It is not unusual for companies to become so dissatisfied with their payroll providers that they decide to switch. Any such decision is followed by the inevitable question of when to actually do it. In the old days, prior to computer technology, switching from one provider to another was a nightmare. It is not so bad now. Still, the end of the year is the best time to switch.
Note that competition among providers is such that most payroll companies will go out of their way to make migrating as smooth as possible. Yet switching in the middle of the year can create unnecessary headaches. Waiting until the end of the current quarter is a better choice, but it will not eliminate questions of who is responsible for what. Switching at the end of the year is still the best option.
Here are the top two reasons to switch payroll providers at the end of the year:
1. Less Confusion
Switching payroll providers involves migrating data. The more data you have to migrate, the greater the chances of confusion. Unfortunately, the employer is the one in the position of having to clear up the confusion. That can make an already stressful situation even worse.
Imagine attempting to switch in the middle of the year. Not only do you have to migrate employee and accounting information, but you also have to consider payroll taxes, withholding, submitting tax payments, quarterly filings, etc. Who will handle what?
Your old provider has certain obligations under the arrangement you had with them. Your new provider also has obligations in terms of getting you up and running in their system. There will undoubtedly be some overlap involved. With that overlap comes confusion. Is one party responsible for a certain task, or is the other? Where services are duplicated, should one party acquiesce to the other?
The danger here is that some tasks get left undone. They don't get done because each party is expecting the other to handle them. Only after it's too late does anyone realize what has happened. All of this is significantly minimized when you switch at the end of the year.
2. Starting Fresh
The second benefit of switching at the end of the year is starting fresh with your new provider in January. Nothing is held over from the previous year, from an administrative standpoint. You and your new provider can spend the last several weeks of the year migrating employee data. Once that is done, you are set to go.
Your new provider can create fresh online accounts for each employee. They can start fresh with W-4's, time tracking, etc. without having to worry about migrating any old data. The result is a smoother process with fewer hiccups. It is a lot like buying a new car. You sign the papers, put the key in the ignition, and off you go.
When Year End is Not an Option
There are times when circumstances dictate the need to switch payroll providers immediately. These are times when waiting until year's end is not an option. The good news is that it's not the end of the world. Digital technology has made switching mid-year easier than ever before. It can be done, even with the extra work involved.
Switching payroll providers is mostly a matter of data migration. In light of that, switching at the end of the year is the best way to go because it means less data to migrate. Where data migration can be reduced, so can all the headaches that com