There could be several reasons for you to change payroll services. These include a lack of integration, poor service, and excessive charges. Companies frequently tend to get into a state of panic before deciding to change payroll services.
As a result, systems, people, and their relationships get pressured and jeopardized. That is, quite understandably, detrimental to the growth of the business.
Occasionally, even the most precious employees can perform poorly due to stress, leading to significant business losses. Thus, it is imperative for your business’s prosperity that you switch payroll services as soon as possible.
Of course, you might be wondering what the best time of the year to do so is. In our opinion, that time is the beginning of the year. This article discusses the reasons behind this and more details about the same.
What is the Best Time to Switch Payroll Services?
If you start with a new payroll services provider right at the start of the year, it will spare you the inconvenience of having to collect all your quarter-to-date and year-to-date information from your previous provider.
Thus, your new payroll provider will be able to begin afresh for the upcoming year. You will be able to operate on a clean slate without any carryovers from the previous year to file. That is especially beneficial for owners of small businesses.
On the other hand, switching throughout the year will require you to transfer the historical data, as well as re-enter data.
A mid-year switch can complicate things a bit. It can lead to questions regarding whether the previous or present payroll provider is responsible for some tasks. In the case of quarterly switches, you can start filing and processing that quarter’s taxes with your new provider.
However, you will still have to go through the process of transferring historical data. Thus, it is better to switch at the beginning of the year and let your new payroll service begin on a good note.
Ensure you give yourself ample time to research and gather sufficient information to make the transition relatively smooth. It is essential that you have a detailed conversation with your financial advisor or accountant before changing payroll services.
They are experienced people who will give you good advice and help you with the procedure. Below are some simple but essential steps to transition payroll processing at the beginning of a new year.
Ask Certain Questions to Online Payroll Services before Deciding
When changing payroll services, you should ask every payroll service provider some important questions before deciding. For example, you should find out how long their company has been in business. That will help you ascertain whether they will stand by you through thick and thin or not.
Is it For Your Business?
The size of businesses can be very relative and subjective. Therefore, you must find out whether the given payroll service will be able to help a business of your size or not.
People tend to choose online payroll services because they are unfamiliar with the concept of payroll and taxes. Thus, you should make sure that the payroll service has a customer care team if you run into any problem.
Do They Provide Customer Service?
Do not forget to enquire about customer service hours and methods of accessing the same. Mistakes regarding taxes and payrolls tend to be common. Therefore, you should go for payroll services that willingly help you when anything goes sideways.
Look for Reviews
Finally, do not forget to go through online reviews from other customers regarding their service. Although you can ask this question directly as well, looking up reviews yourself will be much better. You should do your best to go for reputed review websites for this purpose.
Keep in mind, though, that a few negative reviews shouldn’t deter you. Acknowledge those points, but pay attention to the positives as well. That said, a huge list of negative reviews indicates that you need to back off.
Decide Your First Pay Date for the New Year
You should try to set your final payment date with your previous provider and your first pay date of the upcoming year with your new provider. That will allow you to make everything as straightforward as possible.
For example, if your pay period is from December 15 to December 31, 2022, and your pay date is January 6, 2023, this particular cycle should be with your new provider. That is because it will be reported on your 2022 W-2s.
On the other hand, your former payroll services will come up with the 2022 W-2s. Payroll taxes are not concerned with your pay period itself, but rather when wages are paid.
Proceed to Close Your Payroll Account with Your Former Payroll Provider
Make sure you save copies of all payroll reports, annual tax forms for your records, and employee details before closing your account with your former payroll services.
Remember that some payroll providers can limit your access to this data after your account has been closed. Thus, you should not forget to download or openly ask for this material before closing your account.
Keep Your Business Details Ready
You should have the given information prepared when you change payroll services:
- Authorized business name and address, as registered with your EIN.
- Federal Employer Identification Number (EIN)
- State Employer Identification Number
What to Do If You Need to Switch in The Middle of a Year?
In case you need to switch payroll services in the middle of a quarter, you should convey this to your previous payroll provider. After that, proceed to inform them about the tax payments and filings that they need to make for you. They need to refund quarterly taxes that have been collected but not submitted to the IRS or state to you.
Certain new payroll providers offer to recollect and submit those particular taxes for you. Ideally, your previous provider also needs to pay any state and federal income taxes collected.