Q. Are there any requirements to start a Payroll Processing Company?  If so, where can I find the requirements. I heard that to do payroll processing, you have to be a CPA?

A. Each state is likely to have a different requirement for those individuals wishing to start a payroll company.  For the last several years there have been news stories of individuals who ran a so-called payroll company, but never actually paid the liabilities to the taxing jurisdictions on behalf of their clients.  Essentially the payroll company took the money and ran.  States then go after the employer/clients because ultimately, the liability was never paid by them.  This put many business out of business because of the huge amount of cash it took to pay these taxes for what amounts to a second time.  I say all this because many states have implemented minimum bonding rules to alleviate this problem.

You do not have to be a CPA.  In fact, you could be running a bookkeeping business and offer payroll as an additional service.  The key is that you must have adequate payroll knowledge before processing payroll.  There are several organizations out there that offer payroll training.  One in particular is the American Payroll Association.  Another organization, the Independent Payroll Provider Association is a group of payroll processors that have banded together to network and learn from each other how to run a payroll processing business in a more efficient manner.

My final thought is regarding the computer system you may choose to use.  You can buy a full-blown computer package that can integrate with your website.  You could also resell a web-based system offered by one of the existing payroll providers to your clients at a markup.  The choice is the level of control you want over the process.