I would appreciate comments / input from anyone with experience paying overhead / staff employees for multiple subsidiaries / LLC's from one "paymaster" or payroll company.  Paying all staff from one payroll and / or company and charging the cost directly to the appropriate affiliated company using inter-company accounts would seem to be an efficient way to administer overhead payroll.  However, based on input from the legal department there could be requirements that LLC's employ and pay employees directly to be considered legitimate (i.e. employees cannot be seconded to an LLC from an affiliated or holding company for the LLC to maintain its' Limited Liability status).

Most accounting systems can easily accomodate direct allocation of cost from a pay company for payroll or AP to affiliated companies.  Administrative expense associated with maintaining multiple payroll processes and bank accounts could be reduced.  Double payment of FICA and SUI / FUI for employees switching companies in mid year could also be avoided using a central payroll process.

I would appreciate hearing from anyone with experience in this area.

Thanks

I can conur with your legal department in that disregarded entities for income tax purposes (wholly owned LLC's not taxed as corporations and qualified subchapter S subsidiaries) are treated as seperate corporations, per IRS regulations, for employment tax purposes.

Perhaps you can work around this by using or creating a PEO (Professional Employer Organization), but this will come with its own set of legal requirements.

At a previous company we used a "Common Paymaster" from our umbrella company and charged out to the other companies.  We worked in multiple states so we had to get the umbrella company registered to do business which was a pain.  Check with your CPA firm on any tax implications in you area

Luther Salonen, CCIFP

Kelly Hill Company

Kansas City MO