Employee shared among multiple QBO companies?

Managing a Shared Employee Between Two QBO Companies: Best Practices

When you own multiple businesses, each with its own QuickBooks Online (QBO) account and Employer Identification Number (EIN), managing shared resources can be a bit of a puzzle. This is often the case when an employee splits their time between different companies that ultimately roll up under your ownership and are reflected on a single combined personal tax return. Let’s explore a practical approach to handling payroll for an employee working across two separate QBO setups.

The Current Scenario

Consider this: Company A, which uses Gusto for processing payroll, and Company B, yet to establish a payroll system, both operate under the same ownership. An employee, initially hired part-time with Company A, has begun dedicating a few hours each week to Company B.

How to Allocate Payroll Effectively

Setting up an entirely new Gusto payroll account for just a few hours of work each week for Company B might seem excessive, both in terms of effort and cost. Instead, consider a more streamlined approach:

Monthly Journal Entries: A viable solution is to record a monthly journal entry that moves the payroll expense from Company A to Company B proportionately. This method reflects the true labor cost against each company’s financials without setting up a secondary payroll account.
Exploring an Umbrella Payroll Account: While not explicitly supported, it’s worth consulting with a financial advisor or payroll provider about the possibility of a consolidated payroll solution. Some service providers may have innovative options for businesses in this situation.
Documentation and Compliance: Whatever method you choose, ensure it aligns with compliance standards. Properly document the time allocations and reimbursements to maintain clear financial records and support your annual tax filings.

Final Thoughts

Managing payroll for an employee shared between two companies can present challenges, but with the right approach, it is an issue that can be managed efficiently. By reducing unnecessary complexities and costs while ensuring proper compliance, you can maintain streamlined operations for both of your businesses. Always consult with Accounting professionals to tailor the best solution for your specific business needs.

When dealing with employees who work across multiple companies under the same ownership, especially when those companies are reported on the same personal tax return, it’s important to manage payroll efficiently while ensuring compliance with tax regulations. Here are some strategies and best practices you can consider for handling this scenario:

1. Utilizing a Journal Entry Approach

Since you’re already using Gusto to process payroll for Company A, and considering the simplicity and cost concerns, one feasible approach is to handle the cross-company payroll allocation through Accounting entries. Here’s how you could implement this:

Create a Reimbursement Structure: Record the entire payroll expense, including wages, taxes, and related expenses in Company A, as you normally would. For the hours worked in Company B, create a monthly journal entry in both companies.
In Company A, credit the amount that corresponds to the hours worked for Company B as a “Due from Company B” or similar intercompany receivable account.
In Company B, debit a payroll expense account and credit “Due to Company A” or a similar intercompany liability account. This reflects that Company B owes for services rendered to it.
Monthly Reconciliation and Payment: At the end of each month, reconcile these accounts and have Company B reimburse Company A. This can be done through a simple bank transfer or a cash transfer if preferable.

2. Setting Up an Umbrella Payroll Solution

While setting up a separate Gusto account for Company B may be cumbersome for just a few hours a week, it’s worth investigating if Gusto offers an umbrella solution or multiple EIN support that could facilitate payroll management across several entities under one account. Contacting your Gusto representative for available options tailored for small businesses with shared employees might reveal an efficient solution you didn’t initially consider.

3. Utilizing a Professional Employer Organization (PEO)

For more extensive needs, consider partnering with a Professional Employer Organization (PEO). They can manage payroll, taxes, benefits, and more under a single platform, facilitating administration across multiple business entities. This might be cost-effective in the long term if employee sharing becomes more extensive.

4. Tax Compliance Considerations

Ensure compliance with the IRS regarding employee allocation across employers within the same ownership under different EINs. Misclassification or improper reporting might result in tax complications, so consulting a tax professional or accountant for specific guidance is beneficial. Furthermore, check whether there are any state-specific regulations since payroll laws

One response

APAdmin

3 March 2025 at 9:18 AM
When dealing with employees who work across multiple companies under the same ownership, especially when those companies are reported on the same personal tax return, it’s important to manage payroll efficiently while ensuring compliance with tax regulations. Here are some strategies and best practices you can consider for handling this scenario:

1. Utilizing a Journal Entry Approach

Since you’re already using Gusto to process payroll for Company A, and considering the simplicity and cost concerns, one feasible approach is to handle the cross-company payroll allocation through Accounting entries. Here’s how you could implement this:
- Create a Reimbursement Structure: Record the entire payroll expense, including wages, taxes, and related expenses in Company A, as you normally would. For the hours worked in Company B, create a monthly journal entry in both companies.
- In Company A, credit the amount that corresponds to the hours worked for Company B as a “Due from Company B” or similar intercompany receivable account.
- In Company B, debit a payroll expense account and credit “Due to Company A” or a similar intercompany liability account. This reflects that Company B owes for services rendered to it.
- Monthly Reconciliation and Payment: At the end of each month, reconcile these accounts and have Company B reimburse Company A. This can be done through a simple bank transfer or a cash transfer if preferable.
2. Setting Up an Umbrella Payroll Solution

While setting up a separate Gusto account for Company B may be cumbersome for just a few hours a week, it’s worth investigating if Gusto offers an umbrella solution or multiple EIN support that could facilitate payroll management across several entities under one account. Contacting your Gusto representative for available options tailored for small businesses with shared employees might reveal an efficient solution you didn’t initially consider.

3. Utilizing a Professional Employer Organization (PEO)

For more extensive needs, consider partnering with a Professional Employer Organization (PEO). They can manage payroll, taxes, benefits, and more under a single platform, facilitating administration across multiple business entities. This might be cost-effective in the long term if employee sharing becomes more extensive.

4. Tax Compliance Considerations

Ensure compliance with the IRS regarding employee allocation across employers within the same ownership under different EINs. Misclassification or improper reporting might result in tax complications, so consulting a tax professional or accountant for specific guidance is beneficial. Furthermore, check whether there are any state-specific regulations since payroll laws
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