When it comes to payroll, there’s little room for error.
If you’re experiencing glaring payroll mistakes, seeing more and more fees on your invoices, or just not getting the customer support you need from your vendor, chances are it’s time to begin transitioning to a new payroll provider.
Of course, switching payroll companies isn’t as easy as snapping your fingers and moving from one provider to the next. After all, there are tax and timing complications to consider.
When is the best time to switch payroll providers?
As it turns out, the best time to switch payroll providers is end of year, as your business is preparing to start fresh on January 1st. By switching payroll vendors at the end of the year, you can avoid having to track down and enter year or quarter-to-date records from your previous provider into your new solution. Instead, you can roll into a new platform on Jan. 1 and start with a clean slate and a lot less data entry.
January is one of the most popular hiring months. By switching payroll services, you can avoid having to retrain new hires later in the year, which is a bit of an added bonus. Also, many new tax laws take effect Jan. 1, so your payroll changes can take place on one fell swoop.
If a year end switch isn’t possible, you may be wondering if you have other options.
Can you switch payroll providers mid-year?
Even though January is the best time to do it in many cases, your business is free to switch payroll providers at any time of the year. Some companies actually prefer to switch mid-year when team members are out of the office and the business is running at a slower summer pace.
Just keep in mind that if you switch payroll providers mid-year, you’ll create a bit more backend work. For starters, you’ll have to speak with your former payroll provider to ensure you get the proper data from your previous provider—the last thing you want to do is pay more taxes than you owe due to miscommunication. Additionally, the previous provider will need to issue a refund for any quarterly taxes they collected on your behalf but didn’t submit yet.
Mid-year historical payment information
If you’re switching payroll platforms mid-year, you’ll need to provide your new payroll provider with a detailed list of YTD employee and contractor payments. This ensures your new provider has accurate pay information for the entire year, so they can create accurate tax filings for your workers. Historical pay information should include the name of every contractor or employee and the total amount paid in the current year from January 1 until your go-live date with your new provider.
YTD tax filings (if switching mid-year)
You’ll also need to provide your new payroll company copies of each of your quarterly federal and state payroll tax filings for the current year and the associated quarter-ended payroll report that matches the totals. A little extra work now to make sure the information agrees will save both your and your payroll vendors a lot of time at the end of the year.
Add it all up, and while it’s possible to switch mid-year, it’s much easier to do so at the end of the year.
Why you need to switch payroll companies
Switching payroll providers is never convenient. After all, you’re incredibly busy, and the last thing you want is to take on a new project. While it’s easy to continue with your current provider, the status quo won’t solve the larger issues at hand.
Eventually, your current payroll vendor will almost certainly make another error—and the ramifications could be significant. According to one study, 49% of employees start job hunting after just two payroll errors. In the age of the Great Resignation, can you really afford to lose employees?
On top of that, your business’ reputation is also at stake. Payroll errors reflect poorly on your company and strike a nerve with current and prospective hires. Just because 82 million U.S. workers have dealt with paycheck errors in the past doesn’t mean that your company needs to contribute to the problem.
Having the right payroll system in place will make your business operate more smoothly while guaranteeing all workers are paid promptly. This, in turn, boosts morale and decreases turnover — leading to greater productivity, lower costs, and better reviews for your business.
End of year is the best time to switch payroll providers
With the end of the year approaching, there’s no better time than now to switch payroll platforms and put yourself in a position to thrive in 2022 and beyond. It’s just a matter of picking a new provider, informing your current vendor that you’re moving on, and migrating to a new system.
Everee can help your business ensure a seamless migration — without any headaches. Our team will walk you through the process, providing total transparency and expert support along every step of the way.
To learn more about how Everee can help you solve your payroll challenges, request a free demo today.