Entertainment Payroll Basics for the Performing Arts

As you are now ramping up for your next live performance production (theatre, broadway, off broadway, or touring), I would like to introduce you to the concept of utilizing the services of an entertainment payroll company.

Leaving the payroll details to a paymaster allows you to focus your attention on the creation of your production.

An entertainment payroll company (paymaster) with EOR (employer of record) services offer a theatrical production an array of different options. The benefits offered are numerous.

Choosing the right entertainment payroll company for your needs means you should choose an EOR company who can be flexible in their thinking and in their service offerings. The success of your production can be impacted if your paymaster is unable to process your payments in a flexible, knowledgeable and timely fashion. Your paymaster should know you by name and you should not only be made to feel like you are their only client, they should perform the work for you as if you are their only client. The success of your production should be their main focus and they should educate you and create a structure for you from the start.

They paymaster should be available to you from start to finish ensuring your payroll process and experience is smooth, your paperwork is complete, your union contracts are correct, you are following all the regulations set by the unions and the federal and state agencies, and most important, that you meet your time lines and deadlines set by federal, state and union agencies so you don’t incur penalties or fines.

Q. Tell us how a theatre would choose an outsourcing payroll system over other options?

A. It depends on the theatre, their resources, and what is important to them. Are they just looking for someone to cut the checks (check cutting service, accountant, or in-house payroll dept) and they themselves will retain the liability for the labor laws surrounding their payroll processing, payroll taxes, workers' compensation, unemployment insurance and pension reporting etc, or are they looking for the removal of their liability and to pass that liability over to a paymaster by way of a "employer of record service (EOR)" for labor laws surrounding their payroll processing, payroll taxes, workers' compensation, unemployment insurance and pension reporting? All of these determine what system a theatre would choose - whether a paymaster or a paycheck cutting service, accountant, or in-house payroll dept.

2. Is outsourcing payroll to an entertainment payroll just for larger theatres?

A. It is a great choice for any size theatre. Generally any theatre regardless of size will see a cost effective benefit in using a paymaster because they are typically less equipped to handle this on their own, and the Actors Equity Association (AEA) sometimes requires a paymaster to process the payroll for a production. If a theatre lacks the expertise in applicable federal and state labor laws, union contracts processing and payment, tax processing and submissions, workers compensation claims and audits, unemployment claims and audits and W2 processing, they are more likely to find themselves in the middle of an IRS audit, violating union rules and regulations, or worse, a lawsuit. The releasing of the liability (see above for explanation) is enough of a reason for any theatre to utilize the "employer of record service" offered since a good paymaster provides expertise in all of these areas AND also retains the liability. Many theatres will call a paymaster after attempting the process themselves and the first question is "I tried to do this myself and I need help. Can you help me" and of course they are helped. Bottom line, theatres need to figure out where their strengths and weaknesses are with regards to their accounting and payroll systems in order to make the most cost effective decision for their circumstance.

Q. What other "HR" services does a paymaster perform?

A. A paymaster provides the following: new hire paperwork processing and reporting, education on completion of all applicable payroll and payroll tax related forms if necessary, workers compensation insurance, unemployment insurance, direct deposits, time-card processing and their accurate completion, applicable state labor laws education, payroll check processing, union (AEA, IATSE etc) support, reporting and payment processing, and employee safety policies, programs and audits. Sometimes a paymaster also offers health, dental and vision benefits to on-going theatrical clients.

Q. How have theatres benefited from using a paymaster?

A. Assuming the payroll company is knowledgeable, flexible in their philosophy and are also service oriented (of which there are some, and they are not always the largest fish in the business) the immediate, ongoing support that ultimately reduces a theatres overall cost and liability is the most beneficial. They also find they have peace of mind in knowing that they have a solid partner in the process of payroll services as this part of the production will be handled correctly for them. Most paymasters offers all inclusive services accommodating all types of theatres, union and non union, any and all states, and all circumstances ultimately allowing the theatre to focus on their production rather than concerning themselves with the liability of all aspects of payroll processing. Ultimately clients see a reduction in their overall liability, time and cost and they view their chosen paymaster as a vital part of their overall production support system.