Holding company paying payroll

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#1
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Would like some input on the following issue that I am having:
I created a Holding company (I own 100%) to pay all employees that are working for three operation companies (I own 100% of each). The operation companies fund the Holding companies for their portion of the weekly payroll which is 100% of the payroll allocated in accordance to how much time each employee work in the 3 operation companies.
How do I show the payroll in the three operation companies when I prepare their tax returns?
I appreciate your input and thank all in advance.
 

#2
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Are you a tax professional?
~Captcook
 

#3
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I am a CPA (not licensed any longer) and being doing individual taxes for a long time and business taxes for my businesses only for the past 5 years. I don't do taxes for a fee if that is your question.
 

#4
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~Captcook
 

#5
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Completely uneducated guess...
I feel like the three sub companies are not paying "wages" but rather for services provided by the main holding company.
So the wages would all be expensed on the holding company, and the holding company would have income from the three subs for payments of services provided.

I know there are common employer rules, etc - but I have no experience with this area.
Last edited by ReckedCPAEA on 14-Mar-2023 6:30pm, edited 1 time in total.
 

#6
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Thank you ReckedCPAEA! I was leaning toward a management fees from the subsidiaries to the Holding company as the Holding company files Form 941 etc.
 

#7
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Tony1970 wrote:Thank you ReckedCPAEA! I was leaning toward a management fees from the subsidiaries to the Holding company as the Holding company files Form 941 etc.



Yes... I do this a bit with clients. One company has the payroll etc.... the others poay a management fee to the "payroll company". That company pays the payroll, at times rent etc.
 

#8
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Thank you southparkcpa!
 

#9
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CaptCook has a point...
 


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