When is the Best Time to Switch Your Payroll Service?
Whether you’ve been following a DIY approach for your small business payroll or working with an online payroll service, you may be wondering if it’s time to make a change.
DIY payroll is time-consuming, and online payroll services aren’t created equal so you could be wondering if there is a better option out there to fit your business. Switching payroll providers may feel like a daunting task, and depending on when you make the change during the year, it can definitely be more involved. Below, we explain the best time to switch payroll services, what you should be looking for in your small business payroll journey, and what information you’ll need for a smooth transition.
When is the best time to switch payroll services?
The end of a quarter or the end of the year are the best time to switch payroll providers. While you technically can change at any point through the year, these times make the transition smoother. When you prepare at the end of the year to have a new payroll service in the new year, it’s a fresh start and you won’t be required to enter any employee wages from the previous year, which is a big win for small business owners. When you switch throughout the year, you have to transfer the historical data and data re-entry. With a quarterly switch, you still have to transfer the historical data but you can begin processing and filing that quarter’s taxes with your new payroll provider.
Questions You Should Ask Online Payroll Services
In addition to the points above, there are some more specific questions you’ll want to ask a payroll service when you’re trying to make a decision.
- How long has your company been in business? It’s important to know that your online payroll provider will be there for you during the good times and bad. You don’t want them to magically go out of business one night and leave you hanging with no way to pay your employees. While that may sound extreme, it unfortunately has happened, so choose a payroll provider who is built to last.
- Can you help a business of my size? The phrase small business can mean many different things. A restaurant may be small but employ over twenty employees, while a small bookstore may only have three employees. While there are many small business payroll options, some may be too small or too large for your business's needs.
- What are the customer service options? Chances are if you’re choosing an online payroll service, you don’t know a ton about payroll and taxes. Because of that, if you’re running payroll and run into a problem or have a question about your account, it’s important to have a customer care team that has your back. Keep an eye out for customer service hours, how you can get help (call, chat, email, etc.), and if they have any notable rewards for providing excellent customer service.
- What do other customers say? While you can directly ask this question, you might find better results by searching for online reviews. When searching, it’s important to look at reputable review websites. If you do come across some negative ones, it’s important to look but don’t always let them deter you. However, an endless stream of negative is a sign to stay away.
- Will I get help if something is wrong with payroll and taxes? Payroll and tax mistakes are common. Choose a payroll service that will help you if something goes wrong, especially if it ends up being their fault.
Payroll Transition Checklist
When you’re transitioning payroll providers, there are obviously some payroll and tax tasks you’ll need to do to make this happen. For a smooth transition make sure you have:
Business Identification Numbers
- Employer Identification Number (EIN)
- State withholding tax ID number
- State unemployment insurance account number
You should have previously collected the following forms from all employees:
- Form W-4
- State withholding tax form
You will need to classify workers as one of the following:
- A W-2 employee
- A 1099 independent contractor
How will you pay your employees?
- Direct deposit
- Paper check
Once your payroll company has the above information, they can begin to run payroll on your behalf.
At that point, you still have some responsibilities. Most importantly, you want to regularly check for accuracy regarding the following deductions from employee paychecks:
- Federal income tax
- State tax
- Local tax
- Medicare and Social Security taxes
- Other deductions, such as those for retirement plans and insurance.
You should also regularly review the following employer taxes:
With the help of your payroll company, you're also required to make the following federal and state tax deposits and filings:
- Form 8109 (Federal)
- Form 940 (Federal)
- Form 941 (Federal)
- Form 944 (Federal)
- State forms (depending on your state)
Lastly, here are some of the year-end documents that come into play:
The end of the year is always a great period of reflection and small business tasks are no exception. If you want an easy way to get new payroll help, year-end is a great time to make that happen. Give yourself plenty of time to research and get all of the information you need to make the transition as smooth as possible.
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This website contains articles posted for informational and educational value. SurePayroll is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, SurePayroll. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant. If you require legal or accounting advice or need other professional assistance, you should always consult your licensed attorney, accountant or other tax professional to discuss your particular facts, circumstances and business needs.