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How and When to Switch Payroll Providers

March 23rd, 2023 | 9 min. read

By Bret Asmussen

Why does changing payroll companies seem so difficult? Small business owners will stay in a bad situation for a variety of reasons, but they mostly think about the extra effort it will take to ensure accuracy and worry that they are not doing it at the right time.

At CSI Accounting & Payroll, we onboard clients from other payroll companies year-round - and we’ve been doing it for over 20 years, so you can trust that we have our system down. We make sure your switch is done right by addressing these common questions:

  • When is the best time to switch payroll providers?
  • What do I need to do when switching payroll providers?
  • How will a new payroll provider make sure the switch is easy for me?


When to Switch Payroll Providers

You already know the downsides of doing your own payroll. That’s why you outsource! However, not all payroll services are made equal.

When is the best time to change payroll companies? Honestly, the best time to make the switch is when you start questioning if you should. There is no benefit to you to stay in a bad situation with your current provider.

To be clear, if you’re talking about a time of year, there’s really no bad time to switch - there are pros and cons for any time of year. However, there are a few times that are better than others.

End of Year

Most people will tell you that the very end of the year is the best time to change payroll companies. At the end of the year, your balances are all at zero. This means you don’t have to worry about historical data.

There is a con to this, though - it’s the busiest time of year for payroll companies. Do you want them to handle your conversion while they’re swamped? Luckily, the team at CSI has a good system in place, and we stay ahead of the curve whenever possible. You won’t have to worry about us falling behind.

End of Quarter

The other best times to change payroll providers are at the end of the quarters throughout the year. At these times, there is a nice break for quarterly filings.

Your payroll company will still need to import all of the information from the previous quarters of the year, but the only risk to this is that mistakes can occur when inputting data. A quality payroll provider will minimize errors and back up their work with great customer service - just like CSI does.

What to Do While Switching Providers

When you’re onboarding with a new payroll company, how do you make sure it goes smoothly? While a quality provider will do all of the setup work in their system, they will also sit down with you and go over a checklist of items you need to complete. It may contain items like these:

  • Third-party or agent access to state taxing authorities. This includes unemployment and withholding taxes.
  • EFTPS enrollment. They should assist you with this process.
  • Bank information. This is to complete a bank verification for ACH.
  • Other necessary information that may be encrypted by software. Examples include bank account information or employee SSNs.
  • Details on your desired payroll. Optional feature add-ons, frequency of pay, etc.

At CSI, we offer personalized support to make sure we get everything that we need, so you can breathe easy! This is only one of the benefits of outsourcing small business payroll.

How a New Payroll Provider Will Ensure an Easy Switch

A quality payroll company will guarantee satisfaction with your switch. This includes an easy, accurate transfer - and if a detail somehow falls through, a quick correction from first-rate customer service. Smaller providers tend to have much better accuracy and customer service than big-name providers. Compare them here!

You’ve handled your portion of the transfer, but what will your payroll provider do? There is a relatively standardized process to ensure your payroll data is transferred to their system correctly and that their system uses the data to create reports correctly. These are the steps a quality service will follow:

  • Obtain online access to your current system. This is used to pull the necessary reports and data. At CSI, we are very familiar with the big-name providers’ software and can do this with ease.
  • Transfer your data into their system, then run in parallel. This means they compare a payroll that you ran to what their system says to make sure the numbers come out the same. 
  • Compare Forms 941. The same analysis is done here; the forms will be compared to their generated reports. All data comparisons will help you feel confident in receiving accurate Forms 941 and W-2.
  • Automatically transfer sensitive information. This includes bank information and SSNs to eliminate human error. They are then double-checked due to the importance of this data.

Change Payroll Companies With Ease

Change can be scary. When you’re not happy with your current payroll provider, you become comfortable in your own misery. You may think the devil you know is better than the devil you don’t, but that will keep you complacent.

Now that you know about the best time to switch and the steps that you and your new provider can take to ensure an easy change, you can feel confident in your decision to move forward.

If you want to have a discussion about whether or not CSI Accounting & Payroll is the right fit for your business, schedule a free consultation by clicking the button below:

Not ready to talk? That's okay! First, you can download our Small Business Payroll Kit here, which includes:

  • A year-end payroll checklist
  • Payroll tax filing calendar
  • Tips on how to understand the basics of payroll reports
  • Advice on when to contact your payroll specialist

Bret Asmussen

Bret began working at CSI in 2007. Over the years, he worked his way up from an entry-level marketing position to his current role of manager of our payroll service. Bret is largely responsible for the growth of our payroll division over the last several years. His previous experience and knowledge in sales and management are exemplified in his success here. Bret has a college degree in Computer Networking, a skill that certainly comes in handy in an office environment. Bret is also a Certified Payroll Professional (CPP). Fun Fact: As an active duty member of the United States Marine Corps, he served in Operation Desert Shield and Desert Storm.