Seamless Transition:
Your Guide to Onboarding a New Payroll System
Ready to implement an improved payroll system, minimize disruptions,
and maintain long-term compliance for your business? Here’s how to get started.
When your business’ payroll system is outdated or inefficient, it consumes more time than necessary, detracts from key projects, leads to costly payroll errors, and even creates noncompliance and employee retention concerns. Working with a new and qualified online payroll provider can help you run payroll and integrate key HR processes without the headaches, increasing payroll accuracy, timely pay for employees, and much more.
Here we’ll explore the essential steps to take when switching payroll providers and setting up a new payroll software, including evaluating your current processes, gathering employee & payroll data, engaging your team, setting a clear timeline, and providing employee training before your launch date.
Assessing Your Current Payroll System
The first step when switching to a new payroll system is to identify the problems you’re experiencing with your current provider or system. This could include issues with compliance management, payroll errors, poor integration between payroll & related HR processes, inefficient onboarding tools for new hires, or a lack of reporting options.
Cataloging the issues you face with your current system makes it easier to work with your new provider to ensure you receive all of the features and functionality your business requires to run payroll and complete related HR tasks smoothly. Be sure to speak with your new provider about the particulars of your organization – everything from the number of employees to your preferred payment frequency, deduction types, preferred payment method (direct deposit, payroll cards, etc.) as well as long-term aspirations for your business that could impact payroll & HR practices.
Some payroll providers require a notice period and will need to participate in the data migration process before the service period has officially ended. Speak with your current provider to confirm when you will be terminating service, which will help your organization and new provider make a concrete plan for implementing a new payroll system business-wide.
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Data Collection and Preparation
Payroll Accounts
Your new payroll provider will likely request all of the following information to support accurate and timely migration of all employee and payroll data:- Employer Information, including Employer Identification Number (EIN), State or Local Withholding ID, business name, business structure, state unemployment & insurance number(s), a voided check, etc.
- Employee & Onboarding Information, including all of the following for each employee: Name, Address, SSN #, W-2s, W-4s, earnings, deductions, withholdings elections, and direct deposit information
- Payroll Information, including payroll tax returns, current payroll amounts as well as the preceding year (for workers comp audits), payroll tax deposit dates, payroll journals, and pay stubs for all existing employees and contractors, as well as former employees
- Additional Tax Information, including quarterly reports, quarterly tax returns for the current year, payroll tax account numbers, and other registration information that may be required depending on the time of year your organization switches to a new provider
A qualified payroll and HR provider like Payroll Freedom can swiftly process and upload all of your payroll, employee, and tax data for use in the new platform, using a primarily automated process. Of course, it’s important to stay proactive in ensuring data accuracy and security during the transition. Depending on your current system/provider, some records will either need to be entered manually into the new system or converted from the existing format to the new one. Your new provider should be thorough in confirming the accuracy of each employee master file and paycheck/tax form history per employee and have security measures in place to ensure any transferred data is secure during this process.
Team Engagement and Communication
When switching to a new payroll platform, it’s essential to involve your HR and payroll team early in the process. Ideally, you should choose at least one project leader to manage the implementation process and serve as a consistent point-of-contact. Your payroll and HR staff should be involved in providing feedback, formulating a realistic timeline, testing features, and ensuring documentation is available and accurate. Designating specific hours to dedicate to the payroll switch can ensure coordination across your team and transparency about the entire process.
It’s also important to let the rest of your employees know about the forthcoming change to your payroll process once you’ve opened an account with your new provider and before you’ve run payroll with the new system. This gives your employees an opportunity to save any information from the former provider (paystubs, for example) before the first payroll with your new vendor. You should also advise employees to confirm the accuracy of their compensation, paystubs, and other information following the first payroll run with your business’ new payroll provider.
With leading-edge technology and personalized support from Payroll Freedom, it’s easy to make a smooth transition to a new, single-platform system that makes payroll and related HR processes hassle-free and intuitive.
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Planning Your Payroll Implementation Timeline
Before onboarding a new payroll system, you should establish an implementation timeline with your team and your new payroll provider. First, establish when you would like to run your first payroll with the new provider and determine which steps will be required before that date to reach this goal. If your timeline is feasible, it should accommodate all of the time required for data migration, testing, implementation of additional or new HR functionality, and even unexpected challenges or troubleshooting during the onboarding process.
For most businesses, it’s best to switch payroll providers either at the beginning of a new year or the beginning of a new quarter. When you start the payroll onboarding process at the end of the year (to begin in January of the following year), you bypass the need to enter historical payroll data from the previous year, including employee wages and more. Starting at the beginning of the year simplifies financial recordkeeping for you and your new payroll provider and is generally a less time-consuming process for your staff.
Switching payroll providers at the start of a new quarter is also a viable option, especially compared to switching providers mid-quarter, which can create complications with tax filing, records transfer, and migrating data between providers. If you run payroll with your new provider at the start of a new quarter, you’ll still need to migrate some historical data, but you’ll be able to file quarterly taxes and reports exclusively with the new provider, simplifying your payroll process moving forward.
Training and Support
Among other payroll transition best practices, providing comprehensive training and support is critical—but it's important to clarify that this training is specifically for managers. Managers are thoroughly trained on the new payroll system's functionalities, including accessing pay stubs, W-2s, PTO balances, and more. They are also equipped to utilize and teach their teams about any new features or tools unique to the platform, particularly when the system incorporates modules to support hiring, onboarding, employee self-service (ESS), time & attendance, benefits administration, and more.
Training sessions, led by your new payroll provider, are designed to empower managers with the knowledge and tools necessary to independently and effectively train their teams. This approach ensures that managers are fully prepared to guide their staff in tasks such as adding or updating employee information, making changes to direct deposit account details, and using new system modules. Consequently, the rest of your workforce will learn from their managers how to comfortably access tax forms, monitor and utilize PTO, check pay stubs, and complete other basic tasks.
Payroll Freedom offers ongoing support to businesses that use our payroll and HR platform, including HR and compliance support that ensures managers are well-prepared for both initial and long-term training of their teams.
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Testing and Going Live
The last step in the payroll system implementation process is to test the new system to ensure all functions are working as expected. Before you start, you should confirm that all data has been migrated fully and accurately from your former provider, adding any missing data or correcting any incorrect data before running the test. Once you’ve run a parallel test using your new payroll platform, meticulously review the payroll journal, checking for and addressing any errors or inefficiencies.
After that, it’s time to prepare your official go-live date, ensuring you have staff available to answer any questions for employees before and after the first payroll run. Once your first payroll run is complete, you should be able to have a constructive conversation with your new provider about any adjustments you’d like to make to streamline the payroll process even further. Again, this is especially important if you’ve launched new, integrated HR features in conjunction with your updated payroll system.
Intuitive Payroll and HR Solutions with Payroll Freedom
A flawed payroll system can lead to noncompliance penalties, costly errors, employee payment delays, employee retention issues, and needless time spent on administrative tasks. That’s why Payroll Freedom offers a comprehensive and hassle-free payroll & HR solution to simplify payroll for you and your employees. Smoothly integrate your payroll system with HR processes like time & attendance, retirement planning, HR management, and more, and enjoy the benefits of a streamlined onboarding process that includes ongoing, personalized support and training for you and your employees.
Switching to Payroll Freedom is easy!
Contact us today to get started on your seamless payroll transition.
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