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THE ESSENTIAL GUIDE TO SWITCHING PAYROLL SYSTEMS [2024]

Published

Jun 25, 2024

Author

The Rippling Team

FinanceHR


TABLE OF CONTENTS

 * 5 reasons for switching payroll providers
 * When is the best time to switch payroll companies?
 * How to choose the right payroll service 
 * How to change payroll providers seamlessly

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While switching payroll providers can be a big headache for many companies,
there are often good reasons to bite the bullet and make the change. For
example, it’s important to choose a payroll system that can grow with you and
has the full set of functionalities that you not only need now—but also as you
scale. As your business evolves, the right payroll provider will keep up with
your changing needs and help drive your success.

This guide will walk you through the ins and outs of switching payroll systems,
including how to know when it’s time to look for a new provider, when is the
best time to make the switch, and how to choose your next payroll provider to
avoid making another change in the future. 

With Rippling Payroll, you can pay all your employees and contractors in the
same pay run—plus, Rippling syncs all your business’s HR data with payroll so
you never have to use a calculator or manually enter data, like hours or
deductions. And when you use Rippling Payroll as part of our comprehensive HR
suite, you get a powerful, natively built platform that covers your whole HR
tech stack—HRIS, benefits administration, recruiting, performance management,
learning management, and more—so you can run payroll in the same system you rely
on for other HR management tasks. 




5 REASONS FOR SWITCHING PAYROLL PROVIDERS

How do you know when it’s time to switch payroll vendors? Here are five
indicators to look out for.

1. YOU’VE OUTGROWN YOUR CURRENT SOLUTION

You may be hiring more employees, opening new locations, or dealing with complex
compensation structures. But whatever the reason, as your business grows, its
needs and payroll requirements will naturally evolve. If your current payroll
provider can’t adapt, you need one that’s better suited to your needs now and as
you continue to scale in the future.

This is especially important considering 83% of HR leaders say they’re expected
to do more now compared to three years ago. In addition to a new payroll
provider that gives you access to scalable solutions that can accommodate your
growing workforce, you need tech that can help your HR team streamline their
operations.

2. YOUR CURRENT SOLUTION ISN’T SEAMLESSLY INTEGRATED WITH THE REST OF YOUR HR
TECH STACK

Your HR team has a lot of responsibilities: payroll, benefits administration,
recruiting, performance management, learning management, and so on. While they
probably use software to help streamline (or even automate) some of that work,
most HR platforms—even the ones that claim to be “all-in-one”—are made of siloed
modules typically pieced together through acquisitions. The systems don’t work
together, which means your HR admins are stuck manually re-entering data across
multiple parts of the tech stack, risking errors and wasting time.

If this sounds familiar, switching providers can offer access to a natively
built platform that has not just payroll, but all the key functions your HR team
needs, built from the ground up to work together seamlessly. 

Having multiple, disconnected systems has hidden costs. For example, if your
payroll software doesn’t integrate with your time-tracking solution, it won’t
notify managers when employees get near their overtime thresholds, which can
result in unexpected overtime costs. If your current provider doesn't integrate
with your existing HR, accounting, or non-wage systems (such as time-tracking
systems or retirement plans), switch to a new system that helps streamline your
processes, reduce manual data entry, minimize errors, and save time. 

3. YOU’RE HAVING COMPLIANCE ISSUES

64% of HR leaders say they lack the time and resources to meet their most
pressing compliance challenges, so they need software that helps them stay on
top of local, state, and federal regulations. That includes things like filing
payroll taxes on time and with the right agencies, creating new tax accounts for
new hires or employees who move to new jurisdictions, enrolling employees in
mandatory training courses, and providing you with compliance alerts based on
where your employees are located (like when an employee’s pay doesn’t meet the
minimum wage for their location).

Common errors payroll providers can make include mistakes on tax forms, failing
to update tax rates, tracking employee hours incorrectly, filing taxes late,
miscalculating overtime, payroll discrepancies, and data duplications. These
kinds of errors can create a huge time suck for your HR team and harm your
employees—not to mention you could be liable for tax penalties if the mistake
isn’t caught and corrected in time. 

When looking for a new payroll company, focus on tech that can help with one of
your most important responsibilities: staying compliant with regulations at the
federal, state, and local levels. For even more peace of mind, look for a
payroll service provider that automates key compliance tasks to help your team
save time and ensure you don’t miss important deadlines or risk costly errors.

4. YOUR CURRENT SOLUTION ISN’T USER FRIENDLY

While many HR software solutions are built with admins in mind, your payroll
administrator probably isn’t the only one who accesses and uses your payroll
platform. And if your HR admins have ever had to log in to make simple settings
changes or retrieve documents (like paystubs or W-2s) for employees because your
current system won’t let them do it themselves, you know how important it is for
your payroll platform to be user friendly and empower everyone—from managers to
employees—to self-serve.

Look for a payroll solution that’s intuitive and includes employee self-service
features, like an employee app or dashboard, so anyone can sign in to update
their own employee information or access their payroll and tax documents. But
don’t just think about employees; make sure it has the payroll processing
capabilities that will make life easier for your payroll administrators, too.

5. YOU NEED BETTER CUSTOMER SERVICE

The final indicator that you need a new payroll vendor? When your current
solution’s customer support doesn’t meet your needs.

Maybe you discovered a payroll error, but it took too long—a day or more—to get
a response from your payroll vendor to correct it. Or you find that when you
contact support, you have to explain the problem you’re encountering more than
once. The bottom line: Nobody wants to deal with time-consuming, frustrating
customer service. And when it comes to payroll errors, time is of the essence.

When looking into new payroll solutions, consider what options they offer for
contacting their support team. Email? Phone? Live chat? A dedicated support team
just for your business? You can also see if they publish their support stats so
you can directly compare different solutions against one another.

Payroll so powerful it can run itself

See Rippling Payroll


WHEN IS THE BEST TIME TO SWITCH PAYROLL COMPANIES?

You can leave your current platform at any time during the year, but changing
payroll providers mid-year can cause complications. Switching any of your HR
tech stack requires planning and forethought, especially when it comes to the
timing. Generally, there are two times that are considered the best for
switching payroll platforms:

 * The beginning of a new quarter: Time out the switch so you’re fully onboarded
   and start using your new payroll provider at the beginning of a new quarter.
 * The beginning of a new year: Time out the switch so that you kick off the new
   calendar year with your new vendor. This is the best and least complicated
   option.

If you transfer to a new payroll system at the end of the year (which means
you’ll start to run payroll with the new provider at the beginning of the new
year), you won’t need to enter employee wages from the previous year (also known
as “historical payroll data”). This saves a ton of time and makes your financial
records easier to follow. And because you’ll start payroll with the new vendor
on Jan. 1, they’ll have everything they need to file both your quarterly and
year-end taxes. 

Switching systems at the start of a new quarter means you’ll have to transfer
historical payroll data, but it’s still simpler than mixing and matching vendors
within a single quarter. If you have used multiple payroll vendors within one
quarter, it can become messy from a tax perspective: You may have to put in more
effort to pull data, transfer records, and file taxes. 

Whenever you decide to time the switch, check the terms of your current contract
to make sure there are no cancellation fees or notice periods. Give yourself
ample time to complete the switch before your target date to start using the new
system.




HOW TO CHOOSE THE RIGHT PAYROLL SERVICE 

When choosing your next payroll system, you want to make sure it’s the last time
you’ll have to switch—so look for a modern solution with the integrations and
automations your business needs. Learn more about how to choose payroll software
for your business, and consider these key questions when evaluating different
payroll solutions:

 * Do you need a standalone payroll solution or a natively built HR platform
   that seamlessly combines payroll, benefits administration, recruiting,
   performance management, learning management, and more?
 * Can it accommodate a business of your size? What about as you grow and scale?
 * Does the software’s pricing fit into your budget?
 * Does it integrate with the other apps and tools you use, like your time
   tracking and accounting software? Does it integrate with your general ledger
   (GL)?
 * Does it support your employees’ preferred payment methods? Can it handle
   various payment types, like salaries, hourly payments, vacation pay, expense
   reimbursements, commissions, bonuses, and other taxable benefits? How far in
   advance will you need to submit and approve payroll? Can you run payroll
   off-cycle?
 * Can it automate repetitive tasks to help your team save time?
 * Is it intuitive and user-friendly enough for everyone on your team to
   self-serve?
 * Is it customizable to your team’s needs, or will you have to create manual
   workarounds to complete certain tasks or build workflows in ways the software
   can’t accommodate?
 * What compliance features does it offer? Does it proactively surface
   discrepancies and errors in pay runs? Does it automate quarterly and annual
   tax returns, W-2 preparation/filing/distribution, tax remittance, and complex
   tax filings for multi-state workers?
 * Does it automatically update payroll when there are employee changes, like
   when an employee moves to a new state?
 * How is the customer service?
 * Can it build a variety of reports, including custom ones such as new-hire
   reporting?

As you can see, there’s a lot to consider when evaluating payroll providers. Or,
you can switch to Rippling. Rippling Payroll is intuitive, easy to use, and has
a 100% error-free guarantee on every pay run. It also offers 500+ integrations,
automatic and accurate tax registration and filing, and a dedicated mobile app
where your employees can view their W-2s and paystubs, submit expenses directly,
and more.

With Rippling, you can:

 * Pay employees and contractors in the same platform—and the same pay runs
 * Manage time and attendance natively
 * Run unlimited off-cycle pay runs at no extra cost
 * Set up multiple pay schedules, pay rates, and pay types in just a few clicks
 * Add recurring reimbursements (like cell phone payments, gym memberships,
   etc.) that are automatically paid out every pay period, monthly, or at
   whatever interval you choose
 * Automatically calculate prorated pay runs for new or promoted employees
 * Manage all currency conversions, including payroll adjustments
 * Automatically calculate overtime for every country
 * Make changes after submitting payroll

Manage every tool your payroll depends on in one integrated system

See Rippling Payroll


HOW TO CHANGE PAYROLL PROVIDERS SEAMLESSLY

Once you’ve selected a new payroll provider and you’re ready to make the switch,
follow the steps below.

STEP 1: PLAN IN ADVANCE

First, check whether your current payroll system requires a notice period, and
be sure to give yourself enough time for migration and implementation. When you
choose your target start date with your new payroll provider, they should be
able to guide you on how much time you’ll need for the transition.

Notify your old payroll provider that you’ll be terminating the service and
when. While it may be uncomfortable to tell them you’re switching to a new
provider, it’s necessary. You may need them to help migrate data to the new
platform, and if you simply tell them you’re no longer running payroll, some
vendors may inform the IRS that your business is closed.

STEP 2: GATHER INFORMATION FOR YOUR NEW PAYROLL VENDOR

Your new payroll provider should request any information they need. They may ask
for:

 * Company information, including your business name, business structure, and
   Employer Identification Number (EIN)
 * Payroll information and paystubs/payroll journal for all current employees,
   contractors, and terminated employees 
 * Payroll tax returns, tax deposit dates, and amounts
 * Tax authority registration information, such as payroll tax account numbers
 * A voided check for your payroll or tax account
 * Employee information, including names, addresses, social security numbers,
   earnings, W-2s, withholding elections, deductions, and direct deposit details

Note that if you’re transferring mid-year, you may need to provide payroll tax
returns, copies of quarterly reports, and copies of quarterly tax returns for
the current year.

STEP 3: MIGRATE PAYROLL DATA

Set up your new account with your payroll platform. You may need to manually
upload all of your payroll and employee data, but many platforms handle this on
your behalf. 

STEP 4: NOTIFY YOUR EMPLOYEES ABOUT THE CHANGE

Once your new account is open (but before running payroll with the new
provider), let your employees know about the change. 

The switch to a new payroll provider should be relatively seamless for your
employees. However, because they’ll lose access to information from the previous
vendor, notify them that they may want to access and save their paystubs while
they’re still able to log into the previous system. Advise them to also make
sure that their compensation and paystubs are correct after the transition to
the new vendor.

STEP 5: CLOSE YOUR ACCOUNT WITH YOUR PREVIOUS PROVIDER

After your new payroll service has confirmed that all of the data has been
transferred and nothing else is needed from the old system, finish closing your
old account.

STEP 6: RUN PAYROLL

The hard work of switching is (hopefully) done! Before your first payroll run,
double-check that everything has migrated correctly to avoid errors.

Take the pain out of payroll

See Rippling


Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal
advice. This material has been prepared for informational purposes only, and is
not intended to provide or be relied on for tax, accounting, or legal advice.
You should consult your own tax, accounting, and legal advisors before engaging
in any related activities or transactions.

last edited: 28. Juni 2024


AUTHOR


THE RIPPLING TEAM



Global HR, IT, and Finance know-how directly from the Rippling team.


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