How to Switch Payroll Companies

To Switch Payroll Companies

Have you decided to change your third-party payroll provider and switch over to another in quest of better accuracy, increased efficiency and cloud capabilities? Good decision indeed! At times, it becomes a must for a business to change payroll providers as it grows. 

In this article, we will discuss why the need arises to switch between payroll companies, how to switch between them and other important matters related to switching between payroll companies. 

 Let’s start from the very basics..

Payroll Migration and what it Includes

Simply speaking, the process of switching from one payroll provider /solution to another is known as payroll migration. It includes the following processes:

  • Deciding on a new payroll provider
  • Reviewing the contract terms and informing your previous payroll provider that you have decided to discontinue the service
  • Creating a checklist for the upcoming payroll migration
  • Customizing the new platform to suit your unique needs
  • Collecting and migrating the historical payroll data
  • Informing the employees about the new payroll system 
  • Running the payroll in the new system

Read Also-: Signing up Migrating Data from Sage 50 CA to Sage HR and Payroll

When do you Need to Switch to a New Payroll Company?

There are several reasons why you may need to change to a new payroll company:

  • The needs of your business have changed
  • You are not satisfied with the performance of your present payroll provider
  • your present payroll provider has not quite adapted to the advancement in technology 
  • Your budget has got increased/decreased
  • You have acquired new programs that do not work with your existing payroll software
  • Activities related to merger & acquisition
  • You are continuously troubled by payroll errors with your present payroll company

When to Migrate your Payroll Data?

The end of the year or end of the quarter is regarded as the best time to switch payroll providers. Getting ready to switch to a new payroll provider at the end of the year gives you a whole new start altogether. It also means you will not need to enter employee wages from the previous year. This saves a lot of time, especially, if you are a small business. Similarly, when you switch to a different provider at the end of a quarter, you will still have to transfer historical data. However, in this case, you will have the additional benefit of filing taxes for the new quarter with the new provider. 

Please note that you can switch to a new payroll provider any time during the year. But, you would do well to approach the switch strategically so that it becomes a smooth one.

The Process of Switching to a New Payroll Provider

Before you actually start the migration process, make sure to ask certain questions to your new provider. This will help you prevent possible misunderstandings and errors. Here are the questions you must ask-

  • What are the payroll features they offer?
  • What support can they provide during the build phase?
  • Does their payroll service have adequate provisions for privacy and security?
  • What is the average ticket time maintained by their technical support team?
  • Does their payroll software integrate seamlessly with other software programs used regularly?
  • If you have specific needs such as special pay rules, employees across multiple states, etc, how can the provider accommodate these?
  • What is the average customer retention of the provider?
  • Can they provide self-service access to the employees?
  • What is the fee structure?
  • Is technical support included in the fee package?

List the above questions (and others that may come to your mind) before you proceed with the demo. Make sure to include customized questions unique to your organization.

Step by Step Procedure to Switch Payroll Companies

Please follow the sequential steps below to ensure a smooth transition-

Total Time: 35 minutes

1st Step: Schedule a Demo

🔹 As soon as you decide to switch payroll companies, start exploring your options.
🔹 Do not terminate the contract with your present payroll provider till you have found a better alternative.
🔹 After you have shortlisted a few, ask them for a payroll demo.
🔹 This will help you determine which payroll provider will ‘best suit’ your unique needs.

2nd Step: Ask for a Proposal

🔹 Once you have zeroed in on the payroll provider, ask for a proposal.
🔹 Collect all the information related to your payroll in advance.
🔹 Be crystal clear about the payroll modules you want.
🔹 Ask for a proposal with proper break-up so that it becomes easier for you to choose the payroll modules, depending on your budget and priorities.

3rd Step: Chalk out a Business Case

If you are not the only decision-maker in your organization, chalk out a proper business case, detailing the need to change payroll providers. Based on the information you have gathered so far, develop a comparison documentation of different payroll services. Present the comparative statement to the stakeholders, get the necessary approval and move forward.

4th Step: Review your Contract

🔹 The next step is to review your contract with the prospective payroll provider.
🔹 Find out if the roles, responsibilities and applicable penalties related to both the parties involved are jotted down properly.

5th Step: Give Notice to and Request Information from the Present provider

In this phase, you need to inform your present payroll provider about your decision to switch to a new one. There is a whole lot of information you will need to request from your current provider before going ahead with the transition. Such information will differ, based on your payroll. Here, we are listing some important ones-
🔹 The legal name and address of your organization
🔹 The type of business 
🔹 Payroll records including employee data, payroll tax returns, payroll registers reports and pay stubs
🔹 W-2 forms
🔹 State unemployment and insurance number
🔹 Employee information: to set up profiles within the new payroll platform
🔹 Federal Employer Identification Number
🔹 Voided check

6th Step: Coordinate the Tax Filings

The end of the year or end of the quarter is regarded as the best time to switch payroll providers. However, you need to make sure if your prospective payroll provider will handle tax filings depending on the timing you have scheduled for the transition. You need to communicate accordingly with both the old and the new payroll providers.

7th Step: Intimate the Key Stakeholders

🔹 In this stage, you need to inform your employees and the key stakeholders about the switch. 🔹 To maintain transparency, you should share the risks, benefits and impacts of switching to the new payroll provider.
🔹 If applicable, arrange for proper training to familiarize them with the new environment.

8th Step: Transition and Running

In this phase, you are ready to run your new payroll solution. Before running the payroll in the new system for the first time, please review the payroll journal carefully. it will help you identify and resolve discrepancies if any.

Points to consider, if you are a Small Business

If you are a small business, you need to ponder over many things before deciding on the new payroll provider to switch to. Ask the following questions to yourself-

🔹 Is the Solution Designed to Serve Small Businesses?

Have a detailed discussion with the new provider. Understand if their payroll solution is designed specifically to serve the needs of small businesses like you. Also, ask how your employee count will influence the pricing structure and features being promised to you.

🔹 What are the Growth Prospects of the Payroll Solution? Will it grow with you?

Try to assess the longevity of the payroll options provided to you. Ask if this software can accommodate more employees if your business scales up tomorrow. Also ask if additional features or capabilities can be provided later on, to cope with your business growth.

🔹 Does the Software Include the right Modules and Features?

Please assess if you are getting all the important payroll features ‘under one roof’. Juggling different solutions offered by different providers is quite a pain. An all-inclusive solution can minimize your effort and streamline your processes at the same time

🔹 Does the Payroll provider offer Comprehensive Customer Support?

As a small business owner, you are often tied up with many things. You can’t be expected to be involved in each and every intricacies related to the payroll.  This is why comprehensive customer support is a must, to resolve the bugs and errors that are so prevalent in any accounting software. Make sure your new payroll provider continues to provide proper support and service, after the initial onboarding period as well.

In the sections above, we have discussed how to switch payroll companies and other related matters. If you are still having any difficulties while migrating your payroll data or if you have any queries, you may consult with some of the authorized Sage experts.

Accounting Professionals & Specialized Experts

Want quick help from accounting software experts? Get in touch with our team members who can install, configure and configure your software for you. Proficient in fixing technical issues, they can help you quickly get back to work whenever you encounter an error in Sage software. Our team is available 24/7 365 days to assist you. To get in touch.


💠FAQs💠

What are the Important Points to consider before starting the Data Migration Process in Sage 50?

By keeping in mind the following points, you may avoid data migration issues that may pop up in future. 
🔹 Make sure your data is error-free 
🔹 Take proper backup of your data
🔹 You must run your file on Sage.STO.ServerMigrator.exe. Do not run it on Sage.STO.ServerDataMigrator.exe. 
🔹 The Sage data migration tool works with accounting updates 6.3 and higher. 🔹Therefore, you should upgrade the software to version 6.3 before initiating the data migration process. 
🔹 Before starting the migration process on a new server, check the administrative rights for the server. Also, do not forget to minimize the read permission in the old server.

What Information do I Need to Provide while Switching Payroll providers?

In general, you need to provide certain basic information which may include:

🔹 Your company’s information, such as its legal name, state and federal identification numbers, address, and corporate structure
🔹 Past forms filed and tax returns submitted
🔹 Banking information for writing live checks or making direct deposits
personal information related to your employees, direct deposit information and  W-4 details
You can always get in touch with your new provider in case you have any queries or need any assistance while providing this information. Usually, such providers offer a template to make you familiar with the data they need and when they need it.

How to Migrate your Data with the Sage Migration Tool?

With this tool, you can easily move your data and programs to a new server. 
🔹 Log on to the new server with admin credentials
🔹 Install the Sage Timberline Office Accounting. It will provide you access to the Sage Migration Tool on the new server
🔹 On the new server, browse to C:\Program Files (x86)\Timberline Office\Shared)
🔹 Now launch the Sage migration tool 
🔹 Run the Sage.STO.ServerMigrator.exe program 
🔹 Click Browse 
🔹 Go to the old server and locate the 9.5 folder 
🔹 Click on the Validate button to confirm the log file path, old server location and new server location
🔹 Tab the Migrate button to initiate the migration process
🔹 Once complete, click on the Close button
🔹 Review the Server Migration Log. It is usually located in the path- \\[servername]\Timberline Office\9.5\Accounting\Migration\.

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