Shave employment taxes on shared employees — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Shave employment taxes on shared employees

by on
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)

To read the rest of this article you must first register with your email address.

Email Address:

Leave a Comment