The information posted on PayrollTalk is for informational purposes only and is not intended to substitute for obtaining accounting, payroll, tax, or financial advice from a professional accountant.

Payroll company

I currently process payroll for one company and have discovered that I love this type of work . I am taking classes to get my CPS. If I were to start a payroll company, how are taxes paid by the authorized representative? I am reviewing a few software programs that I would use to be able to offer direct deposit for my clients. I am just wondering how companies or business handle this.

Additionally, during my research i ran across topics such as ADP using the money gained from clients and reinvesting it to build interest. Is this common practice?

I appreciate any insight . I am fairly new to this field, but I have a passion to learn more about it.


  • You may want to look into "partnering" with a small local payroll company. This will give you the necessary tools for direct deposit, multi-state reporting, etc. I used to work for a payroll company and we had bookkeeping/accounting firm partners who would process the payroll for their customers with our software. We gave them a price break and they received little support. The more business they brought, the lower their prices got. It really was a win for both sides.

  • rrupert
    rrupert ✭✭✭

    at least federally, it is my understanding that you would need to be an authorized representative on their EFTPS account to pay 941/940 taxes. You would process payroll and then debit a total amount owed for all wages, for all taxes (and depending on whether they funded employee benefits through you) and possibly employee benefit deductions plus your expense. You will need some major insurance and possibly bonding to cover your ACH (Direct deposit) transactions.

    I hate to say this but it's not as easy as just "open your own payroll company". There is a lot of competition and many of them now are inter-related with other modules such as ATS, benefits, recruiting, ACA tracking etc. I suggest a minimum of 7-10 years in the payroll processing roles (continuing to climb a career ladder) to learn much more.

    Oh, and there are also state/local taxes that come into play that I haven't mentioned.

  • Such a great question that I have pondered also. I am a CPP for 6 years now and I have been in payroll for 10+ years. I know there are banks that offer payroll software options for free and prepare the tax filings, which you or the client will have to since and submit. Banks usually allow the employees of clients to have free direct deposit accounts and a low cost.

  • @rfogle4379 I will definitely look into the partnering.

    I am open to working up through a company because I will be the first to tell you that I have much to learn. @rrupert what would be the best position to be looking for to get my foot in the door? I have a master's degree in Rehabilitation counseling . due to a severe physical disability, I did not follow my love for numbers back in school. With technology advances I can interact with computers, software, etc, making this interest more attainable no. How do I become successful at doing this type of work?

  • In my opinion, there are so many payroll companies. I have knowledge of payroll services such as payroll software and tax filing.