Trojan Labor PAYROLLING System

Payrolling is defined as:

The customer recruits workers but seeks a staffing firm to hire and assign them to
perform services. Or workers currently employed by the customer are placed on the
payroll of a staffing firm.

Program description:
The service provided our customer known as “Payrolling” is that service whereby the
customer recruits, interviews, and selects the employee who is then placed on the payroll.
The hourly rate of pay is determined by the customer and we bill that customer weekly at
a pre-determined percent of markup. You should attempt to obtain a 50% markup.

Payroll service Questionnaire:

A completed payroll questionnaire should be filled out before agreeing to accept the
customer for “Payrolling”.

Payrolling Problems:
Payrolling can be a source of collection problems, particularly with smaller, under-
capitalized firms .Therefore it is suggested a payrolling sale must generate a min of 800
payroll hours or $5,000.00 per week in payroll to be considered. The customer must be
prepared and agree to provide payment for services when pay checks are delivered.

Payrolling consideration:
You will submit a payrolling questionnaire to the Branch Manager. You will need to
obtain thorough/validated customer/prospect information. This is necessary to not only
determine how much time and effort can justifiably be spent in pursuing a prospect, but
also it is essential for correct pricing. The Branch Manager will be the approving
authority for all payrolling accounts.

Five Steps to Follow:

There are five steps to be followed in the sales process for payrolling customers.
1) Identifying the prospect
2) Qualifying the prospect
3) Pricing
4) Proposal/Presentation
5) Closing /Service agreement
 Hire Quest L.L.C. d/b/a Trojan Labor
Payrolling

Various types of business can be valid prospects for the Payrolling system. Reasons for
utilizing payroll services vary from the desire to avoid collective bargaining agreements
to probationary periods prior to hire, and many times generally considered to be high
turnover, no benefits with low wages. Businesses with large swings in hiring due to
seasonal jobs are also prime candidates for the payroll system.
Before pricing can be addressed and a presentation of our proposal made, the prospect
must first be qualified. This is a good time to read the sales qualification section of your
sales manual as the process is very similar. This phase of the sales process is devoted to
learning about the prospect and his business. It is at this time that an accurate payroll
service questionnaire must be completed. This will be presented to the Branch manager.
Some of the questions are of a sensitive nature, but are necessary for us to be competitive
and to protect us against securing undesirable business.
Trojan Labor does not wish to assume collection risks, and therefore requires certain
minimums to be met in order to qualify for the Payrolling system.

> A minimum of 800 payroll hours or $5,000.00 payroll dollars weekly

> The customer must also be prepared to “Exchange” checks- one check
from the customer covering the payroll plus the service charge in
exchange for the employee payroll checks.
This can be accomplished through direct transfer of funds from the
customer to Trojan Labor accounts.

During the qualification you will gather information which will allow Trojan Labor to
present the best possible approach to secure the business.

The payrolling system does not include activities or cost of advertising, screening,
testing, dispatching, processing of daily payroll, etc. With the “Payrolling system, we
simply write payroll checks for employees who have been recruited, screened and found
acceptable by the customer. The “Payrolling customer has both the job and the individual
to do perform the task. Since all we do is write the payroll for the employees, we can
perform this service for less than our standard markup provided that there are no unusual
circumstances or hazards.

The pricing will be approved by the Branch Manager prior to presenting a proposal, and
will take into account the following variables:

>Risk Management--our exposure to workers compensation liability. If

Trojan Labor assumes the employer responsibilities of a high risk or unsafe
portion of a company’s payroll, the problem becomes ours.

>Our pricing costs consist of state unemployment, federal unemployment,

workers compensation, FICA, liability insurance and our service charge.
All this must be considered before determining a rate. Our service charge takes into
account the customer requirements stated during the qualification process, and translating
that into the amount of work that will be require to service their needs, Other
considerations are the number of locations to be serviced, required payroll reports,
requested turnaround time, and the represented volume of business. After a total rate is
determined our price quote is always a percentage of payroll and never an hourly rate.

Once all the facts are gathered, and pricing is determined, the Branch Manager or
Staffing Consultant will be ready to present our proposal. It would again be prudent to
review the sales manual section entitled “Making The Presentation”. At this time we
present not only our proposed rate, but must also address the prospect concerns and
overcome any objections raised. The customer has much to gain with the payrolling
system. Almost every firm that uses our payrolling system does so for one and mostly
more than one of the following reasons. For all employees under the system, the customer
pays no fringe benefits, ie: vacations, sick days, retirement or profit sharing benefits. It
provides the customer a means of retaining loyal and valuable employees after
compulsory retirement. Out of city/state companies that have a short term job in the area
where they don’t want to set up payroll procedures and become involved with worker
compensation, state unemployment and liability insurance are prime candidates for
Payrolling. Perhaps a company has an individual they want to hire for a temporary
assignment, but company policy prevents hiring additional personnel on a permanent
basis, for a short period of time. We are therefore asked to place the individual on our
payroll. It may well be that the addition of one ore more employees to the staff of a firm
will require that firm to begin making unemployment compensation payments for the
employee. In some states when a firm has less than four employees it does not have to
make these payments. In order to keep away from these payments and the handling of
related unemployment claims reports, our Payrolling System may be considered. Some
forms are not licensed to do business in a particular state and Trojan Labor may be.
Perhaps it would allow us to payroll their employees. Even the employment of a single
individual in a state can require a great deal of reporting to various state agencies and
departments.

At this time it is valuable to complete a payroll cost analysis sheet which will actually
show the prospect what he/she is now spending to process the payroll. With this in hand
closing will be easy. When presenting, it is vital that the persons in attendance are in fact
the decision makers. With few exceptions, a formal presentation is conducted within the
structure of an appointment call. When setting the appointment, gain assurance the parties
that make the decision will at the meeting. Only with them in attendance, will the closing
or obtaining a commitment be possible. If all of the preparations have been completed,
closing will be the easiest part of the sales process.

At closing we need to explain our service agreement and the pertinent schedules attached.
We are getting the customers’ commitment to fulfill his/her end of the deal, and will
actually need to sign the service agreement and attached payroll service sheet which
delineates the billing rate percentage.
 PAYROLLING QUESTIONNAIRE

COMPANY_________________________ ADDRESS_____________________

PHONE (___)____-______ CITY________________________ ST._____ ZIP____

CONTACT________________________ TITLE_______________________________

TYPE OF COMPANY (give accurate description) ____________________________

_______________________________________________________________________

NO.OF LOCATIONS_________________ WHAT STATE______________________

# OF EMPLOYEES AT EACH LOCATION_________________________________

# OF EMPLOYEES TO BE PAYROLLED___________________________________

LIST DIFFERENT JOB CLASSIFICATIONS________________________________

________________________________________________________________________
HOW MANY EMPLOYEES EACH CLASS_________________________________
AMOUNT OF PAYROLL UNDER EACH CLASS____________________________
________________________________________________________________________

W/C CODES OPERATING UNDER_______/______/_______/______/_____/______

WHAT ARE YOUR RATES_______________________________________________

ARE YOU MODIFIED____WHAT %____ CAN WE GET A LOSS RUN (2YR)___

WHAT IS YOUR STATE UNEMPLOYMENT RATE_________________________

WHAT ARE YOUR PAYROLL PERIODS _______________TO________________
WHEN IS PAYROLL TURNED IN FOR PROCESSING_______________________
WHEN ARE CHECKS HANDED OUT_____________________________________
WHAT BENEFITS DO YOU PROVIDE_____________________________________
WHAT DO YOU WANT US TO PROVIDE__________________________________
VACATION_________________________HOLIDAYS_________________________

ARE YOU CURRENTLY PAYROLLING___________WITH WHOM___________

WHY ARE YOU INTERESTED IN CHANGING____________________________

WHY ARE YOU INTERESTED IN PAYROLLING___________________________
________________________________________________________________________

__________________ ___________________ __________________________

BRANCH MANAGER STAFFING CONSULTANT
 PAYROLL COST ANALYSIS

FICA 7.65%

FEDERAL UNEMPLOYMENT TAX .80%

STATE UNEMPLOYMENT TAX (2.70% start up) ________

WORKERS COMPENSATION COSTS (.50 TO 20.00) ________

(Cost estimated by classification of workers jobs)

PAYROLL PREPARATION (2 to 5 %) ________

(time to write checks, sign checks, prepare
tax returns, 941’s 940’s, w-2 forms paper
costs, check costs, training etc.)

ADMINISTRATIVE EXPENSES (2 TO 5%) ________

(shopping for workers’ compensation, claims,
wage loss reports, weekly tax deposits, tax
penalties, bank charges, payroll reconciling,
time and gas for delivery of payroll, etc.)

EXECUTIVE ALLOCATIONS (1 TO 3%) ________

( shopping for workers’ compensation, health
Insurance, other benefits, compliance with
Employment rules and regulations, keeping
Current with law changes, tax reporting,
COBRA, etc.)

PENSION / 401K (2 TO 5%) ________

(cost of plan document, administration,
annual reports, investments, employee
contribution matches, ongoing IRS
qualifications.)

ACCOUNTING SERVICE (1.00%) _________

TOTAL ESTIMATED COSTS OF PRESENT PAYROLL _________

THE ABOVE ANALYSIS IS ONLY FOR THE PURPOSE OF ESTIMATING

THE PRESENT PAYROLL COSTS, AND WILL ENABLE US TO COMPARE
THESE COSTS WITH THE COST OF A PAYROLL SERVICE PROGRAM.
************* CONFIDENTIAL DATA ***************