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Nov 14, 2022 Matt Venuto

Switching Payroll Providers: 5 Steps to a Successful Transition

Switching Payroll Providers: 5 Steps to a Successful Transition

Change is never easy.

As challenging as change can be, it’s time to switch if you’re not getting what you need from your payroll provider. If they make mistakes and don’t take accountability, it’s time to change. There are a host of reasons; what matters is that if you’re not happyyou need to find a new provider.

Payroll is the lifeblood of your business, and the whole point of paying for a service is not having to worry about payroll. But, of course, it might not feel easy to switch. 

If you know what you need to do to make the switch more straightforward, you’ll ensure a smooth transition and minimal disruption for your employees.

This article highlights the five steps you need to take to switch payroll providers. So let’s get into it!


5 Steps to a Successful Transition: Switching Payroll Providers

We’re pretty confident that if we asked ten small business owners why they don’t take the leap and switch payroll providers, they’d say it’s because the whole process seems overwhelming, time-consuming, and just not worth the effort.

Some business owners have learned the hard way: making a smooth integration is all about timing. Switching providers can be a hassle if the transition is fundamentally unorganized or is lacking key points of information. 

The cost of staying with a provider that makes mistakes, doesn’t treat you like a valued customer, and doesn’t provide the support you needis probably higher than the effort it takes to make the switch.

Apart from poor service, there are other reasons you might want to make the switch. Perhaps technology has advanced, but your current solution hasn’t. Your needs might be changing. You might have a higher budget or need to cut back. Whatever the reason, if switching payroll providers seems like the best solution, it’s time to take the leap.

Quality service is top of mind when choosing a payroll provider, and at ConnectPay, our relationships with clients are the most important thing to us. Let’s look at how you can successfully switch payroll providers in five easy steps.

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Switching Payroll Providers

  1. Pick the right time.
  2. Choose your new payroll provider - carefully.
  3. Communicate the switch with your current payroll provider.
  4. Gather the data and resources you need.
  5. Liaise with your new provider for a smooth transition.


1. Pick the Right Time

There’s a fear that switching payroll providers mid-year is a mistake. It’s definitely doable. You don’t need to use manual systems to migrate all of your data–instead–many modern payroll providers have software that automatically enters data for you.

That said, it is easier for all parties if you switch at the end of the year. To file tax forms on time, your accountant needs historical payroll records. If payroll data comes from two different companies, it’s more challenging to sift through documents, and harder to transfer, import, and file on time.

Related: 7 Aspects of Payroll Compliance

For example, if you switch payroll providers in May and run May and June’s payroll through your new provider, where’s your payroll data for April? It’s with your old provider. When submitting Form 941 on July 31, you need to transfer your old payroll data. 

Although end-of-year and mid-year are both possible, ensure your new provider can seamlessly transfer data and records, so you file your tax return on time.


2. Choose Your New Payroll Provider - Carefully

You’ve considered the best time to switch; now, you must choose a new payroll provider. We say carefully because if you rush your decision based on big promises and price alone, you might end up short.

What does your potential new payroll service offer? Will they handle paperwork like W-2s and 1099s and file your payroll taxes? Is that service included in the price they quote, or is that an additional charge? You need to be clear on what services you’re going to get.

Does your new provider offer onboarding? How easy is the transition process if you decide to switch mid-year? You want easy access to all your records, integrations that make tax compliance more manageable, and an implementation team to help make the transition seamless.

Finally, ask what kind of service you’ll get. Will you have help on hand when you need it? When you have a question, how long will you be waiting on hold? Is technical support included? The best payroll bureaus prioritize client service.


3. Communicate the switch with your current payroll provider

You need to be aware of any contractual obligations to your current payroll provider. Are there any cancellation terms? Is your contract for a specific time period? Once you figure this out, notify your current payroll provider that you’re canceling your account with them.

You don’t want to miss any payrolls, so consider the transition time. Early communication ensures a smoother transition. You also need to clarify if you need your current provider to file W-2s at the end of the year or if your new provider will handle it. Duplicate filing requires amending W-2s, causing unnecessary stress.


4. Gather The Data And Resources You Need

You will need to gather information and data to set up payroll with your new provider.

  • Business data: your legal business name, business structure, and EIN.
  • Employee information: Name, address, Social Security number, earnings, and deductions. You’ll also need tax withholding information and direct deposit information.
  • Payroll information: pay stubs, payroll schedules, and any information regarding 1099 and terminated employees.
  • Payroll tax data: tax deposit dates and amounts, payroll tax account numbers, and tax returns.

It’s best practice to get records going back to the beginning of the year. Getting this information to your new provider as quickly as possible is essential to avoid not paying your employees on time.

Related: 3 Tips You Need to Maintain Payroll Tax Compliance for 2022


5. Liaise With Your New Provider For A Smooth Transition

A new payroll provider who cares about your success will play an active role in making the transition smooth. It’s in their best interests, too. Onboarding new customers with care and attention sets up a working relationship built on trust and support.

Most payroll transitions should take around fourteen business days. Your new provider will tell you exactly what they need and provide checklists to avoid missing anything. Partnering with small business payroll specialists makes the switch easier.

It’s important to let your employees know that you’re making the switch. It shouldn’t affect them, but it’s best practice to help them print or save past pay stubs and how to navigate your new payroll software.


Switching Payroll Providers The Easy Way

Older systems require manual processes that make migration difficult. And if you don’t work with a provider that puts people first, you won’t get the experience you want and need.

It’s no use moving from one payroll provider to another without knowing exactly what you’re investing in and what you’ll get.

At ConnectPay, we pride ourselves on providing a tailored service to our clients. When you connect with us, you’ll get the following:

  • An expert guided business review to identify gaps and opportunities in your payroll process.
  • Access to our Connected Payroll network of local, reputable partners in HR, insurance, and retirement planning to assist your needs.
  • 7-day premium onboarding with Connected Rep guidance and support.

Switching payroll providers is easy when you know how and have the support you need. Exploring your options? Get in touch with us!

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Published by Matt Venuto November 14, 2022