How To Switch Payroll Providers

How To Switch Payroll Providers

How to Switch Payroll Providers
Changing service providers is not an easy task but the promise of a better future can make it all worth it.  In addition to the legwork involved, another factor you want to consider when making the switch is timing. Payroll Link happily takes on new clients any time of the year but there are some sweet spots you can take advantage of to make the transition easier.  In a perfect world, you would switch payroll providers at the beginning of the calendar year so that taxes are streamlined and handled by one provider. If that is not an option, another opportune time is the beginning of a new quarter.

How To Switch Payroll Providers

How to Switch Payroll Providers

1. Gather business and employee information

It is always a good idea to touch base with your new provider to see exactly what information they need to get you going so you aren’t doing more work than necessary.  Typically, most payroll providers will need the following information:

Business Info

  • Federal Employment Identification Number (FEIN)
  • Legal business name
  • Address (registered with your FEIN)
  • Company type
  • Banking information (routing and account number)
  • Year to date gross pay for all employees
  • Payroll reports from your current provider (more on this in step 3)

Employee Info

  • Mailing address
  • Social Security Number
  • Tax withholding details

Don’t forget termed employees must be included!  This is often overlooked but necessary to provide accurate W-2’s at the end of the year.  

2.  Notify your current provider

Once you have chosen your successor, it is time to break up with your current provider.  Every provider is different but a 30-day notice is usually expected and considerate. Although leaving a provider for a new can be awkward it is always best to completely honest.  If you are using an online solution, you may even be able to cancel your subscription without having to notify a representative. Think of it as the text message of breakups.

3.  Pull payroll reports

Not all reports are made equally or titled equally, in this case.  Ideally, you want to look for an Employee Earnings Record that includes every pay stub from this year for all current and former W-2 employees. We’ve noticed this report isn’t consistent with all providers so the key information you need to look for in a report is:

  • Pay date
  • Gross pay
  • Federal Income taxes withheld
  • FICA/Social Security withheld
  • Medicare withheld
  • Any state taxes
  • Any deductions withheld from the employee (pre-tax, post-tax, and garnishments).

If you don’t want to deal with the headache of pulling all these reports on your own, our transition specialists are pros at this and ready to help.  As part of our transition process, you will be awarded a Transition Liason to guide you and quite honestly, retrieve the majority of this information for you.  If a seamless transition process is something you’re looking for feel free to give us a call or schedule a demo.

Changing your HCM provider is not an easy move. Beyond the challenges we previously faced, Payroll Link made it a smooth transition… The implementation time was tremendous, there was a clear understanding of how the process works and who takes care of what.

-Dana F. Controller at Smoke Tree Ranch

4.  Close out the account with your former provider

If you are switching providers mid-quarter you will need to establish what tax filings and payments will be handled by your former provider on your behalf.  You also want to be sure to clarify who will be responsible for filing W-2’s at the end of the year. This would typically be the responsibility of your new provider but it is best to double check in order to avoid duplicate W-2s and IRS notices.