Payroll service provider
In accounting, payroll service provider means a firm that runs payroll under the employer's own EIN — paychecks, deposits, Forms 941, 940 and W-2. It isn't liable for the employer's employment taxes; the employer stays liable for every deposit it makes.
Also called PSP.
Authority: IRS Pub. 15 (2026), §16 (opens in a new tab). Sources
The lessons that teach this
From the free founder back-office course, taught on one company's books, with exercises to work it yourself.
What it is not called
Each of these means something else. Use one here and an accountant reading the product notices.
- PEO (co-employs)
- the employer
Also in Payroll
Defined in Lexicon. This page is generated from that document, so the two can't disagree.