Shave Payroll Costs for Shared Employees

If you run your business operations through two or more corporations, the different entities may share some of the same employees. In that case, you can save payroll taxes by using a “common paymaster.”

Instead of having each business pay Social Security and Medicare tax for shared employees, common paymasters remit the appropriate amount of tax just once.

In other words, no more tax would be paid than would be the case with a single employer. The savings apply to employees who on a combined basis earn more than the Social Security tax wage ceiling, which for 2019 is $132,900 (up from $128,400 in 2018).

For example, let’s say you have two corporations equally sharing a business manager who earns $150,000 a year and collects two different $75,000 paychecks. If each company pays Social Security tax for the manager, each separate Social Security tax bill is $4,650 (6.2% of $75,000) for a total of $9,300.

However, if a common paymaster takes over in 2019  the total Social Security tax bill is limited to $8,240 ($132,900 times 6.2%).

Result: The corporations save $1,060 in Social Security tax ($8,240 versus $9,300).

You can only take advantage of this calculation when related corporations employ a worker “concurrently,” or at the same time. However, there are some restrictions on what constitutes a “related corporation.” Ask your tax advisor for more information in your situation.

IRS Definition

“Concurrent” employment is defined by the IRS as the “contemporaneous existence of an employment relationship between an individual worker and two or more corporations.”

The common paymaster option is only available to corporations. Sole proprietors and partnerships are not eligible.

TESTIMONIALS

As we’ve grown, so have our administrative and payroll needs. That’s why we’ve partnered with HR&P. HR&P supports us every day with human resources, payroll, benefits and compliance so we can focus on being the best BB’s Cafe we can be!

Brooks Bassler, Owner, BB's Cafe

Since 2010, my company has grown to over five hundred employees. With our tremendous growth we needed a human resources and payroll company that could grow with us. That company is HR&P. And as laws have changed, like the Affordable Care Act, HR&P has kept us in compliance. I focus on growing Twin Eagle. I trust HR&P with the rest.

Chuck Watson, Chairman, Twin Eagle

We are the industry leader in Oil Spill Cleanup Products and have dealt with numerous Oil Spill disasters. Knowing up close what a disaster looks like we choose to avoid them in our offices. HR&P guides us through the land mines of HR, Payroll and Benefit compliance so my team can focus solely on helping our clients with their problems, and we avoid our own.

Chad Clay, Owner, CEP Sorbents

One of the best things we did for our business was to partner with HR&P. They’re the experts in human resources, payroll and benefits administration.
HR&P’s web based solutions make it easy for us to manage our employee’s needs. They also help us stay compliant with the Affordable Care Act and with “the alphabet soup” of constantly changing Governmental regulations.

Ken Dennard, CEO, Dennard—Lascar Associates

I run a restaurant, from early in the morning to late at night, our team works hard to deliver great food in a fun atmosphere.
But there’s a lot more to running a business like human resources, payroll, benefits and compliance. So we turn to HR&P.
Outsourcing to HR&P keeps us focused on our business.

Marcus Payavla, Co-Owner, Orleans Seafood Kitchen

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2018-12-31T02:18:07+00:00