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One Payroll, Multiple Pharmacies: Understanding Common Paymasters | Master The Margin · Pharmacy Podcast Network

• 0:05
  Speaker 1: You are listening to the global network of podcasters dedicated
• 0:09
  Speaker 1: to the pharmacy profession. Welcome to the Pharmacy podcast network.
• 0:38
  Speaker 2: Welcome to the Master of the Margin podcast, your dose
• 0:41
  Speaker 2: of pharmacy, accounting and tax topics to help you take
• 0:44
  Speaker 2: your pharmacy to the next level. Good afternoon, everybody, to
• 0:52
  Speaker 2: another episode of our Master the Margin content here at
• 0:57
  Speaker 2: Syche and Company. Got Kathy Blanchard self, Scottie Sykes here
• 1:02
  Speaker 2: and Kathy. Today's topic is a common pay master and
• 1:09
  Speaker 2: we run into this quite a bit sometimes for larger groups,
• 1:13
  Speaker 2: which is kind of common in pharmacy, where with the
• 1:17
  Speaker 2: average owner having an ownership in two and a half
• 1:21
  Speaker 2: or two point eight pharmacies, something like that last NCPA
• 1:25
  Speaker 2: digest that was out. So, Kathy, what is a common
• 1:32
  Speaker 2: paymaster and what do pharmacies need to be looking out for.
• 1:38
  Speaker 1: Well, basically, a common pay master is a situation where
• 1:43
  Speaker 1: one of our pharmacy entities and a controlled group is
• 1:48
  Speaker 1: processing payroll for all of the locations, and we have
• 1:53
  Speaker 1: to be very mindful of what the IRS's rules are
• 1:57
  Speaker 1: for a common pay master benefits here far as you know,
• 2:01
  Speaker 1: you only pay Social Security few to ensue to one
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  Speaker 1: time if the employee works at multiple locations, but the
• 2:11
  Speaker 1: rule specifically states that that employee or employees must work
• 2:18
  Speaker 1: amongst all of the locations. So Scotty can't just work
• 2:22
  Speaker 1: at store number one and store number one has a
• 2:26
  Speaker 1: specific group of staff. Scotty has to work at store
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  Speaker 1: two or Store three along with store one. He has
• 2:34
  Speaker 1: to work at more than one of the locations for
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  Speaker 1: it to be a qualified common paymaster.
• 2:39
  Speaker 2: That's right, And so nine times out of ten that's
• 2:44
  Speaker 2: not the case. And so if you're a multi store owner,
• 2:49
  Speaker 2: your default really is that each location unless you have
• 2:57
  Speaker 2: all of them under one entity. But if you have
• 3:01
  Speaker 2: different let's say you have five pharmacies and they're all
• 3:04
  Speaker 2: different LLCs, each entity is going to have its own payroll,
• 3:11
  Speaker 2: set up, its own payroll, processing its own payroll, tax
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  Speaker 2: returns each entity, because most likely you don't have all
• 3:18
  Speaker 2: those employees working among all the different stores. In fact,
• 3:22
  Speaker 2: I'd be really rare for that to happen. So a
• 3:25
  Speaker 2: common paymaster is really something.
• 3:28
  Speaker 1: That is it's a unicorn.
• 3:31
  Speaker 2: It is a unicorn. So if you are processing one
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  Speaker 2: payroll run for all your different locations, you do need
• 3:40
  Speaker 2: to take a time out there and review that make
• 3:42
  Speaker 2: sure that's the appropriate way to.
• 3:45
  Speaker 1: Be handling that right. It does give you a shortcut
• 3:49
  Speaker 1: on benefits and you only process payroll one time. Your
• 3:53
  Speaker 1: staff only get one W two, But in theory they
• 3:57
  Speaker 1: should be getting a W two from each of the
• 4:00
  Speaker 1: federal ID numbers that they work under.
• 4:03
  Speaker 2: YEP. And that goes back to controlled group conversation and
• 4:09
  Speaker 2: pharmacies that own multiple locations multiple stores need to be
• 4:15
  Speaker 2: aware of the controlled group rules. And a controlled group
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  Speaker 2: rule for RS purposes is where the IRS is going
• 4:24
  Speaker 2: to treat you as owning where all those different entities
• 4:30
  Speaker 2: will say you own five different LLCs and you are
• 4:33
  Speaker 2: the one hundred percent owner of all of them. All
• 4:36
  Speaker 2: those entities are part of a controlled group. And so
• 4:43
  Speaker 2: for different tax attributes, different tax strategies, you have to
• 4:48
  Speaker 2: consider all five of your pharmacies in this case as one. So,
• 4:54
  Speaker 2: for for example, the CACHE method of accounting is a
• 5:00
  Speaker 2: I believe it's thirty million dollars. Is the revenue threshold
• 5:03
  Speaker 2: there you have to you have to be you have
• 5:07
  Speaker 2: to be under and so and so you have to
• 5:12
  Speaker 2: count the revenue from all five of your pharmacies as
• 5:16
  Speaker 2: one group to meet that test. So you can't do
• 5:22
  Speaker 2: it individually, so that also applies to benefits for your employees.
• 5:26
  Speaker 2: Four one K health insurance payroll matters. So if you've
• 5:32
  Speaker 2: got a four oh one K and you're a multi
• 5:35
  Speaker 2: store owner, you'll see where the four oh one K
• 5:38
  Speaker 2: folks were asking you about common ownership and things like that.
• 5:42
  Speaker 2: With your entities, this this would apply there, and it
• 5:46
  Speaker 2: also applies for other IRS strategies and rules, so you
• 5:52
  Speaker 2: need to be aware of the controlled group rules as
• 5:54
  Speaker 2: well if you're a multi store owner.
• 5:57
  Speaker 1: Thanks for tuning in.
• 5:58
  Speaker 2: If you liked this episode and want more content, including
• 6:00
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• 6:04
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• 6:09
  Speaker 2: in the show notes to subscribe