Payroll between companies

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Ok so I am working for a small business and the owner owns another business down the street from mine. We only have one employee (I am not on their payroll since I am being considered a vendor with my accounting service business) so the payroll isn't worth it to buy Quickbooks payroll services.

The other bookkeeper keeps insisting that we do our own payroll .... well I keep shooting back to the owner that it just isn't cost effective to subscribe to the payroll on QB. This debate has gone on for a month now. I am trying to get the gal to realize that she could pay the payroll and do the reporting for our one employee along with her 10 and then bill us and I would pay her. But now my question is all I would pay her for is the expenses right? Not any of the withholdings.

So if the guys check is 700
less 15.00 Fed
10.00 State
5.00 SS (whatever - I dont have a payroll service handy so ...)
Net Pay 670

SO I would pay her the 670 plus the extra 5 for her extra expense to pay the other half of the social security right?

She came unglued and told me that I would owe her the entire 700 and I said no, since she takes out the WH and pays it right back out again that isn't an expense to her.

How can I get her to see that I only owe her for anything that is an actual expense?

Would there be any other expenses that I would have to reimburse that company for? Workers comp, unemployment being two I could think of.

Thanks
 
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kirby

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Well - good news and bad news
Good news you are totally correct that the way to go is to put the one person on the other company's (MAIN co) payroll system. Why spend more bucks just to make these payments. The MAIN company can add the guy to their payroll and then bill the OTHER company for the cost ( such as "services exp" and be sure to eliminate in consolidation). Saves money on processing and as long as that one person does not need - for some reason - to be a true employee of the OTHER company this will work.

Bad news is she is right about you owing her $700 (plus $5 employer portion). Yes you pay the guy cash of $670 NOW but quarterly you (MAIN co) will pay the rest (plus the employer$5) to the state/feds for his withholding. Back out of this battle gracefully and go win the main one that you are correct on.
 

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