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Covered California and Obamacare related questions from consumers, employers and agents are answered by Phil Daigle with the best information available at the time. Archived entries may no longer be accurate as the Covered California and Obamacare knowledge-base is evolving quickly. TO REQUEST A PERSONAL RESPONSE INCLUDE EMAIL ADDRESS.


Do Several Small Businesses Add Up to One Big One?

By on | 3 Comments

Question: I have 4 separate businesses with 4 payrolls, 4 de-6, 4 tax returns. Each have 20 ft ee’s. Am I considered over 50 or under 50 for penalty sake?

Answer: Yes. Long-standing ERISA rules require that all employees of commonly controlled businesses be treated as employees of a single business. View IRS Publication for further definition of controlled businesses.

Thanks to CAHBA agents David Brabender (Sacramento) and Ted Ruiz (San Dimas) for providing the correct answer.

3 Comments

Ted may or may not be correct. It’s not simply, “I have four separate payrolls” that determines the nature of the business, but it depends on the matter of “common control”. If the businesses are all “S-corps”, they very likely are going to be under common control. If they are “C-corps”, they might or might not be, depending on who controls each of the corporations in terms of stock ownership — same individual with 51%? Probably common control.

The basic thing we teach new agents along this line is: A person who owns four car dealerships in four cities is probably a single employer even though he has four separate FEINs and payroll accounts.

You are considered as one employer with over 50 ft ee, if you they are a controlled group. See http://www.irs.gov/pub/irs-tege/epchd704.pdf for more information on what is a controlled group.

Not sure about this answer. I understood that multiple businesses under the same ownership will count together for determining if you have reached the 50+ FTE threshold.

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