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CPAs Recommend Switches Payroll Providers at the Beginning of the Year

During an annual review of business operations, it’s not uncommon for employers to identify payroll issues they may have missed or overlooked during the calendar year. Whether those issues relate to poor customer service from an existing payroll provider or shortcomings with in-house payroll practices, it’s important to identify the key issues and formulate a plan for switching to a new provider.


In this article, we’ll use certified public accountant (CPA) advice as the gold standard to help you determine the best time of year to switch payroll providers. By choosing an ideal time to switch, your business can bypass or minimize time spent on refund requests, migrating employee data and tax forms, and retraining new or existing employees.

Why Switch Payroll Providers

Switching payroll providers is a clear necessity when your current provider has made errors that have led to penalties or employee underpayment – affecting employee retention, company reputation, and budgeting. Of course, it’s equally valid to consider a new payroll provider when lackluster customer service has included poor communication, long wait times to resolve issues, or the lack of a consistent payroll representative to answer your questions.

Many employers also choose to switch providers because they simply want a more intuitive, mobile- and employee-friendly platform that can integrate with other HCM functions like timekeeping, benefits administration, HR management, and more. If your current platform feels outdated (or you’ve fielded employee complaints about issues with navigability or access), it’s wise to take the time to choose a new provider that offers all of the features you and your employees will value.

Ultimately, whether switching providers or selecting one for the first time, employers should prioritize finding a provider that offers reliable customer support, HCM integration options, mobile self-service for employees, and intuitive software that makes training at the onboarding stage a breeze.

When to Switch Payroll Providers or Transition from In-House Payroll

Switching to a new payroll provider mid-year can lead to substantial time spent requesting refunds, as well as extracting, organizing, and migrating all of the following data and more:

  • Quarter-to-date information from current provider
  • Year-to-date information from current provider
  • Historical and tax data (a recipe for errors, missing information, or discrepancies in the newly implemented system)

For these and other reasons, CPAs and other payroll experts consistently recommend switching to a new payroll provider at the start of the New Year. Beyond bypassing all of the tedium listed above, this approach also allows first quarter processes to run much more efficiently. For many employers, January through April is a “hiring spike” period when onboarding needs to be as easy as possible. With an integrated and intuitive platform, training hires for the new system is hassle-free. Starting in the new year also lets your new provider align your payroll processes with any newly instituted municipal, state, or federal labor laws. A fresh start in the new year allows your business to reassess and alter core payroll policies. If, for instance, you’d like to adjust pay frequency to accommodate employees’ financial needs, it’s ideal to make this adjustment with a new platform and at the start of the new year.

How to Assess a (Potential) New Payroll Provider

Even if you know it’s time to switch to a new payroll provider for the start of the new year; it’s important to keep some key service and functionality factors in mind to ensure you’ve found the right match.

    • Integration Capacity – How easy is it to integrate payroll with related HCM functions? A worthy provider will be capable of synthesizing your payroll with benefits administration, timekeeping, and HCM management (recruitment, hiring, and onboarding). Whether it’s streamlining the training of a new hire, managing worker’s compensation, or keeping 401(k) benefits organized, your new payroll system should be one part of a seamlessly integrated platform.
    • An Employee- and Mobile-Friendly Payroll System – The best payroll platform will use a cloud-based system that grants mobile access to employees (from multiple devices). It will also be intuitive and easy-to-use for new hires and existing employees who are switching from the current system. For employers, it should make data report generation simple and offer built-in automation that eliminates redundant tasks for HR staff.
    • Emphasis on Legal Compliance – An ideal payroll provider will set your business’ legal compliance as a high priority. As one aspect of customer service and legal protection, they must have dedicated staff who are experts in all municipal, state, and federal regulations that impact your industry, business location(s), and business structure.
  • Security and Customer Support Any payroll system houses a plethora of sensitive employee and employer information that, if compromised, could lead to major financial or legal issues. Talk with your potential new provider about the security measures they institute to prevent security breaches. Along the way, try to learn more about their customer service approach. Will you have access to the same (one, dedicated) customer service representative throughout your contract? How quickly will they respond to queries or requests for assistance? Don’t hesitate to ask for access to testimonials from current or former clients to better gauge the quality of customer service.

Simple Steps to Prepare for the Switch

If you’re interested in switching payroll providers for the start of the new year and you’ve located a provider that suits your needs, you’ll need to take the following steps to prepare for the transition.

  • Let your current payroll provider administer the final pay date of the current year. Once this step is completed, your new payroll provider will manage all future pay dates, starting with the first pay date of the following year.
  • Begin preparing quarterly and annual tax filings (plus W-2s, 1099s, etc.) from your current provider. This will help you stay on time for upcoming tax and deposit deadlines.
  • Acquire copies of financial records from your current provider. This includes employee information, tax records, and all other relevant financial information.
  • To help your new provider prepare for easy platform implementation in the new year, provide your business information (EIN, account info, and other data they request). Your new provider will upload and organize existing business information into your new platform and update policies to ensure an effective and compliant start in the New Year.
  • Remember to rely on your new/forthcoming payroll provider as a resource and aid, even as you continue to work with your current provider in the final quarter of the current year. 

Switch to An Integrated and Optimized Payroll Platform

At CAVU HCM, we aim to help you simplify your payroll process to eliminate errors, improve employee experience, and pay your employees accurately and on time. We emphasize customer service and leverage our expertise and HCM tools to help you integrate payroll with HR management, talent management, and workforce management. Meeting all your needs to keep your business optimized and your employees engaged and satisfied.

It's time to enjoy a stress-free payroll process and start the new year with a clear plan for success. Contact us today to start our collaboration, and let us know how we can help.

DISCLAIMER: The information provided herein does not constitute the provision of legal advice, tax advice, accounting services or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional legal, tax, accounting, or other professional advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation and for your particular state(s) of operation.