Small business owner talking to his payroll provider on the phone while reviewing info on his laptop

Switching Payroll Companies: 4 Things You’ll Need for a Smooth Transition

If your current payroll provider is no longer meeting your needs, it might be time to switch companies. When you’re moving your payroll data over to a new system, it’s vital that the info is accurate. Making a mistake could result in an administrative nightmare, not paying your team correctly, or not paying the correct tax amounts. Just thinking about changing companies can be overwhelming. You can avoid critical errors and simplify the process by asking your current provider for the following info before you make the switch to a new provider.

1. Payroll register reports

A payroll register report gives you detailed info about previous paychecks. It will tell you

  • who you paid
  • how many hours each staff member worked
  • how much you paid everyone
  • what taxes you withheld
  • how much was deducted for things like 401(k) contributions and health care premiums
  • each person’s net check amount

If you’re changing providers in the middle of the year or quarter, a payroll register can help ensure you’re entering beginning balances correctly into your new system, so your team’s year-to-date info is accurate. It will also help you doublecheck that your tax forms are right at the end of the quarter and year.

You’re typically required to keep payroll records for up to six years, so ask your current provider for your payroll register reports, even if you’re switching at the beginning of the year. If you ask for the data after you’ve changed companies, they might not be willing to share the info, or they might take longer than you want to fulfill the request.

2. Tax data

Make sure you receive the following tax data from your previous provider:

  • your federal and state tax identification numbers
  • liability percentages for taxes like unemployment insurance
  • your total tax liability for the year and quarter
  • how much of your tax liability has already been paid
  • outstanding tax liability that has not been remitted
  • when your payroll forms and taxes are due

Depending on when you switch payroll companies, you might have payroll data in both systems for the same year or quarter. If your previous provider has been filing your tax forms and remitting payroll tax payments for you, find out whether they will continue to do so for the info that’s already in the system. This will help ensure you’re not filing duplicate information, which might trigger an audit.

3. Team info

Make sure you have everything you need about each member of your staff, including:

  • full name
  • mailing address
  • Social Security number
  • W-4 info
  • deductions and contributions
  • bank account information for direct deposit

4. Previous pay stubs

You never know when someone from your team will ask you for a copy of an old earnings statement, so make sure you have past pay stubs for everyone you’ve paid, including former employees. That way, you can provide them a copy if they need it for a loan application or their own records. Consider asking your payroll provider for electronic copies to save space in your office.

Read also: 5 Ways Going Paperless Can Save Your Business Money