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  • Multiple merchant accounts

    Short version: 2 businesses are merging. Both have a website, each using QBMS as merchant account. One has a retail location and uses QBMS as merchant account (same account as website). What we're finding is that each website is required to have its own merchant account, but a company file in QB can only have one merchant account. So how do you keep the books when you have multiple merchant accounts? I understand that both merchant accounts can deposit to the same bank account, but what happens with the transactions through the merchant account that is not connected to the company file?

    We're grateful for any ideas at all!

    April

  • #2
    Before one can deal with how to do it in QuickBooks, there is a major pre-QuickBooks decision: What will be the FEIN of the merged company?

    The answer to that will depend upon the status of the "merged" company.

    Let's call the pre-merged companies A and B. I see only variations of three things that may occur, and one needs competent legal and tax guidance before the merger if finalized.
    • Will the merger generate a new and distinct company which let's call C. If so, C will have it's own FEIN, it own bank account and its own tax return. A new QuickBooks company will be added.
    • Will A be submerged in B? If so B ceases to exist and its FEIN will be become inactive, its bank account's FEIN will have to be changed to that of A, and B will no longer file tax or employment returns.
    • Will A and B become a partnership? If so the two QuickBooks companies can be retained as they now are. The partnership C will have to obtain its own FEIN, will need only a small banking account for the depositing of the periodic distributions of the earnings from A and B to C. The partners of C will each get a K-1 as determined by the annual partnership income tax return.
    If I were giving legal advice (which I am not) I would try to get the "merger" to be that of a partnership. But, more importantly, why have a merger at all? Is there any business reason other than keeping QuickBooks entries as simple as possible. Also important is to ask what type of legal entity is the merging entities (sole proprietor, corporations, partnerships)?

    Lorin Browning
    Fellow National Tax Institute
    lorin@lorinbrowning.com
    Last edited by Lorin Browning; 01-06-2020, 08:59 PM.
    Lorin Browning, Ph. D.
    Fellow -- National Tax Practice Institute

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    • #3
      With multiple merchant accounts, not only can merchants distribute sales volume evenly among two or three accounts, but the same is true for chargebacks. By spreading out your chargebacks, you will lower your chargeback ratio for each account and lower the risk of losing your credit card processing services.

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