End of Year is the Best Time to Switch Payroll Providers
Wednesday, October 30, 2019
Thinking about switching payroll providers?
A quarter of small business owners are shopping for a payroll provider near the end of the year. Some are fed up with the bad service they’ve received. Others are frustrated by payroll platforms that are not integrated with their business’s software and hardware. Maybe a vendor’s lack of attention has resulted in costly errors and penalties. Or perhaps a business owner is just tired of doing payroll with everything else on his/her plate.
Whatever your reason, the New Year is the best time to make a change.
Why? At the start of the New Year, there's no historical data to migrate from your old system into your new one. You also don’t have to go through the hassle of collecting all your year-to-date and quarter-to-date information from your old provider. Changing providers at the beginning of year allows your new payroll company to hit the ground running with a clean slate.
To make the transition go smoothly, be sure your last pay date of the year is with your old provider, and your first pay date of the year is with your new provider. For example, if you have a pay period ending in December 2019, with a pay date in January 2020, that cycle should be with your new provider since it will be reported on your 2020 W-2s. Your previous provider will prepare the 2019 W-2s. Remember, payroll taxes are based on when wages are paid, not when employees worked.
Also, don’t forget to take care of a few vital tasks before you make the switch:
Have copies of all your financial records from your old payroll company such as employee information and tax records.
Have tax filings from your previous provider that include Q4 2019 quarterly, 2019 annual, and 2019 W-2s.
Have basic business info about your company ready for your new provider, such as your Federal and State Employer Identification Numbers and bank account details.
You can, or course, switch payroll providers after January, but you’ll have more information to transfer and the added complication of whether it’s the former or current payroll provider’s responsibility to perform certain tasks.That brings us to the most important question – what should you look for in a new payroll provider? Not all providers offer the same level of service. Before you officially switch, ask the following questions:
What payroll features are provided? You want to do more than process payroll. You want a service that can help you with HR, recruiting and onboarding, time and attendance, and benefits administration – today and as your business grows.
Is the payroll system easy to use? You want an intuitive platform that eliminates data entry duplication. It should also be cloud-based, with a simple to navigate dashboard that allows you to view and automate activities, and generate pre-built reports.
Is the payroll system integrated? Does it connect payroll, hiring, time and HR to streamline back-office operations? Is it able to exchange data with accounting services, worker’s compensation, 401(k) and more?
Will the payroll service keep you compliant? You want to protect your business. You need easy access to certified HR professionals who can provide personalized guidance on HR issues, labor laws and federal, state and industry regulations.
Is the payroll provider experienced and reputable? Find out how long a provider been serving the payroll/HR community, and how many active customers it has? Ensure it provides a dedicated service representative who understands your business, serves as an extension of your team, and is your single point of contact for all service needs.
Payroll is far too important to your business to stay with a provider you’re unsatisfied with. If you’ve been toying with the idea of outsourcing payroll or changing providers, now is a good time to pull the trigger.