I have a Solo 401(k), and Want To Hire An Employee in a Subsidiary. Can I Do This?

That’s a complicated issue.  This gets into the issue of a controlled group.  If the holding company owns 80% or more of the subsidiary, then they are considered the same company for this purpose.  In this scenario, you cannot do the Solo 401(k).

The alternative might be to do a 401(k).  This will be more expensive to administer.    The most economical is to sign up for a multi-employer plan (MEP) with someone like Fidelity.  These plans are a lot cheaper to administer than a stand-alone.  The downside is that all of the rules are vanilla and they normally do not allow for certain exceptions that you may want.

You could also consider a SEP or SIMPLE plan.  One of these would likely be much cheaper to administer than a 401(k).  The rules and options for these 2 are different, so we have to work through the particulars of your situation.  In a SEP, the employer must contribute a uniform percentage of pay for each eligible employee.  The employer does not have to make contributions each year.  Contributions cannot discriminate in favor of highly compensated employees.  A SIMPLE plan uses the matching concept, and you can choose 1 of 2 methods.