How to Switch Payroll Companies

Payroll processing is a time-consuming task that requires great attention to detail. Often, an employer has other responsibilities to tend to; therefore, he does not have the time to do payroll. He may opt to hire a payroll company to handle all his payroll processing. For varying reasons, such as unsatisfactory service, he may decide to change payroll companies. Regardless of the cause for switching, the employer should perform certain steps when hiring another payroll company.

Instructions

Switching Payroll Companies

1. Check the credentials of the new payroll company. Many payroll companies are certified with the American Payroll Association. Although it is not guaranteed, you can trust their reliability more if they are certified. Do not be afraid to ask them for references, which you should verify.

2. Find out how many payroll processors they have. When you have a pressing payroll issue, it is imperative that you are able to contact your payroll professional as quickly as possible. Ensure the new payroll company is adequately staffed and that their response time is appropriate.

3. Select a new payroll company and set up a meeting with their representative. Read the fees carefully before agreeing to them. Most payroll companies charge a payroll processing fee, check fees, direct deposit fees, courier fees, and tax filing fees--all reasonably priced.

4. Give the new payroll company your bank information (account and routing number). They will need this information to set up employees' direct deposit.

5. Call your existing payroll company and/or send them notification via certified mail explaining that you are discontinuing your service with them. Do not terminate your agreement with them in the middle of a payroll cycle. It is better to do it at the start of the year (after W2s have been processed to prevent tax problems). But if you must, try to switch at the start of the quarter, or at the very least, at the beginning of a pay period.

6. Give the new payroll company power of attorney so they have the authority to handle your payroll tax matters, such as quarterly and annual federal and state tax filings.

7. Send all relevant payroll files (e.g. employees' payroll data and tax information) to the new payroll company. They will inform you of the most effective ways to send the files. A variation of methods may be used, such as e-mailing spreadsheets or via CD-Rom.

Tips & Warnings

• If you have a payroll administrator who will be responsible for transmitting the payroll to the payroll company each pay period, ensure that he or she receives training on the software or methods that the payroll company uses.

References

• Payroll Outsourcing Companies