One of my clients would like to set up a separate LLC so that all overhead and payroll expenses are managed separate from their industry expenses, is there any reason why they can/cannot do that in terms of GAAP or law in the U.S.?
Yeah, see, those additional facts change the situation a lot in this case. That looks almost exactly like a PEO arrangement. I think you can do it, depending on how Company B sets its transfer prices.Dr SL,
Wow, I cannot thank you enough for your reply.
All companies owned by this client are LLCs and are owned by a single partner. The goal to save on overhead and staff expenses.
Company A (is in fact Company A1, A2 and A3) these three companies issue different contracts to clients for different service therefore all companies have different industry expenses (We will not move the industry expenses to Company B) and volume of work. In addition, there's only one staff pool (reception, assistant, accounting, etc) doing all of the overhead work. It seems cost effective not to have to set up and pay different payroll companies since Company (A1, A2, A3) do not generate enough revenue and/volume of work to have their own payroll accounts or overhead expenses. So, my client asked if we can set up a Company B that can manage all of the Overhead and Payroll for Company A1, A2 & A3. Company B's revenue will be a 20% management fee on ALL costs. In this way, the owner will save on overhead/payroll expenses.
I made a worksheet, and between companies A1-A3 and the savings is substantial to warrant setting up a separate management entity, but if it violates an IRS ruling, we don't want to do it.
Want to reply to this thread or ask your own question?
You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.
|Deferred Tax treatment on Right of used asset.||0|
|USA How to account sale of asset w/ section 179 deduction in prior year||2|
|USA Sweep Account Setup & Booking Help||0|
|USA ASC-842 Current Asset turned into a Finance Lease||7|
|UK Clarification on provision for ad debt and sale of fixed assets on a SOFP & IS||1|
|USA FSA Set up||0|
|Germany Down payment for fixed assets||1|
|A set of items sold separately - is it alright||4|