If you run your business operations through two or more corporations, the different entities may share some of the same employees. In that case, you can save payroll taxes by using a "common paymaster."
"Concurrent" employment is defined by the IRS as the "contemporaneous existence of an employment relationship between an individual worker and two or more corporations."
The common paymaster option is only available to corporations. Sole proprietors and partnerships are not eligible.
Instead of having each business pay Social Security and Medicare tax for shared employees, common paymasters remit the appropriate amount of tax just once.
In other words, no more tax would be paid than would be the case with a single employer. The savings apply to employees who on a combined basis earn more than the Social Security tax wage ceiling, which for 2015 is $118,500 (up from $117,000 for 2014).
For example, let's say you have two corporations equally sharing a business manager who earns $140,000 a year and collects two different $70,000 paychecks. If each company pays Social Security tax for the manager, each separate Social Security tax bill is $4,340 (6.2 percent of $70,000) for a total of $8,680.
However, if a common paymaster takes over in 2015, the total Social Security tax bill is limited to $7,347 ($118,500 times 6.2 percent).
Result: The corporations save $1,333 in Social Security tax ($7,347 versus $8,680).
You can only take advantage of this calculation when related corporations employ a worker "concurrently," or at the same time. However, there are some restrictions on what constitutes a "related corporation." Ask your tax adviser for more information.