Migrating to a new payroll provider

Migrating. Switching. Leaving. Joining. Any time you switch to anything there is always a cost. There is disruption. There is change. You'll be doing things differently. You'll be interfacing with different people, things, surroundings, etc.

Many people stay with legacy systems for this reason. If it ain't broke, don't fix it. There is some truth to that, actually. But what if it is broke? Or you really want out? Then what? What should you be considering if you want to move payroll providers without experiencing too much pain that often comes with changing things?

Here is a basic, non-exhaustive list of some things you should consider when switching to a new payroll provider:

• eFile/ePay for state and federal government taxes and direct deposit for wages to employees  -  I never want to go back to paper filing and paying by check for anything, if I don't have to. Many payroll services will do direct deposit for employees and eFile/ePay for federal and state governments.

• Integration with your accounting system  -  It might not seem like much, but some payroll systems require manual journal entries into the accounting system. Depending on how many employees you have, this could be mildly annoying to hell on earth, with varying degrees in between.

• Price  -  What is the price of the new system under many scenarios of employee variability. Am I charged per employee? A flat rate? Do they offer contractor payments, with 1099-Misc reporting? How much extra is that?

• Reporting  -  Have you ever been through a payroll audit? If so, you know that you need access to awkward reporting dates... like May 1, 2014 to April 30, 2015. A good payroll provider should either have that flexibility or deliver the information into the accounting system in a granular enough way to pull it out of a report there.

• Customer Service  -  Payroll is complicated...FICA, Med, SS, 401K, 403B, employer taxes, employee withholdings, etc.  You'll want to be able to talk with someone who not only knows the ins and outs of payroll, but how they relate to whatever business entity type you are: S-Corp., Multi-member LLC, C Corp., etc.

• Day to Day User Experience  -  Is it easy to use? Can I make payments to employees in a timely way without much extra effort? Can I automate payments for salaried employees?

• Timing  -  Is this the right time for your business? Is it at the beginning of a new quarter? New Year? Timing is less of an issue now because most payroll providers will update your YTD activity, but it is still something to consider.

Overall, the landscape in payroll is such that you can usually change payroll providers to a payroll system with a user experience that suits you, without sacrificing much in the way of cost. Sometimes it helps to talk it through with someone else. Contact us if you'd like to explore the issues involved in switching your payroll system.