"Phoebe Roberts, EA" <phoebe[at]cottagesoft.com> wrote:
- quote -

I don't consider to be a SUTA specific issue. The fact is
that most states simply don't allow it, so that in fact you
might run into a FICA issue.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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David Woods, EA, ChFC, CLU wrote:

- quote -

Assuming you only have a single state's worth of payroll
under both the common paymaster and multiple employer
scenarios, is there any state issue beyond SUTA?

The current "goal" of the SUTA audits going around here
lately is "we're reclassing all of your S-corp distributions
to SUTA-taxable wages, even though you're over the SUTA cap,
because it makes us look better if we have a high total wage
base."

Thanks for the heads-up; we hadn't considered SUTA issues
for our one common paymaster guy. His issue is the employer
FICA, though, since he's over the FICA max in both entities.

Phoebe

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"Phoebe Roberts, EA" <phoebe[at]cottagesoft.com> wrote:
- quote -

I'll just point out that in fact even though fed tax law
allows for common paymasters, most states do NOT.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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Craig wrote:

- quote -

For salaries, you might look at the common paymaster rules.
Contract labor I'd handle with a management fee.

Phoebe

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"Craig" <jcstone1[at]comcast.net> wrote:

- quote -

I'd have Company A (the one paying the salary) charge
Company B a management fee covering its share of salary,
payroll taxes, and related expenses.

--
Tom Healy, CPA
Boulder, CO
Web: http://www.tomhealycpa.com

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"Craig" <jcstone1[at]comcast.net> wrote:

- quote -

A simple method is to have the company paying the wages
charge the other compay a management fee.

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"Craig" <jcstone1[at]comcast.net> wrote:

- quote -

Frankly, I think you might need a bit of professional help.
You may own two corporations, but you seem to be comingling
the two. There are both tax reasons and legal reasons not
to do that.

The procedure might come down to why you paid your salary
out of one of the companies, and not have each company pay
some? Does one have income and not the other? Any
transfers of money between the corporations should be
recorded as such. People have written books on how to do
that.

Likewise, your contract laborers really should have been
paid out of the accounts of the companies that they
generated income for. For the numbers you are talking
about, you really need to have some sort of accountant work
this all out for you. Anything they might charge you will
save you thousands (and a lot of headaches) in the long run.
You are beyond a do-it-yourself project here.

Another issue you might need to worry about: Are your
contract labor people really not employees? My apologies if
you are renting them from an employment agency or something.
But if you are clasifying them as contractors, and they
really are employees, the IRS could come after you for all
the payroll taxes you *should* have been withholding.

Get some help -- it could save you tens of thousands of
dollars later.

Bryan
--
Bryan Kellar, EA
Oregon Tax Help, Inc. Portland, Oregon
www.oregontaxhelp.com
www.canadatax.org

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What is the proper procedure for allocating owner's salary
and contract labor between 2 commonly owned (only one
shareholder) S corps when they are paid out of one
corporation but should have been split between the two? Each
corporation has about $500,000 in income, owner's salary is
$50,000 (no other salaries paid) and $600,000 total in
contract labor.

Thanks

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