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How to Switch Payroll Providers in 7 Steps

If your current payroll provider is no longer meeting your needs, it might be time to switch companies to software that will better serve your business. Just thinking about changing can be overwhelming but having the right payroll software can save you time and simplify your administrative tasks. Keep reading to learn how to switch payroll providers in seven easy steps.

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1. Decide when you want to make the switch

Generally, the best time to switch payroll software is at the beginning of the year or quarter because it’s easier to transfer your financial records. So, try to make the change on January 1, April 1, July 1, or October 1.

If you switch in the middle of a quarter, your new software provider can help you input your previous payroll information to make sure your year-to-date info and tax forms are accurate.

2. Determine what you need from a payroll provider

There are several reasons why you might be switching payroll companies:

  • price
  • lack of features
  • poor customer support
  • overly complicated processes

Whatever the reason for changing, make a list of everything you need and want from a new provider. This will help you ask the right questions to ensure you’re getting everything your small business needs.

3. Select a new payroll provider

Look for software that fits your budget and offers the features you need. To make sure you’re picking the right company, ask for a product demo and/or free trial to make sure the software is easy to use and meets your requirements.

Learn more about how Workful can help you streamline your most important payroll tasks.

4. Request reports from your current provider

You’re typically required to keep payroll records for at least six years, so make sure you ask for data from your current provider before switching. If you wait until you’ve already changed companies, they might not be willing to share the information, or they might take a long time to get it to you.

Asking for the following info can also ensure you have everything you need for your new provider:

  1. Payroll register reports – These reports share detailed info about previous paychecks, including who you paid, how many hours everyone worked, how much you paid your staff, how much was withheld for taxes and other deductions, net check amounts.
  2. Tax forms and liability reports – By having copies of previously filed tax forms and tax liability reports, you’ll know what has been filed and paid and what is still outstanding. You’ll also have your federal and state tax identification numbers and tax rates.
  3. Pay stubs – If possible, ask for electronic copies of prior pay stubs for your entire staff. These can help you input beginning balances correctly and allow you to provide copies to workers if needed.

Read also: 7 Benefits of Paperless Payroll

5. Gather everything you need to switch

Before running payroll for the first time with your new provider, find out what info you need. Then, gather it in once place so you can speed up the transition process.

For each employee and contractor, you will need things like:

  • full name
  • birth date
  • home address
  • Social Security Number
  • banking info for direct deposit
  • salaries and wages
  • withholdings and deductions
  • previous pay stubs for beginning balances

For your company, you’ll need to know your

  • Federal Employer Identification Number (EIN)
  • federal tax deposit schedule
  • state Department of Revenue and Department of Labor identification numbers
  • state unemployment insurance tax rates
  • state tax deposit schedule
  • payroll bank account info for direct deposit
  • pay schedule
  • first payday with the new software

It’s vital that all info entered in the new system is accurate, so don’t be afraid to ask questions throughout the process to ensure you’re setting everything up correctly.

6. Notify your current payroll provider

Make sure you’re not being charged for something you’re not using by canceling your account with your current payroll software before you start running payroll with the new company. In some cases, you might need to provide them notice before your account can be canceled.

Don’t forget to ask if they will be filing tax forms or making any tax payments on your behalf after you switch. Typically, your new provider will take over that process, but double-check.

7. Run payroll

Now that everything’s entered and you have canceled your previous subscription, you’re ready to run payroll!