How to Switch Payroll Providers Without the Stress

You made the decision, and you’re switching payroll providers. Now comes the part that gives many small businesses pause — changing payroll systems without missing a beat. When you’re short on time or wearing multiple hats, it’s easy to miss the small details that can cause delays, errors, or duplicate filings down the line.

However, a smooth transition doesn’t require a big team. You just need a clear plan. Find out how to prep before the switch and what steps you can take to avoid major headaches.

Before You Switch Payroll Providers

A successful switch starts well before you log into a new system. First, take stock of what’s been holding you back, whether it’s frequent errors, limited support, or clunky tech. Knowing what’s not working helps you choose a payroll provider that’s best for your business. Next, create a short list of what you want from your next provider, such as stronger integrations, better service, or payroll automation. 

Make sure you don’t overlook timing. Transitioning at the start of a quarter or a new year makes tax reporting cleaner and easier. It also reduces the back-and-forth between your current and new provider. Lining up these pieces early helps smaller teams stay ahead without scrambling once the change is underway.

Payroll Transition Tips

Once you’ve chosen a new provider, it’s time to focus on changing payroll systems. With good preparation, you can keep payroll running smoothly and ensure that nothing important gets missed in the process. This phase is all about accuracy, timing, and staying organized.

1. Notify your current provider 

Before you notify your current provider, review the cancellation terms of your contract. Some payroll providers require advance notice or charge early termination fees, especially with annual agreements. Even after notifying them, don’t cut ties just yet. You still need your current provider to process payroll while you’re transitioning.

You’ll also need access to:

• Tax filings, payment confirmations, and reports

• Year-to-date payroll summaries

• Benefits deduction and employer contributions history

• Wage garnishment records

• Pay stub history

• PTO balances and accrual history

• Employee data and direct deposit information

Before officially closing the account, ask how long you'll have access to these records. Some providers limit access after cancellation or charge fees to retrieve archived data. Securing what you need ahead of time can help avoid disruptions later. 

Once your final payroll run is complete and your new provider is fully set up, you can move forward with closing the account. Keeping both systems active for a short overlap can help prevent delays, errors, and missed payments.

2. Plan the transition

Switching providers isn’t a one-day event; it’s a process that requires a clear timeline. Start by locking in these key dates:

• Submission deadline for employee, payroll, and tax information

• Training sessions for you and your team

• Parallel run date to check accuracy

• Final payroll run with your current provider

• First payroll run with new provider

Tight timelines can increase the risk of mistakes, so work backward from the date of your first scheduled pay run with your new provider. This ensures you have breathing room to complete every task. 

3. Gather information for the new provider

Your new payroll provider will need a full picture of your workforce and pay structure to get set up correctly. That includes:

• Employee details (SSNs, addresses, and direct deposit info)

• Year-to-date payroll data

• Benefits deductions

• Wage types

• Active garnishments

• Payroll tax returns

• Payroll tax account information

You’ll also want to include any terminated employees who were paid earlier in the year to ensure tax forms are accurate. Some providers offer import templates to help you organize everything, which saves time. And if you’re pulling data from multiple systems, verify file formats and naming conventions early to avoid setup delays.

4. Notify employees about the new payroll system

Give your team a heads-up that you’re changing payroll systems. Let them know when the change is happening, what they need to do (if anything), and where they can find their new pay stubs. It’s also helpful to show them where they can update their direct deposit information and tax forms. Provide their login information and highlight the deadline for updating information if it differs from what’s being carried over. 

If your transition brings new benefits, create space for questions—whether through a dedicated Slack channel, an open Q&A session, or a brief forum. A simple FAQ or short walkthrough can help employees feel confident about the new system. Creating a space for open conversation and employees to ask questions helps them feel informed and heard.

5. Do a parallel payroll run

Before you go live, it’s worth doing a parallel payroll run if your new provider offers it. This means processing one pay cycle in both systems, just for comparison, not for issuing duplicate payments. It’s your chance to catch setup mistakes early by reviewing wages, payroll taxes, benefits, and any employer-paid contributions.

Even minor mismatches can lead to significant issues down the line, especially with tax reporting. Be sure to give yourself enough time to review both runs side by side and flag any inconsistencies. A successful parallel run gives you peace of mind before you close out with your current provider.

6. Finally, let go of the old provider

After your final payroll is complete and deemed successful, you’re ready to part ways with your old provider. Before closing your account, it's time to address any loose ends. Confirm that all outstanding taxes and filings have been submitted, including any local or industry-specific forms and requirements. It's also best to verify that the final payments for garnishments, benefit contributions, or off-cycle runs have been processed correctly.

To avoid retrieval fees for documents and records from your previous provider, archive and organize relevant payroll and tax information, such as: 

• Audits

• Tax filings

• Tax payment confirmations

• Employee requests

• Final pay stubs

• Year-to-date summaries

Having everything in order helps with future audits, employee requests, and year-end reporting.

How Justworks Can Help

Switching payroll providers has many moving parts, but with a solid plan, it will become easier to execute. Whether you’re transitioning now or preparing for the future, having a partner like Justworks that’s organized and responsive makes all the difference. We offer expert support and implementation managers to help guide you and ensure payroll runs smoothly from day one.

Looking for a simpler way to run payroll without second-guessing each step? Find out how Justworks can help you switch with confidence and less stress. Get started with Justworks today.