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Run the Payroll Fee Auditor →Blog · Payroll Management · Financial Services
Financial Services & Accounting Firms: Payroll Setup Guide (2026)
Setting up financial services firm payroll means the standard registrations, an EIN, state withholding and unemployment accounts, new hire reporting, plus the financial services firm specifics: pay codes for deferred compensation structures and FINRA recordkeeping and a documented classification for financial advisors and CPAs. BEG: $45 per employee per month inside the payroll software you already use, live in 3 to 5 days.
Step 1: accounts and registrations
Every financial services firm starts with an EIN, a withholding account in each state where someone works (unless that state has no wage tax), an unemployment insurance account in each of those states, and access to each state's new hire directory. New employers deposit federal employment taxes monthly during the first calendar year because there is no lookback period yet.
Step 2: classify financial advisors and CPAs before the first check
Exempt or non-exempt status for financial advisors and similar staff is based on the duties they actually perform, not on job title or on whether the customer is an end user or an intermediary. An employee whose primary duty is selling financial products does not qualify for the administrative exemption.
Step 3: build the financial services firm pay codes
Deferred compensation structures, FINRA recordkeeping, performance fee payroll and Series license holder compliance each become a pay code with its own taxability and overtime treatment. Building them before the first run is cheaper than correcting a quarter of 941s afterward.
If a nonqualified deferred compensation plan fails section 409A, the deferred amounts become includible in the employee's income, are reported on Form W-2 box 12 code Z, and are subject to an additional 20% income tax plus a premium interest tax, both assessed on the employee. Amounts that are substantially vested and paid no later than March 15 of the following year fall under the short-term deferral exception and are not subject to section 409A.
Step 4: set the records up to be kept
Broker-dealers must keep the records required for each associated person under SEC Rule 17a-3(a)(12) in an easily accessible place until at least three years after that person's employment or other association with the firm has ended.
Core broker-dealer books and records made under SEC Rule 17a-3(a)(1) through (3), (5), (21) and (22) must be preserved for not less than six years, with the first two years in an easily accessible place. Compliance and supervisory manuals must be kept until three years after they stop being used.
The rules behind this page, with sources
General information, not legal advice. Every rule below was read on the agency page linked next to it.
- Exempt or non-exempt status for financial advisors and similar staff is based on the duties they actually perform, not on job title or on whether the customer is an end user or an intermediary. An employee whose primary duty is selling financial products does not qualify for the administrative exemption. [DOL Fact Sheet #17M]
- If a nonqualified deferred compensation plan fails section 409A, the deferred amounts become includible in the employee's income, are reported on Form W-2 box 12 code Z, and are subject to an additional 20% income tax plus a premium interest tax, both assessed on the employee. Amounts that are substantially vested and paid no later than March 15 of the following year fall under the short-term deferral exception and are not subject to section 409A. [IRS Publication 5528, Nonqualified Deferred Compensation Audit Technique Guide (Rev. 3-2024)]
- Broker-dealers must keep the records required for each associated person under SEC Rule 17a-3(a)(12) in an easily accessible place until at least three years after that person's employment or other association with the firm has ended. [SEC Rule 17a-4, 17 CFR 240.17a-4(e)(1)]
- Core broker-dealer books and records made under SEC Rule 17a-3(a)(1) through (3), (5), (21) and (22) must be preserved for not less than six years, with the first two years in an easily accessible place. Compliance and supervisory manuals must be kept until three years after they stop being used. [SEC Rule 17a-4, 17 CFR 240.17a-4(a) and (e)(7)]
Read the full guide to how to set up payroll for a new business, and the rest of the financial services firm payroll library.
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Frequently Asked Questions
What registrations does a new financial services firm need before running payroll?
An EIN, a state withholding account and a state unemployment account in every state with an employee, and new hire reporting access. State registrations are the slow step and can take weeks, so they start before the first hire date.
How are financial advisors and CPAs classified at setup?
Exempt or non-exempt status for financial advisors and similar staff is based on the duties they actually perform, not on job title or on whether the customer is an end user or an intermediary. An employee whose primary duty is selling financial products does not qualify for the administrative exemption.
What records must a financial services firm keep from day one?
Broker-dealers must keep the records required for each associated person under SEC Rule 17a-3(a)(12) in an easily accessible place until at least three years after that person's employment or other association with the firm has ended.
What does managed payroll cost for a financial services firm?
$45 per employee per month, all-inclusive, inside the payroll software you already use, with no monthly minimum. Deferred compensation structures, FINRA recordkeeping and performance fee payroll are configured at setup, not billed as add-ons.
Related Resources
Anthony leads payroll solutions at Business Executive Group, a national managed payroll firm serving businesses across industries including Financial Services & Accounting Firms. BEG manages payroll at $45 PEPM, all-inclusive, with deep expertise in compliance, multi-state filing, and industry-specific payroll requirements. Get instant pricing at beghr.com.
Authoritative source: U.S. Department of Labor: Wage and Hour Division
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