Switching Payroll Providers: Everything Employers Should Consider

With the current economic climate, it’s becoming more and more common to find yourself in need of a new job. But what if you’re not just looking for change but better wages? For many people these days, switching to another company is one of their best options. Everything that goes into picking your next employer should be carefully thought out before making any decision.

The “change of payroll provider letter” is used to inform an employer’s current payroll provider that they are leaving. The letter must be in a formal format and include the information about the new provider, as well as any other relevant information that may be needed.

Understanding your goals and objectives vs what your current provider offers and finding a better fit is the key to switching payroll providers. Then, to ensure that everything goes well, think about the optimum time to switch and make plans with your old and new suppliers.

Here are the actions we suggest you take:

1. Assess Your Current Payroll Service Provider

The first step is to assess your present service provider. What makes you unhappy about it? What do you want to get out of a new provider? You should ask the following questions:

• What are your favorite features, and why do you like them?
• What are some of the things you’d want or need but don’t have access to right now?
• Is your current supplier costing you more or less than you expected?
• What is the maximum amount you are ready to spend on the best solution?
• What are some of the most vexing issues you’ve encountered?
• Why are you so adamant about switching providers?

You’ll be able to make a list of must-haves after you’ve answered these questions. Include any features you’d prefer your new provider to offer, as well as any deal-breakers. This will assist you in making a choice and selecting the finest payroll solution for your company. Throughout this process, it’s critical to know precisely what you’ll need to efficiently handle and process payroll.

2. Evaluate Your Current Payroll Provider in Light of Other Payroll Providers

Various payroll providers provide different features and services, so your research should reflect that. These options might include anything from varied direct deposit speeds to whether or not your staff will be able to manage their own data via an online interface. After you’ve made your basic list of must-haves, double-check that you’ve covered all of your bases.

For a few topics to think about, click the tabs below:

Add-Ons and Services: What are the most critical services for your company? Is it important for your payroll provider to be able to monitor commissions and sales as well? Many payroll services provide HR help as well as time monitoring. Is it possible to save money by adopting payroll software that has these features? Would it be beneficial to streamline your operations?

Will the service be able to fulfill your future demands if your company grows in size or requirements? Add-ons or bigger plans may be included. Consider the following prices: Is there a significant difference when adding features? Is there an a la carte app menu in the alternative? Do you need to haggle for more services?

Integrations with Third Parties: Don’t miss this opportunity! Are you presently utilizing third-party accounting or point-of-sale software to operate your business? If not, do you intend to do so as your company grows? Do you have any payroll integrations with your existing provider? Would it be beneficial to your company if your payroll provider could connect with these other programs?

Pricing Structure: What is the structure of the pricing? Is there a set cost depending on the number of workers charged by the provider? Is there a price for the number of pay runs? What impact would this have on your firm if you decide to expand or recruit additional employees?

Many payroll services provide new members with discounts. If the listed price is discounted, inquire as to when the reduction will cease and what the new price will be. If there are any typical yearly increases, inquire about them. Check for additional costs such as customer service consultations, add-ons, integration fees, and transfer fees, among others.

Off-Cycle Payrolls: Some payroll providers charge no extra fees if you complete as many payrolls as you require. Others levy an extra cost for any payroll run that occurs outside of the normal payroll cycle. Do you anticipate processing a large number of off-cycle payrolls? Do you plan on paying bonuses? If that’s the case, would you like them to be paid separately to prevent any confusion?

Availability of Support: Whether you’re new to payroll processing or have years of expertise, strong customer service is essential. Is there someone accessible to answer queries 24 hours a day, 7 days a week at the provider? Is there a phone number to contact or is just online assistance available? Will you have a dedicated service staff or will each enquiry be handled by a different representative?

Training: There will always be a learning curve while using new software. Are there any online tools or sites that can assist with training? Is there a way to get live instruction from the support team? Are there any video tutorials that can be used?

Sites that allow users to leave reviews: Customers who are presently using a program and can speak from firsthand experience typically provide the greatest comments. However, it’s crucial to avoid comparing apples to oranges while reading evaluations to get the most out of them. Ask yourself a few qualifying questions when you read reviews. Is their company comparable to yours? Do you use the same software applications? Is your payroll procedure the same as theirs?

Employee Self-Service Portal: Giving your staff the ability to handle their own information via a portal may be a major time saver. What information do workers have access to? Is it possible for an employee to amend their address if they relocate? Is it possible for workers to amend their tax elections themselves, or will someone on your staff be in charge of that?

Payroll access through mobile app is critical, particularly in today’s environment, when companies are becoming more distant than ever. Is it possible to conduct payroll on the fly using a mobile app? If that’s the case, what are the constraints? Is there a difference between using an app and utilizing a web browser? Is the website mobile friendly, enabling you to utilize it from your phone, tablet, or other device if there isn’t an app?

You may want to be able to compare the top payroll providers and what they can provide your company when deciding which payroll provider is ideal for you. Take a look at our comparisons of payroll companies:

Article Selection Justworks vs. Gusto QuickBooks vs. Gusto Payroll Zenefits vs. Gusto ADP vs. Gusto vs. Paychex Paychex vs. Gusto ADP vs. Paycom GustoOnPay vs GustoRippling vs Zenefits vs Zenefits vs Zenefits vs Zenefits vs Zenefits vs Zenefits vs Zenefits vs ADPPaychex vs. QuickBooks vs. Gusto Payroll Paychex vs. ADPRippling vs. QuickBooks Payroll 6 Competitors of Zenefits in 2021

When doing research, don’t only glance at their website or ask a coworker. Examine the plans and pricing, speak with the sales staff, and look at review sites such as ours as well as others such as Capterra. Watch demonstrations and be sure to inquire about the features are included in the package you’re considering. Try it out with a sampling of your employee base if it provides a free trial.

Tip: Now is a wonderful opportunity to do a payroll parallel test. This entails running your paycheck through two distinct test scenarios to determine whether the results are the same. This will allow you to get a better sense of the software in real time, allowing you to select which is best for you.

3. Choose a New Payroll Service & Decide When to Switch

After you’ve compared several payroll providers, you’ll need to pick which payroll service is ideal for your company.

After you’ve made your selection, you’ll want to spend some time to have all of your data migrated and validated, train your workers, and double-check that data is right and integrations are in place before going live. While you may be eager to get started, it’s critical to ensure that your team and workers have a seamless transition.

When is the Best Time to Switch Payroll Services?

Switching payroll providers necessitates the transfer of a large amount of history and employee data. This is considerably simpler with the development of cloud technology, so if you’re switching from a cloud-based system to a cloud-based system, you may do so at any moment. The optimum times to change are, in general, towards the end of the year or the end of the quarter.

You make it easier for the new payroll provider to monitor taxes and other government paperwork for the coming year by changing at the end of the year. Even if it includes work completed in December, expect your first salary of the year to come from the new source. The end of the quarter is the next smoothest transition period, with the first payroll performed by the new supplier at the start of the following quarter. Both of these alternatives assist you avoid problems when it comes to filing and paying your taxes.

Regardless of when you switch, give yourself enough time to get things in order so you don’t miss a paycheck.

When switching to a new payroll provider, how much lead time should you allow?

Before deciding on a changeover date, you should talk to your new provider about this. It will depend on how much work you perform vs how much you delegate to them, what information they want, the size of your organization, and other things such as integrations.

Gusto, a provider that mostly serves small companies, may have you paying your employees in as little as a few days. ADP, which serves a wide variety of small to big enterprises, may take a little longer, maybe weeks or months, depending on the payroll solution you pick.

When Should You Give Your Current Payroll Provider Notice?

You’ll need to work with your existing payroll provider to acquire the data you want moved and to resolve any legal or technical difficulties that arise as a consequence of the transfer. In most cases, 30 days’ notice is plenty, however your new provider may offer you a more precise estimate. Check the specifics of any existing contracts you have with your current payroll provider, though. Check to see if there are any costs associated with terminating your subscription early.

Switching Payroll Services and Notifying Your Current Provider

It might be awkward to inform a provider you’re leaving, particularly if you’ve had a long-term connection with them. However, avoid the urge to inform them you don’t need payroll any more. Your representative may mistakenly believe you are shutting your company and call the IRS to cancel accounts. It’s preferable to be open and honest about why you’re leaving. There is no such thing as a flawless payroll firm, and they rely on consumer input to figure out where they can improve.

4. Arrange for your new payroll service to be set up.

Some payroll providers can assist you in setting up the system or would handle it entirely for you. If they do, inquire as to whether or not they charge. Assigning a point person keeps the information flow constant and eliminates the need for you to be engaged in every detail.

System may be accessed through the cloud or downloaded.

It could be able to provide your new supplier access to your data through the cloud. This simplifies the transfer process. If you need to download anything, talk to them about the best format and arrangement for uploading into their own program.

Tip: Regardless matter how you transfer the data, do an internal audit to ensure that it was moved without problems or to correct any existing errors in the previous system.

Send Documents & Other Payroll Information

Your new provider will tell you of the specific details required to get started. You may be able to have your old payroll provider transfer the data straight to your new one if you give them permission. The following are the most often required items:

• EIN and other fundamental company information, such as legal business names, are available from the IRS.
• Past returns, payroll tax deposit dates/amounts, and tax account numbers are all available on tax forms.
• Information about Payroll Registration: For federal, state, and local tax authorities
• Information about your bank account: a canceled check for your salary or tax account
• Names, Social Security numbers, residences, incomes, withholdings, deductions, garnishments, and so on are all on the current employee list.
• Payroll Information: Pay stubs, payroll journals for employees, and any past data required to pay taxes if you aren’t starting at the beginning of the calendar year.
• Terminated Employee Information: Even though your prior service gave former workers lifelong access to their files, you are required by law to maintain this information for a specified number of years.
• Third-Party Authorizations: Any other authorizations required for the new provider to pay taxes or make transfers on your behalf, such as Form 8655s, state/local authorizations, and so on.

Prepare other software for synchronization with the new system.

Changing payroll providers entails more than just transferring information. Make a comprehensive inventory of all the software and applications you’ve integrated. If some of your old program’s functions are fulfilled by your new software, you may choose to transfer the data and close those accounts.

Working with your new supplier on integrations will ensure that when you transition over, you have a seamless flow of data across programs.

Give specific instructions on how to file your taxes at the end of the year.

Make it plain to your vendors who will be providing the year’s W-2s. If you don’t clarify, they could both file, forcing you to submit updated W-2s and perhaps facing an audit.

In addition, if payroll information was not loaded during the move, new providers would often refuse to provide W-2s for payments not made in their system. If year-end filings aren’t handled correctly, they may be a major nuisance.

5. Inform Employees of the Change in Payroll Service

Even though upgrading payroll software is mostly invisible to workers, you should let them know about it. They should, at the very least, anticipate mailings or correspondence from the new supplier.

You may wish to educate or perhaps teach your employees on the following, depending on the differences:

• Whether it’s a new employee interface or a mobile app,
• Advantages and disadvantages of a credit card program
• Sign-ups for new perks
• Accounts for new employees

This is also a good opportunity for them to check over their information and make any necessary modifications, such as withholdings.

Employees should be given written notice or an email, but announcements through chat, posters, or video conference could also be considered. Some payroll providers provide live or recorded employee training.

6. Formally Terminate Your Relationship With Your Previous Payroll Provider

You may terminate connections with your former supplier after you’ve completed all of the necessary transfers and informed your personnel. Send them a letter or an email notifying them of your decision.

If you haven’t already, be sure to:

• Inquire about whether you and/or your staff will have access to their accounts for the rest of their lives.
• Obtain copies of papers such as pay stubs, employee documentation, tax returns, and receipts.
• Check to see if you have any outstanding transactions that need to be canceled or completed.
• Check to see whether you’re still getting charged for the service.
• Make sure you’ve revoked any authorizations issued by your prior supplier.

Conclusion

There are several reasons to switch payroll software, and it’s now simpler than ever thanks to cloud technologies and batch transfers. However, it is still a time and effort commitment that should be carefully considered to prevent having to switch again in the future.

Understanding why you want to switch providers and what you anticipate from the new one can aid you in choosing a service that will meet your needs today and in the future. A well-thought-out strategy will help the shift go more smoothly and avoid expensive mistakes.

The “payroll provider change announcement” is a document that will help you to decide what to do when switching payroll providers. It has information about the pros and cons of each company, as well as how much they charge for their services.

Related Tags

• questions to ask when changing payroll providers
• moving employees from one payroll to another
• switching payroll companies mid quarter
• adp
• bamboohr payroll integration