Save Payroll Taxes By Using A “Common Paymaster”
If your closely held businesses are operated using two or more corporations, the different entities may share some of the same employees. By using a common paymaster for these concurrent employees, you will save some social security tax and possibly state and local taxes and worker’s compensation insurance premiums.
“Concurrent” employment is defined by the IRS as the “contemporaneous existence of an employment relationship between an individual worker and two or more corporations.” Note: LLC,Sole Proprietors, and Partnerships may not employ the concurrent employment paymaster.
Rather than each corporation paying Social Security and Medicare tax for shared employees, common paymasters remit the tax just once as if it were a single employer. The savings apply to employees earning more than the Social Security wage base, which for 2008 is $102,000.
This is also helpful for many state and local unemployment and disability taxes which can be paid just once rather than for each corporation. Further, there can be significant worker’s compensation and benefit insurance premium savings.
Talk To A Tax Lawyer Today
Call Ronald J. Cappuccio, J.D., LL.M. (Tax), at 856-665-2121 to discuss this further. You can also reach us by email.