Expert: Shirley McAllister, CPP, PHR - 10/25/2010

Question
Shirley, I work for a communications company that owns several stations throughout the Pacific Northwest. Each station has it's own FEIN (13). We file 1 Form 1120 and the stock is only offered under one company. The Officers are the same for all the companies. However, we currently file separate 941's and W-2's for each company.
Should I be looking to have a Common Paymaster relationship or should I try to consolidate down to one FEIN?
Regards, Andy

Answer
I believe that you qualify for a common paymaster relationship. You could do it either way.

Common paymaster is a member of a group of related corporations that pays wagesto employees working for two or more of the corporations.

Must be related corporations:

Must be part of a controlled group of corporations under IRC 1563 which means one corporation must own at least 50% of the other's stock or the same five or fewer persons own at least 50% of the stock of each corporation

At least 50% of a corporation's officers are concurrently officers of the other corporation, or
At least 30% of one corporation's employees are concurrently employed by the other corporation.

You also might wish to try one of these alternatives:

Create a parent corporation which is the administrative body and sub corporations below it with each individual EIN number. Wherever the Corporate office is the payroll would be done there by the coporate staff and sent to the sub corps. So one payroll staff would do all the payroll's and all the taxes and W-2's. They would still do individual runs for each sub corporation but it would save money because it would all be done in one place.
I have multiple EIN numbers and companies. I simply run one payroll, then I run the next payroll. Put the reports in separate books and than do all the 941's.

Another alternative would be to outsource both the payroll and taxes to an agency such as ADP or Ceridian that would do all the separate payrolls for you send you the checks and do the taxes for you also.

Shirley