Payroll Processor Licenses

What is a payroll processor?

There are different types of payroll processor licenses:

• A restricted payroll processor license permits a company to prepare and file income withholding tax reports and unemployment insurance compensation reports. These licensees don’t have direct access to their client’s money and don’t issue physical payroll checks.
• Limited payroll processor licensees can issue payroll checks and prepare and file income withholding tax reports and unemployment insurance compensation reports. Limited payroll processor licensees cannot collect or hold money for income withholding taxes or unemployment insurance contributions from the clients, although they may initiate payments directly from the clients’ accounts to tax or unemployment authorities so long as the licensee is not authorized to arrange for the transfer of funds for any other uses or to any other accounts.
• Full-service payroll processing licensees can access, control, direct, transfer or disburse a client's funds. These companies can also prepare and issue payroll checks, prepare and file income withholding tax reports and collect, prepare and file unemployment insurance compensation reports, and may impound income withholding taxes and unemployment insurance contributions in an escrow account.

Please refer to Maine Title 10, Chapter 222 and Bureau Rule 710, for complete information.

Who is required to obtain a license with the Bureau of Consumer Credit Protection?

Whether you are a sole proprietor operating a small bookkeeping business, or a large organization, if your business activities involve the preparation, filing, or issuance of providing payroll services, unemployment insurance compensation, or income withholding tax reports, then you may need a license.

The Maine Department of Labor and/or Maine Revenue Services tells me I need a license with the Bureau of Consumer Credit Protection as a payroll processor and until my company is licensed with the Bureau, there is a hold up. Why is this and what can I do?

The Bureau of Consumer Credit Protection oversees individuals and entities that provide payroll processing services to Maine clients as defined at 10 M.R.S. § 1495. The Bureau does not have oversight under the laws, rules, or regulations within the Department of Labor or Maine Revenue Services, but our agency recognizes that other agency statutes or rules may point individuals and companies to our agency to meet certain compliance requirements under those other agencies’ standards.

Although the Bureau cannot force individuals or companies to obtain a payroll processor license unless required under Maine’s payroll processor law, you should be aware that failure to comply with Department of Labor or Maine Revenue Services standards may negatively impact your company’s ability to do business with Maine clients. If you are advised by the Maine Department of Labor and/or Maine Revenue Services to obtain a payroll processor license with the Bureau, you may want to either act on this advice or check with your legal counsel as a way of meeting standards for any applicable Maine governmental agency that you do business with.

Are there any exclusions or exemptions for the payroll processor license?

If you or your company meets the definition of “payroll processor” as defined under 10 M.R.S. § 1495(1-B), (1-D), or (4), you must apply for a payroll processor license. This is the case if the business is a one-owner small bookkeeping business, or a large multi-state organization.

• What if my company only serves one Maine client?
  There is no de minimis or threshold number for an exemption or exclusion. If your business provides payroll processing services, a license is needed.
• What if my client isn’t located in Maine, but I'm providing payroll services for a Maine resident who works for my client?
  If your company provides payroll processing services to an “employer” as defined at 10 M.R.S.  � 1495(1), a license is needed.

How do I apply for a license?

An application for a Maine payroll processor license should be made online through the Nationwide Multistate Licensing System (NMLS) (Trusted Partner Link).

You will need to create an account on the NMLS database to begin the process. (Note: It is helpful to have your Maine Secretary of State documents as well as your Internal Revenue Services documents available when setting up your NMLS account).

• Visit NMLS’s Getting Started: State-Licensed Companies page (Trusted Partner Link) for information on setting up an account and applying for a license.
• Visit the NMLS Company Quick Guides page (Trusted Partner Link) for information on how to set up your NMLS account and complete tasks in the system.
• For a full list of licensing requirements, visit the NMLS Checklist Compiler (Trusted Partner Link). Look for the Maine company checklists and select the applicable checklist for the license you are applying for. The two choices pertaining to payroll processing companies are “Restricted Payroll Processor License” and “Full and Limited Payroll Processor License.”
  
  IMPORTANT: If your company needs a restricted payroll processor license, then you should select the “accounting/billing service” business activity type under “consumer finance services.” Only select “payroll processing services” if you intend on applying for a limited or full payroll processor license.

After you successfully apply in NMLS, the license status will default to “pending-incomplete”. This is a normal status for a new application. Meanwhile, an examiner will review the filing, update the status, and notify you if you need to provide additional information before we can issue your license. Please allow a minimum of two weeks for any status change or feedback from the Bureau. Check your NMLS account for updates. If you need expedited service, please reach out directly to the Bureau.

What are the licensing fees?

The Bureau assesses the following fees for payroll processor licenses:

• Restricted Payroll Processor: $200
• Limited or Full-Service Payroll Processor: License fees are assessed based on the number of employers you provide services to.
  • Fewer than 25 employers: $300
  • 25-500 employers: $600
  • More than 500 employers: $900

Your company will be charged a base fee of $300 for a limited or full-service license. In addition to the license fee, you can expect to pay an annual processing fee charged by NMLS.

How long is the license valid for and how do I renew?

Payroll processor licenses renew on an annual basis, expiring every December 31st. Renewal reminders will be posted to the NMLS account prior to the expiration date. There are also renewal checklists available on NMLS to assist with renewal materials that may be needed as part of the renewal process.

Who should I contact if I need technical assistance on NMLS?

Contact the NMLS help desk at 1-855-665-7123

Who should I contact if I have policy, regulatory, or other questions?

Contact the staff at the Bureau of Consumer Credit Protection at (207) 624-8527 (TTY Maine Relay 711) or CCP.PFR@maine.gov