One response

1. When managing payroll across multiple QuickBooks Online (QBO) companies with separate Employer Identification Numbers (EINs), especially when dealing with a shared employee, careful consideration is required to ensure compliance and accuracy. Here are some potential strategies and best practices for managing this scenario:

   Best Practices for Handling Shared Employee Payroll Across Multiple QBO Companies

   1. Intercompany Reimbursement via Journal Entry

   Given your situation where an employee is working under two companies with separate EINs but with the same ownership, one practical approach is using an intercompany journal entry to allocate payroll costs. Here’s how you can do it:

   • Record Payroll in Gusto for Company A:

   • Continue paying the full wages for the employee through Gusto in Company A. Ensure accurate tracking of hours worked specifically for Company B.

   • Journal Entry in Company B:

   • At the end of the month, calculate the total hours the employee worked for Company B and their corresponding pay.

   • Record a journal entry in Company B to allocate the employee expenses. This journal entry should include:

     • Debit: Payroll Expense (for the calculated wages attributable to Company B).
     • Credit: Accounts Payable or Intercompany Payable (to acknowledge the liability to Company A).

   • Journal Entry in Company A:

   • Make a corresponding journal entry in Company A:

     • Debit: Intercompany Receivable (to recognize the amount due from Company B).
     • Credit: Payroll Expense (to offset the wages initially recorded by the shared hours).

   • Intercompany Settlement:

   • Periodically settle the intercompany balances through a payment from Company B to Company A, which can be recorded in QBO when the payment is made.

   2. Consider a Payroll Management Service

   While setting up a separate payroll account for a few hours may seem excessive, some payroll providers offer services to handle payroll for multiple entities, which could streamline your process. Explore if Gusto or another provider offers a solution to manage payroll across multiple EINs under an umbrella payroll account.

   3. Ensure Compliance and Documentation

   • Maintain clear records and documentation for all hours worked by the employee across both companies.
   • Check state and federal labor laws to ensure compliance with how wages are allocated and reimbursed between companies.
   • Due to the common ownership, ensure that transactions are at arm’s length to avoid potential tax implications.

   4.

   Log in to Reply