10 Things you need to know before switching payroll services

So you are frustrated with your current service provider and are ready to make a move to go to another company, here are some tips you may want to consider before switching: 

1. Payroll Records—Make sure you have all the payroll records before switching because your new company will require that information assuming you are transferring in the middle of the year. 
2. Tax Payments and Filings—Please make sure your current service provider will pay all your outstanding taxes and file any forms because the new service provider will not assume liability of what your prior service provider did.
3. Cancellation of Service—Please make sure you do not cancel your current service until the new service provider has completely set up your profile and wages because I’ve seen companies canceling services and unable to run a payroll because the new service provider does not have all the necessary information.
4. New Quarter or New Year—The best advice for business owners planning to switch payroll service is to start in a new quarter or wait until the following year.  The reason behind this is having a clean start with the new service provider; it will be easy to enter the Year-to-Date wages for W-2 purposes.  If you are starting in a new year, then there are no wages to carry over; it would be a simple setup process.
5. Customer Service—Please test out the customer service making sure there are live people answering the phones before switching services.  What good does it do if the price is really cheap and you can’t get basic customer service? 
6. System Functionality—Please verify that the system is able to support all your payroll needs such as 401K, 125 Plans, Internet access, garnishments, etc.  There are so many payroll companies out there, but not everybody can accommodate you like ADP or Paychex.  Some systems only supports up to 50 or 100 employees, you need to make sure they are capable of handling your situation.
7. Local vs National—When thinking about switching service providers, please make sure you know where they’re located at because if they’re local then you can print checks and get it deliver faster compare to a company in a different state.
8. Reports—Certain companies will offer certain reports such as Certified Payroll Reports, ask them about the reports that you need and make sure they can handle it.
9. Tax Debits—If you are tight on cash flow, choose a company that will debit your account two days before the due date; instead of paying the taxes on every payroll.  As you know payroll service providers make money from interest on your money and don’t pay it until the due date.
10. Year End Forms—Please make sure one company is handling your year-end forms such as w-2s, 940, etc.  Sometimes you would cancel service from the previous service provider and they filed a W-2 at year-end for you because you didn’t inform them to stop all the filing obligations.  The new company files a W-2 also and you’ll have two sets at year-end.

I hope you find this information useful as switching payroll service can be complicated, but as long as you understand the concept of it, you can make the transition smoother.