How do I switch payroll providers?

Welcome to Ask An Accountant, where we take your payroll and accounting queries and help you make sense of them. Whether you’re doing payroll for the first time or you’re a seasoned veteran, we’re here to make sure you never have to worry about something going over your head.

Switching payroll providers can seem like a daunting task, but you should never stick with an inadequate service simply because the thought of switching is overwhelming. To make the idea of jumping ship a little less scary, we talked to Knit People’s Senior Accounting Associate Guriqbal ‘Guri’ Singh to break down the process of switching payroll providers. Whether you’re looking for a company that can meet the needs of your growing team, or you’re simply frustrated with your current provider, we’ll help you figure out your next move.

Step 1: See what's out there

There’s nothing worse than going through the process of switching payroll services, only to find out that your new provider isn’t up to snuff. To avoid this administrative nightmare, do your homework and research the payroll solutions available to you. Look for companies with positive reviews and a strong track record, and then think about your pain points, your must-haves, and any other features that would make your life easier. There are a number of different payroll providers in Canada and the services they offer range from just the basics to more complex capabilities. Do you need a payroll service that can take care of WSIB (Workplace Safety & Insurance Board)? Issue ROEs (Record of Employment)? Integrate with HR? Every company is different, so take the time to create a wish list and find a provider that can deliver on those needs.

Of course, online research can only get you so far, so don’t be afraid to contact a company directly to find the answers to your questions—this can be a great test of what kind of customer service you can come to expect from a new provider. Many providers will also be happy to walk you through a demo to show you how to use the features that you’ll be working with and help you get a feel for their service.

Step 2: Sunset your current provider

Congrats, you’ve officially decided to make the switch! Now what? Well, now it’s time for some awkward conversations. Begin by reviewing your contract with your current provider and finding out more about any important cancellation terms or restrictions. Once you know what’s involved, contact your current payroll provider and (nicely) let them know you will no longer be using their service.

Also, keep in mind that most company contracts require customers to give at least 30-days notice (though many cloud-based providers will allow you to cancel right away), so be sure to give yourself a buffer so that no payrolls are missed while making the switch. To make things easier, it’s best to change payroll vendors between fiscal years, at the start of a new quarter, or immediately following a pay period. This will ensure that there are fewer data to migrate over and fewer opportunities for errors.

Step 3: Prep for your new provider

The best transitions are the ones that feel seamless, so get your ducks in a row by asking your new provider what forms, information, and important documents you need to give them to initiate payroll. This can include information such as:

• Your CRA-issued business number
• Employee information (names, addresses, social insurance numbers, etc.)
• Past pay stubs
• A void cheque
• Payroll register reports
• ROEs

Next, contact your current provider to get access to that information. Often this involves requesting a payroll register report, which provides a comprehensive recap of each payroll. If you’re switching providers mid-year, this information is necessary to set up your active and terminated employees with your new provider. Also keep in mind that as an employer, you are required by the CRA to keep payroll records for a period of six years from the end of the last tax year. If the payroll records are maintained by your payroll provider, you will need to get access to all the payroll records before switching providers.

Step 4: Set up your account

With your payroll information in hand, now it’s time to get set up with your new provider. If comfortable, you can tackle this yourself, but many providers will also help to walk you through the process. At Knit, there are extensive help docs available to get you started and a customer support team that’s always ready for any questions you may have.

Step 5: Officially shut off services at the old provider

Just like cable TV, it’s time to cut the cord. As soon as you’ve transferred all of your payroll information to your new provider, you can safely close your old account.

Step 6: Double Check all the details

While you’re probably eager to start running payroll with your new provider, give yourself a bit of time to double check everything first. It’s much easier to deal with mistakes before you start running payroll than after. This includes checking things that may seem obvious, such as making sure that your old payroll provider doesn’t file year-end reports on your behalf. In this case, it never hurts to put this in writing to make sure that the CRA doesn’t end up receiving two sets of year-end reports from two separate providers—a mistake that could trigger an audit.

However, once you’ve dotted your i’s and cross your t’s, you’ll be ready to run payroll better and faster than ever.

Ready to make the switch? See how Knit’s unified software for payroll, HR, and benefits can help you get payroll perfect by requesting a free demo today.

Disclaimer: This article provides general information and should not be construed as tax advice. Since tax rules may change over time and can vary by location and industry, please consult a CPA or tax advisor for advice specific to your business.