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Shave employment taxes on shared employees

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in Small Business Tax,Small Business Tax Deduction Strategies

Maybe you’ve acquired separate companies or you split off a subsidiary from your initial operation. In either event, you own two or more business entities on the books.

Potential problem: If some of the employees work for more than one of the companies, you could be paying more employment tax than required.

Strategy: Assign a “common paymaster” for payroll matters. If you pay the shared employees from a single source, you won’t overpay employment tax anymore. And this makes life easier for the employees, too: They don’t have to wait until they file their tax returns to recoup their shares of any excess taxes (see box below).

It’s a win-win situation for employers and employees. Nobody loses ... except maybe Uncle Sam.

Here’s the whole story: Both employer and employee must pay an equivalent share of FICA employment tax. For 2009, the Social Security portion of the tax is 6.2% against a wage base of $106,800. (Th...(register to read more)

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