# The Business Glossary

> 54 terms from the Workforce book's The Business part, each defined in a line and linked to the chapter that explains it.

- **85% rule (CPEO):** a worker is a CPEO's work site employee only at a site where at least 85% of the people performing services for the customer are covered by the CPEO contract ([PEOs & Co-Employment](https://www.syntaqx.com/books/workforce/peos-and-co-employment#worksite-employees-and-the-85-rule)).
- **Accumulator:** a quarter-to-date or year-to-date total per worker, employer and key (a pay item, a tax, a jurisdiction), derived from paid statement lines and never the source of truth ([The Workforce Business](https://www.syntaqx.com/books/workforce/workforce-business#the-core-data-model)).
- **Administrative services only (ASO):** a PEO vendor's payroll and HR service without co-employment; the client stays the only employer and files under its own EIN ([Who Runs Payroll: Agents & Liability](https://www.syntaqx.com/books/workforce/who-runs-payroll#aso-and-eor)).
- **Agent's List:** the list a reporting agent submits to the IRS of every taxpayer it will file or deposit for, each with its own Form 8655 ([Who Runs Payroll: Agents & Liability](https://www.syntaqx.com/books/workforce/who-runs-payroll#reporting-agent)).
- **Aggregate return:** one Form 941 or 940 filed under a Section 3504 agent's, designated payer's or CPEO's own EIN for many clients, with Schedule R allocating it ([Who Runs Payroll: Agents & Liability](https://www.syntaqx.com/books/workforce/who-runs-payroll#the-irs-s-five-arrangements)).
- **Certified professional employer organization (CPEO):** a PEO certified by the IRS that is treated as the employer of its worksite employees for federal employment taxes and files aggregate returns under its own EIN ([Who Runs Payroll: Agents & Liability](https://www.syntaqx.com/books/workforce/who-runs-payroll#certified-professional-employer-organization)).
- **Client service agreement:** the written co-employment contract between a PEO and a client that allocates every employer duty between them ([PEOs & Co-Employment](https://www.syntaqx.com/books/workforce/peos-and-co-employment#the-client-service-agreement)).
- **Coemployer:** a PEO or a client that is party to a co-employment relationship, each an employer of the same worker for different purposes ([PEOs & Co-Employment](https://www.syntaqx.com/books/workforce/peos-and-co-employment#the-client-service-agreement)).
- **Company:** the provider's customer, one account and one contract, with one or more employers under it ([The Workforce Business](https://www.syntaqx.com/books/workforce/workforce-business#the-core-data-model)).
- **CPEO bond:** the surety bond a CPEO keeps for each April-to-March period, the greater of 5% of its prior-year section 3511 liability (capped at $1 million) or $50,000 ([PEOs & Co-Employment](https://www.syntaqx.com/books/workforce/peos-and-co-employment#cpeo-certification)).
- **Deduction election:** a worker's deduction, as an amount or percent with any goal, limit and arrears rule and the enrollment or order behind it, effective-dated ([The Workforce Business](https://www.syntaqx.com/books/workforce/workforce-business#the-core-data-model)).
- **Designated payer:** a third party, typically a PEO without IRS certification, that pays a client's workers under a service agreement claiming to be their employer or co-employer, files under its own EIN and is jointly liable with the client (Treas. Reg. 31.3504-2) ([Who Runs Payroll: Agents & Liability](https://www.syntaqx.com/books/workforce/who-runs-payroll#designated-payer-the-non-certified-peo)).
- **Duty allocation:** the line in a client service agreement that assigns one employer duty (wages, a tax, workers' compensation, a plan, hiring and firing) to the PEO, the client or both ([PEOs & Co-Employment](https://www.syntaqx.com/books/workforce/peos-and-co-employment#the-client-service-agreement)).
- **Employer:** a legal entity with an EIN that employs people and files returns; a company with three EINs is three employers ([The Workforce Business](https://www.syntaqx.com/books/workforce/workforce-business#the-core-data-model)).
- **Employment:** one stint of a worker at an employer, from hire to termination; a rehire is a new employment on the same worker ([The Workforce Business](https://www.syntaqx.com/books/workforce/workforce-business#the-core-data-model)).
- **Filing arrangement:** which IRS arrangement files an employer's federal employment tax returns for a period (in-house, payroll service provider, reporting agent, Section 3504 agent, designated payer or CPEO), deciding the EIN, signer, deposit schedule and liability ([Who Runs Payroll: Agents & Liability](https://www.syntaqx.com/books/workforce/who-runs-payroll#the-irs-s-five-arrangements)).
- **Float:** interest a provider earns on client funds between collecting a payroll and paying it out, the average balance times the yield ([How Payroll Providers Make Money](https://www.syntaqx.com/books/workforce/revenue-models#interest-on-client-funds)).
- **Float revenue:** Dayforce's name for investment income earned on customer funds before they are remitted ([How Payroll Providers Make Money](https://www.syntaqx.com/books/workforce/revenue-models#interest-on-client-funds)).
- **Form 2678:** the employer's and agent's application for IRS approval of a Section 3504 agent ([Who Runs Payroll: Agents & Liability](https://www.syntaqx.com/books/workforce/who-runs-payroll#section-3504-agent)).
- **Form 8655:** the reporting agent authorization that lets an agent sign and file returns, make deposits and receive notices under a client's EIN ([Who Runs Payroll: Agents & Liability](https://www.syntaqx.com/books/workforce/who-runs-payroll#reporting-agent)).
- **Form 8821:** a tax information authorization that lets a designee inspect and receive a taxpayer's information, without representing it or signing for it ([Who Runs Payroll: Agents & Liability](https://www.syntaqx.com/books/workforce/who-runs-payroll#seeing-and-speaking-for-the-account-forms-8821-and-2848)).
- **Form 8973:** a CPEO's notice to the IRS, within 30 days, that a service contract with a customer started or ended ([Who Runs Payroll: Agents & Liability](https://www.syntaqx.com/books/workforce/who-runs-payroll#certified-professional-employer-organization)).
- **Form M-1:** the annual report a MEWA's administrator files with the DOL by March 1, with registration 30 days before operating in a state ([PEOs & Co-Employment](https://www.syntaqx.com/books/workforce/peos-and-co-employment#master-health-plans-as-mewas)).
- **Gross billings:** everything a PEO bills its clients, wages, payroll taxes, benefits, workers' compensation and its fee, of which only the markup over payroll cost is revenue ([How Payroll Providers Make Money](https://www.syntaqx.com/books/workforce/revenue-models#gross-billings-and-net-revenue)).
- **Insurance service revenues:** TriNet's revenue line for insurance-related billings and fees collected from PEO clients and withheld from worksite employees, reported with insurance costs as an expense ([How Payroll Providers Make Money](https://www.syntaqx.com/books/workforce/revenue-models#gross-billings-and-net-revenue)).
- **Job assignment:** what an employment is over time: title, department, manager, work location, FLSA status, pay basis and standard hours, effective-dated ([The Workforce Business](https://www.syntaqx.com/books/workforce/workforce-business#the-core-data-model)).
- **Liability (payroll):** an amount a pay run owes a third party (an agency, carrier, plan, order payee or employee), with its due date computed from a rule ([The Workforce Business](https://www.syntaqx.com/books/workforce/workforce-business#the-core-data-model)).
- **Markup (PEO):** the part of a PEO's gross billings above worksite employees' payroll cost, covering estimated taxes, benefits, workers' compensation and the service fee; Insperity's revenue consists solely of it ([How Payroll Providers Make Money](https://www.syntaqx.com/books/workforce/revenue-models#insperity-worked-per-worksite-employee)).
- **Master plan:** a benefit plan sponsored by a PEO that its clients' worksite employees join, a MEWA under ERISA when it covers two or more employers ([PEOs & Co-Employment](https://www.syntaqx.com/books/workforce/peos-and-co-employment#master-health-plans-as-mewas)).
- **Money movement:** one movement of funds on one rail (a client debit, a net pay credit, a tax payment, a garnishment, a benefit remittance, a refund), with its status, return code and trace number ([The Workforce Business](https://www.syntaqx.com/books/workforce/workforce-business#the-core-data-model)).
- **Multiple employer welfare arrangement (MEWA):** a plan or arrangement providing welfare benefits to the employees of two or more employers, which includes a PEO health plan covering two or more clients ([PEOs & Co-Employment](https://www.syntaqx.com/books/workforce/peos-and-co-employment#master-health-plans-as-mewas)).
- **Pay item type:** an entry in the volume's catalog of what a pay item is (regular pay, overtime, tips, imputed income, a pre-tax deferral, a garnishment), to which every company code maps and from which taxability is decided ([The Workforce Business](https://www.syntaqx.com/books/workforce/workforce-business#the-core-data-model)).
- **Pay run:** one run of one employer's payroll for one period and type (regular, off-cycle, bonus, correction, void, reversal), from draft to paid ([The Workforce Business](https://www.syntaqx.com/books/workforce/workforce-business#the-life-of-a-pay-run)).
- **Pay statement:** one worker's statement for one pay run, with gross, net and its lines; never edited once paid, only reversed or adjusted by a new statement ([The Workforce Business](https://www.syntaqx.com/books/workforce/workforce-business#the-core-data-model)).
- **Pay statement line:** one earning, deduction, employee tax, employer tax, reimbursement or memo on a pay statement, with its hours, rate, amount and subject and taxable wages ([The Workforce Business](https://www.syntaqx.com/books/workforce/workforce-business#the-core-data-model)).
- **Payroll reporting agent (California):** an agent registered with the EDD that files returns under each client's employer account, keeping a DE 972 memorandum on file in place of a power of attorney per client ([Who Runs Payroll: Agents & Liability](https://www.syntaqx.com/books/workforce/who-runs-payroll#state-equivalents)).
- **Payroll service provider (PSP):** a third party that prepares payroll, returns and deposits under the client's EIN without an IRS authorization form and without liability for the client's taxes ([Who Runs Payroll: Agents & Liability](https://www.syntaqx.com/books/workforce/who-runs-payroll#payroll-service-provider)).
- **Pays per control:** ADP's measure of employees paid per client, the per-worker meter on its existing base ([How Payroll Providers Make Money](https://www.syntaqx.com/books/workforce/revenue-models#modules-and-attach)).
- **Per employee per month (PEPM):** pricing by the number of workers each month, the base of most payroll and HR software fees ([How Payroll Providers Make Money](https://www.syntaqx.com/books/workforce/revenue-models#per-employee-per-month)).
- **Principal versus agent:** the ASC 606 judgment of whether an entity controls a good or service before it reaches the customer and reports the gross amount, or arranges for another party to provide it and reports its fee; for a PEO it decides which parts of gross billings are revenue ([How Payroll Providers Make Money](https://www.syntaqx.com/books/workforce/revenue-models#gross-billings-and-net-revenue); for goods, [Commerce Accounting](https://www.syntaqx.com/books/commerce/commerce-accounting#revenue-for-goods)).
- **Professional employer organization (PEO):** a firm that co-employs a client's workers, running payroll, benefits and HR under its own plans and allocating employer duties by contract ([PEOs & Co-Employment](https://www.syntaqx.com/books/workforce/peos-and-co-employment#the-client-service-agreement)).
- **Quarterly assertion (CPEO):** a responsible individual's statement under penalties of perjury, with a CPA's examination-level attestation, that a CPEO withheld and deposited federal employment taxes and kept positive working capital, due by the end of the second month after each quarter ([PEOs & Co-Employment](https://www.syntaqx.com/books/workforce/peos-and-co-employment#cpeo-certification)).
- **Remittance:** a payment to an agency, carrier, plan or order payee that satisfies one or more liabilities, with its method, confirmation number and settlement date ([The Workforce Business](https://www.syntaqx.com/books/workforce/workforce-business#the-core-data-model)).
- **Reporting agent:** a payroll service provider authorized on Form 8655 to sign and e-file a client's employment tax returns and deposit through EFTPS under the client's EIN, with the client still liable ([Who Runs Payroll: Agents & Liability](https://www.syntaqx.com/books/workforce/who-runs-payroll#reporting-agent)).
- **Revenue retention:** the share of revenue a provider keeps from existing clients year over year, distinct from client retention, the share of clients kept ([The Payroll & HR Landscape](https://www.syntaqx.com/books/workforce/workforce-landscape#what-gets-counted)).
- **Schedule R:** the allocation schedule an aggregate filer attaches to Form 941, 943 or 940, splitting wages and taxes among the employers it filed for ([Who Runs Payroll: Agents & Liability](https://www.syntaqx.com/books/workforce/who-runs-payroll#section-3504-agent)).
- **Section 3504 agent:** an agent approved on Form 2678 that files aggregate returns and deposits under its own EIN for the employers it serves, jointly liable with them ([Who Runs Payroll: Agents & Liability](https://www.syntaqx.com/books/workforce/who-runs-payroll#section-3504-agent)).
- **Tax registration:** an employer's account with one jurisdiction for one tax, with its account number, rate, deposit frequency, dates and status ([The Workforce Business](https://www.syntaqx.com/books/workforce/workforce-business#the-core-data-model)).
- **Taxability rule:** whether a pay item type is subject to, exempt from or only reported for one tax in one jurisdiction, effective-dated; the heart of gross-to-net ([The Workforce Business](https://www.syntaqx.com/books/workforce/workforce-business#the-core-data-model)).
- **Trust fund taxes:** income tax withheld and the employee's share of Social Security and Medicare, held by the employer for the government ([Who Runs Payroll: Agents & Liability](https://www.syntaqx.com/books/workforce/who-runs-payroll#who-stays-liable-worked)).
- **Wage base restart:** a worker's Social Security and FUTA wage bases starting again at zero when wages move to a new employer without a successor rule, such as a PEO without certification ([PEOs & Co-Employment](https://www.syntaqx.com/books/workforce/peos-and-co-employment#wage-base-restarts)).
- **Worker:** a person working for one employer, as an employee or a contractor ([The Workforce Business](https://www.syntaqx.com/books/workforce/workforce-business#the-core-data-model)).
- **Worksite employee (WSE, WSEE):** a worker co-employed by a PEO at a client's worksite, the unit PEOs count and price; TriNet counts co-employees and others receiving PEO services, Insperity averages those paid per month ([PEOs & Co-Employment](https://www.syntaqx.com/books/workforce/peos-and-co-employment#worksite-employees-and-the-85-rule)).
- **Zero-margin benefits pass-through:** benefit costs a PEO bills its clients at cost and reports in revenue and in cost at the same amount, earning nothing on them, as ADP reports for ADP TotalSource ([How Payroll Providers Make Money](https://www.syntaqx.com/books/workforce/revenue-models#gross-billings-and-net-revenue)).

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