6 Things to Do When Switching Payroll Companies

Switching payroll companies can seem like a daunting task, but with the right knowledge and help, the payroll provider transition can be a smooth one.
6 Things to Do When Switching Payroll Companies
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If your current payroll provider isn’t giving you the service or experience you need, then it may be time to switch. Here are a few questions to ask when switching payroll providers that will make the transition better

  • What’s the best time to switch payroll providers?
  • What payroll services do I need?
  • How can I make the switch seamless?

We’ll answer these and more questions for when you’re changing payroll providers. 

Here’s a payroll transition checklist of things for you to keep in mind.

1. Pick the right time

You should be able to switch payroll providers whenever it is convenient for you if you’re not stuck in a contract. Still, changing payroll providers mid-year can add just a little bit of complexity. 

Is that added complexity worth dealing with a provider you don’t like? Absolutely not. Is it something to keep in mind? Ya, probably.

If you’re planning on switching payroll providers, doing so at the end of a calendar year is easiest. If you do it then, you won’t have to pull all of your historical payroll data. That can be a real pain if you have many employees, so it may be worth trying to avoid.

Switching midyear also takes more effort when it comes to tax payments and filings. You’ll have to figure out what your current provider will take care of and what your new provider will manage. 

If you can’t change providers at the turn of a year, then shoot for the beginning of a quarter. If even that won’t work, just make sure the switch doesn’t interfere with your employees getting paid on time.

There’s a lot going on here, but EddyHR’s payroll team can walk you through it and help you make sure everything gets done right.

2. Determine needed services

There is a whole lot that a payroll provider can provide, but they don’t all offer all of these services. 

Here’s what full-service payroll providers do:

  • Top-of-the-line customer service
  • On-time employee payment
  • Quarterly and annual tax returns
  • New-hire reporting
  • W-2 preparation, filing, and distribution
  • Tax remittance

Everything on that list has to be done. It just comes down to whether you’re doing it, or somebody else is. When you’re choosing your payroll provider, you have to make that same decision. 

Make sure that your new provider is fairly priced and provides all the services you need. If you’d prefer a more customized package, go with a company that can work with you on what you need.

"If you’d prefer a more customized package, go with a company that can work with you on what you need."

3. Check the terms of your current contract

Before you leave your current payroll provider, you should double-check the terms of your contract with them. There may be some terms in it about service cancellation fees and whatnot.

If your current contract is almost up, waiting to switch providers until your contract ends may be worth it. 

4. Gather info for your new provider

There’s a lot of information that you need to gather from your own company to get started with a new provider.

  • Employee info
  • Business info
  • Payroll Registers and/or Quarterly Reports
  • A voided check
  • Proof of FEIN (Federal Employer Identification Number) from the IRS
  • Payroll tax returns for the current year quarters
  • Copies of payroll registers for each check date of the current quarter
  • W-2 Forms
  • Copies of a payroll quarterly report for each completed quarter for the current year
  • Copies of quarterly tax returns for the current year
  • Employee profile information including, name, address, social security number, tax withholding information (information found on the W4 form), rates of pay, recurring earnings/deductions, garnishment paperwork, and direct deposit information.

You should keep this info on file because many providers charge fees to collect it after you leave their service.

The sooner you can get this information to your new payroll provider the better. If you take too long, you’ll run the risk of not paying your employees on time. Your new provider will tell you how much time they need to set everything up, but fourteen business days should be enough.

"You should keep this info on file because many providers charge fees to collect it after you leave their service."

5. Set up your new contract

Your new payroll provider should make this pretty simple, but you should be familiar with the details of the contract. You should know how to avoid fees, your responsibilities to keep things running, and any cancellation requirements.

Being very familiar with and sticking to your contract is a great way to keep a good relationship with your provider.

6. Notify employees

Make sure to let your employees know that you’re switching payroll providers. Ideally, the switch won’t affect them much, but every payroll provider has slightly different processes. 

"Make sure to let your employees know that you’re switching payroll providers."

Your employees will lose access to the old provider’s information, so have them print or save past pay stubs, and help them find the new ones.

Have your employees check their first pay stub with the new provider very closely. Tons of information gets transferred during payroll provider changes, so it’s smart to double-check that everything is correct moving forward.


Payroll is definitely the most important business expense, and it’s also one of the most frequent. You should enjoy working with your payroll provider and be totally satisfied with their service. If that’s not the case, it’s worth considering a switch.

EddyHR’s payroll solution is that full-service, veteran experience provider you need. Learn more about what we offer and our service guarantees.

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