First, the Bad News: Payroll Processing Services Require a License
For years, payroll processing services have enjoyed a regulation-free business. Payroll businesses processed payments on behalf of their clients to be paid to employees, government (state & federal), contract employees and vendors. All without being classified as a Money Services Business and the need to have a Money Transmitter License.
The rules of the game have changed and are ever changing.
Many companies who were processing payrolls without a money transmitter licenses have been handed Consent Orders. These include names like JetPay HR & Payroll Services, Inc., ZenPayroll, Inc, d/b/a/ Gusto, Paycom Software, Inc. & Paycom Payroll, LLC.
They were all given Enforcement Orders by Department of Banking by the State of Texas demanding that they stop their operations.
States like Texas have made it necessary for payroll services companies to be registered as money services businesses by the Department of Banking (Texas). These payroll services companies must have the requisite money transmitter license if they wish to service payroll for companies based out of Texas.
Your Payroll Business is Now Classified as a Money Services Business
If you want to offer payroll processing services to companies headquartered out of, say, Texas then you, as a payroll processing service provider must be licensed in the State of Texas.
Slowly and surely, more and more US States are jumping on the bandwagon and demanding that Payroll companies be classified as money services businesses.
As a payroll processor, you hold on to money and act as an intermediary which necessitates that you apply for the requisite money transmitter licenses immediately.
Failure to do so could result in not only a cease and desist order but also large fines and other punishments.
Money Transmitter License for your Payroll Business
Alright, you say, so I’ll just go get some money transmitter licenses.
Not so fast.
Are you aware of the requirements for getting an MTL in all the states?
Obtaining money transmitter licenses is not easy or affordable. It can easily cost $100,000s in only license fees without even counting the other expenses.
And it doesn’t stop there.
Do you know the time and compliance burden of maintaining money transmitter licenses?
Good news! There are Easier Alternatives
Leveraging the existing network of licensed money transmitters along with FBO (For Benefit Of) Accounts offered by Banks, one can completely handover the regulatory responsibility of being a money transmitter.
You concentrate on what you do best: Payroll processing
We handle the rest.
When you work with us, you do not have to worry about licensing, compliance, anti-money laundering, know your customers, access to banking, etc.