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

S T R A T E G I E S

I S SUE 70 • W IN T E R 2017

Our business is growing yours

THE VOTES ARE IN: Introducing the New President’s Tax Plan

Rx Management: The Last Bastion of Smoke & Mirrors

Rx Management: The Last Bastion of Smoke & Mirrors

The Melding of Cultures During &

After a Merger

Nexus Implications for e-Commerce

Businesses

Creating Digital Content that Generates Business

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

Election Special .....................2The Votes Are In: Introducing the New President’s Tax Plan

Marketing & Sales..................4Creating Digital Content that Generates Business

Human Resources ..................5The Melding of Cultures During & After a Merger

Employee Benefits .................6Rx Management: The Last Bastion of Smoke & Mirrors

Tax & Accounting ..................7Nexus Implications for e-Commerce Businesses

CBIZ in the News

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

2 | BIZGROWTH STRATEGIES – WINTER 2017 CBIZ, INC.

Election Special

BY BILL SMITH

Taxes may not be in the forefront of the public mind in the aftermath of the 2016 presidential election, but the outcome could have a significant effect on taxes as we know them.

Newly elected president Donald Trump spoke about his tax plan throughout his campaign. Now that he’ll be taking the Oval Office, he has a chance to make his plans a reality. Here are 10 key provisions from Trump’s campaign tax plan that he endorses:

1. Corporate Tax: Tax rates would be capped at 15 percent. Most incentive deductions and credits would be eliminated, with the exception of the research and development (R&D) tax credit. Manufacturers can elect to expense immediately all of their investment costs, but if they choose to do so, they would lose their

The Votes Are In: Introducing theNew President’s Tax Plan

CNBC.comWhat does Trump have in store for your tax return?November 18, 2016

InvestmentNews7 tips on achieving zero-tax estate planning through charitable givingOctober 30, 2016

Money Magazine3 questions about Trump’s child care proposalSeptember 13, 2016

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deduction for net interest expense. The corporate alternative minimum tax (AMT) would be repealed.

2. Individual Tax: Because of the increase to the standard deduction discussed below, individuals with adjusted gross income (AGI) up to $15,000 and married filing joint (MFJ) couples with AGI up to $30,000 would pay no tax. MFJ taxpayers would pay a 12 percent rate if their AGI remains under $75,000, 25 percent if their AGI falls between $75,000 and $225,000, and 33 percent if AGI exceeds $225,000. Carried interests would be taxed as ordinary income, and the individual AMT would be repealed.

3. Capital Gains: Tax rates on capital gains would be capped at the current rate of 20 percent.

4. Estate Taxes: Estate taxes would be repealed, but capital gains exceeding $10 million that are held until death would be subject to tax.

5. International Tax: A one-time deemed repatriation tax of 10 percent would be levied on corporations with cash held overseas. Initially Trump proposed that the deferral of corporate income earned abroad would be repealed, but his most current plan calls for no changes.

6. Exemptions, Deductions & Credits: Itemized deductions would be capped at $100,000 for single filers and $200,000 for MFJ. The standard deduction would increase to $15,000 for single filers and $30,000 for MFJ, and personal exemptions would be eliminated.

7. Net Investment Income Tax: Repeal.

8. The Affordable Care Act (ACA): Repeal and replace.

9. Childcare – Business: A credit for offering onsite childcare would increase to $500,000, and the recapture rules would be reduced to five years. Direct employee subsidies would be taxable to the employee.

10. Childcare Costs: An above-the-line deduction for childcare for up to four children or elderly parents would be capped at state average costs. Stay-at-home parents would have a similar deduction. Spending rebates would also be available through the earned income tax credit.

It is difficult to gauge the likelihood that President Trump can pass comprehensive tax reform. The prospect of tax reform was a divisive issue in Congress during the Obama administration, but with Republicans controlling Congress and the White House, it should be easier to reach agreement on overall change. Be sure to contact your tax professional if you have questions about how the outcome of the election could affect your tax obligations.

BILL SMITHCBIZ MHM, LLCBethesda, MD • 301.907.2412billsmith@cbiz.com

4 | BIZGROWTH STRATEGIES – WINTER 2017 CBIZ, INC.

Marketing & Sales

BY ALEX BOWDEN

Content is everywhere online – social feeds such as Twitter and Facebook, blogs, promotional emails, advertisements layered upon other

content, and so much more. With this vast and ever-expanding arena for content creation, what can businesses and marketing teams do to help ensure their material is consumed by the right audience and in a way that brings in business?

Content creation can be a terrifying journey with so many variables to consider. The good news is that there are a couple of simple things every creator can do at the beginning of the journey that will simplify the whole process.

Start with “Why?”

When developing content, it is vital to ask “Why?” Why would someone read the content? What is its purpose? By answering these questions it becomes easier to develop performance metrics that directly relate to ROI. There is a common perception that creating more content generates more clicks – and this might be an accurate statement – but it is a bit of a red herring. Increasing the number of blog posts and articles created will undoubtedly lead to a larger number of “clicks” overall, but if these clicks don’t generate any leads or opportunities it will all be for naught. Business is generated only when the viewer takes action on a piece of content, and actions are

Creating Digital Content that Generates Business

only taken if the content adequately satisfies the searcher’s intent.

Searcher’s Intent

At its core, searcher’s intent is the question searchers ask themselves prior to reading a piece of content online. When someone turns to Google to enter a query, they have a goal of gaining certain knowledge and insight about a product or idea. This is their intent for searching the internet. For example, someone might type “how to start a nonprofit” into the Google search box. In this case, the intent is pretty clear: they want to know how to start a nonprofit. Quite frequently, however, a search, for example, “new smartphones,” is made with a multitude of different intents. In this example, the searcher may want to purchase the latest smartphone then and there, while another user with the exact same search may simply want to learn the features of the newest smartphones for the sake of comparison. Businesses need to determine which intent gives them the greatest opportunity and create content accordingly.

So what does all of this mean?

It may seem like creating quality content is far more difficult than anyone thought, but ultimately it comes down to the following simple statement: Businesses need to create digital content that answers the questions searchers are asking and in a way that adds value.

The most difficult part is not in the creation itself but in understanding what customers are looking for.

(Continued on page 8)

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that the assumptions might change once the two organizations are exposed to one another.

Communication is critical on several levels.

Organizations must carefully consider the impact of the deal on the workforce as they announce transactions and integrate companies. Communication is vital to success and should be executed through and after a post-merger announcement. Merging organizations are advised to outline a human capital strategy early in the process, subject to typical contractual limitations. At a minimum, the top HR professionals should get acquainted to develop common ground and open lines of communication. Although it is rare that there is truly a “merger of equals,” let’s assume such an audit is a two-way street whereby both parties conduct senior executive exchanges in a nonthreatening and constructive manner.

Reaching agreement on a communication plan supported by senior leadership of both organizations will be a key aspect of this discussion. The goals: to combat the natural rumor mill and to be as open and honest with employees as possible.

Human capital matters.

As we all know, the merged organizations want to retain the best and brightest from both entities. Articulating what happens to people who might lose their jobs is the most awkward topic, but it is better not to leave this to chance; have a plan in place.

The use of retention bonuses, career transition services and similar tools can ease the burden on employees’ minds. People remember how they were treated on the way out. It is wise not to risk the long-term, detrimental effects of public relations fallout.

There are implications beyond the obvious.

Business culture affects decision-making and leadership style, as well as how people work together. It is a key factor influencing management decisions and business functions. While a transaction is not likely to be stopped for reasons of business culture, those managing the deal should recognize and direct the impact of culture to support their desired goals.

Many progressive acquisitions and mergers employ outside third parties to assist with such deliberations and communication. This may be a wise investment under certain merger scenarios.

The bottom line: Recognize that business culture is a key component of both due diligence and change management in the acquisition merger process. Do everything possible to become aware of and harness culture to promote a successful integration.

Human Resources

The Melding of Cultures During & After a MergerBY JAY MESCHKE

Regardless of industry, all mergers are complex initiatives. Understandably, all parties are laser-focused on financial and operational matters.

Teams are deployed to address issues related to clients, systems, service line congruencies, litigation matters, synergistic opportunities, tax issues and the like. These are all critical management issues, yet the opportunities presented by acquisition can be squandered if leaders lose sight of the human part of the equation.

For both sides of the transaction, it is wise to initiate both a human capital and a cultural audit before proceeding too far down the acquisition trail. Typically, the human capital audit is routine as a subset of due diligence; however, a cultural audit is often overlooked.

What is a cultural audit?

A cultural audit is simply a formal inspection and assessment of business philosophies (e.g., entrepreneurial versus corporate or traditional), decision-making styles, employee engagement similarities or differences, and philanthropic/community mindedness. Employee attitudes regarding compensation and benefits, training, and performance recognition should also be surveyed and considered.

Often, a senior executive of the acquirer is tapped to survey these issues and produce a report suggesting cultural pros and cons of the combination of the two entities. Although subjective in many respects, assumptions derived from this cultural assessment will assist in formulating areas of emphasis from a people perspective after the merger is agreed to, recognizing

JAY MESCHKEEFL Associates, a CBIZ, Inc. company Kansas City, MO • 816.945.5401 jmeschke@eflassociates.com • @jay_meschke

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Employee Benefits

Rx Management: The Last Bastion of Smoke & Mirrors

(Continued on page 8)

BY NEIL MODEL

Prescription drug prices have risen at a rapid pace over the past few years. The forecast for 2017 indicates no relief, with a projected 11.6 percent

increase in prescription drug costs, up from 11.3 percent in 2016.* Specialty drug prices are expected to rise by 18.7 percent. Employers and employees alike are feeling the pain of these increases, but there are steps employers can take to ensure that everyone is working together to mitigate prescription drug costs.

Here are five ways to implement prescription cost savings within your organization.

Brand vs. Generic

Collaboration between employer and employees is beneficial in establishing an understanding of cost savings, which can be achieved when everyone works together. Emphasizing brand name versus generic prescription cost differences, not just co-pay differences, is helpful in setting a cost-savings goal. Including this information in a benefits manual or on a company benefits website/intranet page is a great way to inform employees of the cost differences.

Step Therapy

Step therapy is a widely used process to control costs. It is sometimes referred to as “fail first.” The idea is that if an older, less expensive drug works sufficiently in remedying an illness or condition, there is no need to first prescribe a newer, more expensive drug. Should a patient fail on the low-cost prescription, prescribing the “step up” prescription is certainly acceptable. When it is determined that a generic will not be effective or the best option for the patient, a prior authorization can be requested by the prescribing physician.

Apps

In the past few years, many prescription savings apps have been developed to allow patients to compare drug prices at local and online pharmacies, some offering discount codes and coupons that can be used right from the app. By simply entering the name of the prescription and desired pharmacy pickup location, patients can see which pharmacy in their area is offering the best price on their prescription drug and which coupons or discounts are available to them. OneRx Drug Savings and Coupons, GoodRx Drug Prices and Coupons, and SearchRx are all great comprehensive apps which have proven to be popular among consumers.

Understanding Your PBM Contract

A self-funded employer must understand their Pharmacy Benefit Manager (PBM) contract. A contract with a PBM, such as Express Scripts or CVS Caremark, for example, will include well-known terms such as the Maximum Allowable Cost (MAC) or Average Wholesale Price (AWP). Sometimes, lesser-known terms will appear in the contract. For example, does the term “brand/generic algorithm” appear anywhere? This feature basically lets the PBM move generic (with higher discounts) into brand calculations when calculating end-of-contract-year reconciliation to determine contractual discounts applied (on average). It’s imperative that benefits managers understand everything contained in the PBM contract to effectively administer a prescription benefits program.

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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.

BY GEOFFREY J. CHRISTIAN

It’s no secret that cash-strapped states are becoming more aggressive in collecting taxes. To raise more funds, states have turned their attention to online

shopping, which has continued to chip away at local sales tax revenues – a major source of state funding.

Although it’s a complex issue, not fully understanding “nexus” or what gives a state the ability to tax a person or business could cause businesses to find themselves in hot water down the road.

Traditionally, a state’s ability to collect taxes would normally be based upon a physical presence, such as an office or employees in the state. To address the increase in online sales, states have imposed sales tax nexus on remote sellers based on relationships with in-state entities.

Another type of nexus is called click-through nexus. Click-through nexus is triggered if compensation is paid as a result of a customer clicking through a website link that generates a sale. This is commonly referred to as the “Amazon tax.”

Nexus can also be established during the inventory fulfillment process. For example, if a business engages Amazon to handle its fulfillment (inventory, shipping, returns, etc.), otherwise known as FBA services, nexus is created wherever Amazon is conducting this process on behalf of that business. As a result, a business physically located in Arizona that has FBA services through Amazon’s warehouse in Michigan would also have nexus in Michigan.

Many businesses, especially e-commerce businesses, may not be aware of these rules, much less that they are subject to paying these potential taxes. Oftentimes, businesses don’t even realize that nexus has been established.

So, what happens if your business is not compliant with nexus rules? Unfortunately, the consequences can

Tax & Accounting

Nexus Implications for e-Commerce Businesses

be steep. Typically, states issue a tax assessment that includes interest and penalties for not filing/paying tax. These assessments can go back to when nexus was first established, which can be several years for some companies.

What should you do if you find your company has nexus in states where it is not currently filing?

First, contact a tax consultant well-versed in state and local tax issues. There are ways to clean up the situation so the tax bill isn’t as hefty.

Essentially, there’s a voluntary disclosure program that almost every state offers that would allow your tax representative to contact the state, often anonymously, to get your company into the program. In exchange for voluntarily coming forward, the state will generally limit the lookback period to three or four years and agree to waive penalties.

Your tax adviser will assist you with securing the voluntary disclosure agreements and getting penalties waived. Generally, the company will be stuck with tax and interest for the lookback period and will have to agree to file prospectively, but at least it doesn’t go back to the beginning of nexus.

GEOFFREY J. CHRISTIANCBIZ MHM, LLC – National State & Local TaxGreenville, SC • 864.241.2009 gchristian@cbiz.com

ALEX BOWDENCBIZ, Inc. San Diego, CA858.795.2057 • abowden@cbiz.com

NEIL MODELCBIZ Employee Services OrganizationPlymouth Meeting, PA610.862.2460 • nmodel@cbizmodel.com

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Our business is growing yours

Marketing & Sales (Continued from page 4) Employee Benefits (Continued from page 6)

Pharmacy Audit

An employer with 1,000 employees may easily generate 20,000 to 30,000 prescriptions per year so it is important and beneficial to perform an audit of a plan’s prescription program. How well is your plan performing according to your PBM contract? Are you achieving the best prices through contract renewals and performance guarantees? Technology exists to analyze every prescription transaction for cost effectiveness and compliance.

Rx used to be a very small percentage of health care spend. Today it amounts to over 20 percent and is rising faster than any other health care cost components. Above are several simple-to-comprehend ideas that help shed light on managing and understanding what every consumer is contending with.

*Source: https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/2017-drug-plan-cost-strategies.aspx

When analyzing the products the business sells, what type of life situations would drive a potential customer to look for content related to these products? If someone is preparing to host a party and stains the carpet before guests arrive, they will ask Google how to remove it. A company that sells stain remover has a perfect opportunity to show them how to remove stains with home remedies. As there’s no time to run to the store, the customer won’t buy their product this time. However, by helping solve their issue in a pinch, the company has made a positive impression and can take this opportunity to suggest purchasing and storing their product at home for future accidents.

At the end of the day, with proper planning and enough time spent understanding the customer and their needs, a business can generate a loyal following of individuals who have confidence that the organization has their best interests at heart – all through the creation of quality content.