For small to midsize businesses, payroll can be not only the biggest part of the budget, but also a daunting responsibility for HR. Staying compliant while keeping track of changing employment laws often feels like a juggling act.
Ideally, an organization’s HRIS makes running payroll easier. But if dealing with the software is more trouble than it’s worth, it may be time to consider a change in payroll providers.
Read on for telltale signs it’s time to pick a new payroll software—and when is the best time to switch payroll providers.
Efficient and error-free payroll is a necessity for a thriving organization, and if your provider isn’t making that part of your job easier, you might consider changing payroll systems. Here are the top three signs it’s time to switch:
If these signs are visible at your organization, it is likely best to consider a new software provider to run your payroll.
Your organization can change its payroll system at any time, but it’s best to make the transition to a new payroll provider at the end of a calendar year. That’s because when you file taxes for a given tax year, the IRS needs the entire year’s payroll history, regardless of what system it’s on, for your employees’ W-2s.
Switching at the top of a year saves the trouble of pulling that year-to-date payroll history into your new software—though it’s still possible to do so if your organization wants to. If you don’t have to bother with gathering employee tax returns, the process will be faster and, depending on your software provider, you’ll likely avoid a fee associated with consolidating the data.
Switching mid-year is possible, but it can be more challenging. You’ll have to import payroll history, including Form 941, state income tax withholdings, and unemployment insurance. You may have to either give your new provider login access to your old system or, if you don’t want to share that information, provide reporting with payroll data for each employee, which is much more time-consuming.
But if January 1 isn’t an option—or if you just don’t want to wait that long—the next best time to switch payroll providers is at the end of any quarter. If you start running payroll through your new system on April 1, July 1, or October 1, you’ll simplify some of the paperwork and have the opportunity to run parallel payroll for a few cycles to make sure all employee withholdings and deductions are coming through correctly.
For more information on all things payroll, check out our free BernieU course Payroll Basics for Employers, which is pre-approved for SHRM and HRCI recertification credits.
You can stay informed, educated, and up-to-date with important HR topics using BerniePortal’s comprehensive resources: