake. Loss of confidential information and data breach liability are huge risks for businesses, especially when they don’t have proper cyber prevention and protection measures in place.

When cybersecurity is not part of your business process, it leaves a company vulnerable to a range of security issues. Last year, the average cost of data breaches reached over $3.5 million – a 15 percent increase from 2013!

Management & Performance

Why Your Business Needs Prevention & Protection Measures

CYBERSECURITY:

CHRIS ROACHCBIZ Risk & Advisory Services • Houston, TX 281.844.4239 • croach@cbiz.com

DISCLAIMER: This publication is distributed with the understanding that CBIZ is not rendering legal, accounting or other professional advice. This information is general in nature and may be affected by changes in law or in the interpretation of such laws. The reader is advised to contact a professional prior to taking any action based upon this information. CBIZ assumes no liability whatsoever in connection with the use of this information and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.

CBIZ, INC. BIZGROWTH STRATEGIES – SUMMER 2015 | 3

The following are three key reasons why cyber prevention and protection are vital in 2015:

1. Hackers don’t discriminate. In 2013:a. 61 percent of all targeted attacks were against

small and medium size businesses.b. There was a 91 percent increase in attacks

against businesses. c. There was a 62 percent increase in the number

of breaches.d. More than 552 million identities were exposed

via breaches.

2. Advances in technology have made businesses more susceptible to breaches, making safeguarding one’s business more important than ever. In fact, small business cyber attacks nearly doubled from 2011 to 2013 from 18 percent to 31 percent.

3. Cyber breaches extend beyond a company’s firewalls; outside contractors also are included within the realm of risk.

When it comes to cybersecurity there are four key things every business needs to know or do:

First, understand what’s at risk. Know what assets are most valuable to the business, where they are supposed to reside, where they actually reside, who touches them and how access to them is managed.

Second, identify the holes in the organization’s defenses. For instance, at least once a year conduct a cyber vulnerability or penetration test to see whether any unintended parties can access critical assets.

Third, conduct security awareness training for employees. Studies have shown that up to 30 percent of data breaches are related to the operation of negligent employees’ or contractors’ (human factor) accidental release of private data.

Finally, be proactive to protect the business by:

n accepting that security will be compromised;n considering ‘cyber’ in all activities;n focusing on critical information assets;n being prepared to respond; andn getting the basics right.

Being proactive and taking preventive steps to identify your sensitive information and the vulnerabilities that put that information at risk are critical to protecting your business.

Expanding Your Wealth:THE BASICS

4 | BIZGROWTH STRATEGIES – SUMMER 2015 CBIZ, INC.

BY ANTHONY PARRELLI

Most financially secure people ponder the question “why should we expand our personal wealth if it already is adequately secure?” The

simple reality is that life is always unpredictable and so is the economy.

Some feel that their net worth defines their status in society or places them at a higher level than their peers. For others, the idea of personal wealth gives them a sense of security. Wealth has a stigma that it is only for the upper class. However, everyone wants to make plans for purchasing a home, vacations, retirement plans and many other life events. The truth of the matter is that we live in a fast-paced society where money is the necessary tool to make most of our dreams become reality.

The road to expanding your personal wealth may sound impossible; however, the simplest way to begin is based on a principle that can be implemented from early on: saving a percentage of your monthly income. You don’t have to take a large portion out, but you must never touch it. This takes discipline, but after several months you will see the benefits and look forward to reaping the rewards in the future. The underlying fact is that you need to start somewhere.

Expanding personal wealth is a gradual process that requires much dedication. The majority of wealthy people see the fruits of their labor in middle age or later.

There will always be ups and downs, but you must remain positive, believe in your plan and steer the course. Always keep track of your money and never spend it on anything that is not truly necessary. Always be aware of where your money is and what you are doing with it so that you remain in control of your hard-earned cash. Save your money wisely, but also invest it wisely.

One of the key components of investing is the risk involved. There will be times when your investments result in huge success; other times… failure. Without risk, there is no reward. Some have pure luck; they are in the right place at the right time. Others are more business savvy than others and take advantage of a good opportunity when they see one. Regardless,

Personal Wealth

there is risk involved. Some of the most successful people had to take a fall before reaching their maximum potential.

All would be well advised to seek the guidance of a seasoned wealth planning professional.

For most of us, it takes many years, even decades, of hard work and dedication to see our savings and investments pan out. Continue to be determined. If you start small and aim big, the opportunities are endless.

ANTHONY PARRELLICBIZ MHM, LLC • New York, NY212.790.5738 • aparrelli@cbiz.com

@CBIZNewYork

CBIZ, INC. BIZGROWTH STRATEGIES – SUMMER 2015 | 5

BY ZACK PACE

Did you know that your employee health benefits probably don’t involve a health insurer? Per the 2014 Kaiser Family Foundation and HRET

Employer Health Benefits Annual Survey:

n 61 percent of all covered workers are covered by a self-funded plan.1

n 81 percent of covered workers employed by a firm with 200 or more workers are covered by a self-funded plan.2

These days, outside of small group policies, it’s increasingly rare for employers to purchase group health insurance for their employees. Many employers of size, instead, “self-fund” their health benefits. This means, in short, they hire:

n an administrator to process claims; n a network to secure discounts from physicians,

hospitals and other providers; andn an insurer to provide coverage for catastrophic

claims (e.g., individual claims over $150,000 or so).

The popularity of self-funding will continue to grow as the Affordable Care Act’s (ACA) Fair Health Insurance Premium Rules fully implement in 2016 and the new ACA Premium Taxes (aka Annual Fee - Health Insurers) rise through 2018.

Meanwhile, most of us still commonly call the administrator of our health plan the “health insurer” and think about our health plan benefits as an arrangement similar to car insurance: premiums in; claims out. Why is that?

1. Many health insurers in the individual and small group market (e.g., Aetna, Anthem, CIGNA, UnitedHealthcare) also offer claims administration and network services to self-funded medical plans. We tend to associate these brands and their logos

with health insurance companies.

2. Policymakers, the media, employers and benefit consultants often don’t distinguish between an insured health plan and a self-funded plan in their communications.

3. For most of us, our consumer experience using an insured health plan and a self-funded plan is the same.

Why does any of this matter to an average worker?

n Cash Wages + Benefits = Total Compensationn If the total compensation budget is fixed, dollars

invested in benefits reduce cash wages.n The largest benefit cost increase usually comes

from the health plan.

Per page 2 of the 2014 Kaiser Family Foundation and HRET Employer Health Benefits Annual Survey’s Chartpack, since 1999:

n health plan costs have increased 191 percent; and

n cash earnings have increased 54 percent.

If it turns out that most of this 191 percent increase went directly toward paying the non-catastrophic claims of your employer’s health plan and not to a health insurer, would that knowledge change your point of view?

For example, would you be:

n more supportive of the wellness initiatives your employer is investing in?

n more likely to speak with a nurse calling from the health plan’s care management service?

n more willing to provide your employer with ideas on how to improve workplace health?

If you’re an employer sponsoring a self-funded plan, do you use the term “health insurer” or “health insurance company”? If so, have you considered:

n communicating to your employees that the plan

Stop Calling Health Plan Administrators Health Insurers

(Continued on page 7)

Employee Benefits

6 | BIZGROWTH STRATEGIES – SUMMER 2015 CBIZ, INC.

BY CLAIRE BISSOT

Human Resources is a function that is changing rapidly in companies of all sizes. Gone are the days of HR being viewed as the “paper pusher”

with piles of paperwork to be processed and filed, the “picnic planner” in charge of all the activities and food, or the “gossip department” where employees only go to complain.

TechnologyRegardless of size, organizations are re-evaluating

their HR spend and structure by exploring technology solutions. Once thought to be possible for large companies only, technology has become a critical component in small businesses’ success and has become a low cost option to reduce overhead and improve efficiencies. Through the growth of cloud computing and SaaS solutions, small businesses have access to robust applicant tracking, benefit enrollment, self-service and performance management tools for the same cost as hiring an additional HR administrator “paper pusher.”

Engagement & CultureLarge public companies like Google have

encouraged the world to re-evaluate employee responsibilities and human capital management. HR professionals are now challenged to create

Human Resources

new and exciting ways to engage their personnel, encourage their involvement in the organization, create opportunities for natural team building and show employees the more personable side of the business. They must be aware of generational differences and the company culture to do so successfully.

Human Capital ManagementMany CEOs and business owners are waking up to

the strategic value of HR or more aptly named Human Capital Management. The difference is that in today’s version of HR, the development of associates, the growth of new leadership, and the construction and maintenance of quality teams are critical to creating business bandwidth and capacity. Historically, HR leaders would be responsible for resolving conflict; now they are teaching employees to have conflict but in constructive ways.

As the profession develops, the requirements to be a leader in the HR space look more like those of a CIO, CFO or even CEO. So leave the picnic planning to a committee and use Human Resources as a strategic weapon, wielded for the growth and prosperity of the business.

Reinventing Your HR: The 21st Century HR Professional

CLAIRE BISSOTCBIZ Human Capital Services • Roanoke, VA 540.853.8007 • cbissot@cbiz.com

@cbiz_hcs

CBIZ, INC. BIZGROWTH STRATEGIES – SUMMER 2015 | 7

(Continued on page 8)

BY CHRISTOPHER PHELAN

It is all too common that businesses and individuals must deal with unforeseen, adverse tax consequences as a result of transactions that were

executed without performing an adequate level of due diligence and without dedicating the necessary amount of time and resources to planning. Unfortunately, in some situations these negative tax consequences are permanent and can have a lasting effect.

While tax consequences should cer tainly not be the only factor considered when contemplating a transaction, it is critical to understand the tax implications early in the process to ensure that it is structured in the most tax-efficient manner. This will also help ensure that any compliance obligations resulting from the deal are completed and filed within the required timeframe (i.e., elections, statements, etc.).

In many cases, investing the proper amount of time and resources upfront into tax planning can yield a net cash-flow benefit in the form of income tax savings. When reviewing the structure of contemplated transactions, the slightest nuances can yield vastly different tax consequences to the parties involved. A simple example is the direct acquisition of a business, as there are generally two methods for doing so:

Tax Strategies

1. The buyer can purchase the underlying assets of the business from the seller.

2. The buyer can purchase the stock/equity of the business from the seller.

1. The Kaiser Family Foundation and Health Research & Educational Trust Employer Health Benefits – 2014 Annual Survey, page 206.2. Ibid.

is self-funded?n developing an incentive plan that rewards

employees if the plan’s performance runs better than expected? (Ask an ERISA Attorney and Benefits Consultant about the permitted incentives.)

It’s not a new idea that self-funded health plan costs are better controlled via strong employer/employee part-nerships. Many employers have successfully used this partnership strategy to control costs and bring balance to

the aforementioned total compensation equation.

Yet, this strategy is not yet commonplace. However, as more and more employers cancel their group insurance contracts and move to self-funding this year and beyond, we believe that this idea will come of age. The first step is to stop calling health plan administrators health insurers!

ZACK PACECBIZ, Inc. • Columbia, MD443.259.3240 • zpace@cbiz.com

@zpace_benefits

Employee Benefits (Continued from page 5)

Avoid Surprises: Plan Ahead When Tax Planning

CHRISTOPHER PHELANCBIZ MHM, LLC • New York, NY212.790.5734 • cphelan@cbiz.com

@CBIZNewYork

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Tax Strategies (Continued from page 7)

From a tax perspective, the two scenarios would have vastly different consequences to both the buyer and seller. Under the first scenario, known as an “asset” acquisition, the buyer receives tax basis in the acquired assets equal to the total purchase price paid (e.g., purchase price plus assumed liabilities), therefore stepping up the tax basis of the acquired assets to Fair Market Value (FMV). The total purchase price is allocated amongst the acquired assets with the excess being allocated to intangibles and goodwill, which become amortizable over 15 years. This effectively provides the buyer the ability to recover its purchase price and realize a cash tax benefit via the tax deductions. From the seller’s perspective, the treatment varies between corporations and individuals, depending on the tax profiles as tax rates differ with individuals receiving a preferential capital gains rate, while a corporation might have tax attributes available to shield or reduce its tax liability. Other factors to be considered in asset acquisitions include the transferability of the assets (i.e., any legal restrictions), as well as transfer taxes, which can be a surprise to some as state rules vary widely.

Under the second scenario, known as a “stock” acquisition, the buyer does not receive a stepped-up

tax basis in underlying assets to FMV but rather a carryover basis in the assets. Further, if the acquired business has tax attributes, their utilization could become subject to limitation. From the seller’s perspective, the sale should result in capital gains treatment, and, as discussed above, the tax profiles impact the consequences.

To further complicate things, there are certain elections available, each with their own specific requirements that would treat stock acquisitions as asset acquisitions, which is beyond the scope of this article.

The proper upfront tax planning can help facilitate a transaction that makes sense for all parties involved. The U.S. has one of the most complex tax regimes in the world, and the slightest change in facts or circumstances can yield a completely different tax result. Until Congress can find a way to streamline the tax rules, it is important to be proactive in reviewing the tax implications of a deal structure to avoid surprises.