Updated: July 2, 2024

Accounting professional’s guide to switching payroll software mid-year

Published By:

Jon Davis

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Switching payroll software can seem like a heavy lift, but preparing ahead of time and keeping some basics in mind will make this a straightforward process for you and your clients — no matter what time of year you decide to make the switch.


Why making a mid-year payroll software switch makes sense for your practice

Many accounting professionals use the middle of the year to evaluate the vendors they work with, and if any fall short of expectations, they may decide the time is right to move on. For example, some practices use the mid-year point to determine whether the payroll software they use is meeting all of their needs. Though switching payroll providers is a move you can make at any time of the year, the months of June and July can be popular with practices.

Why do some accounting firms switch payroll software mid-year?

Here are some considerations that may have organizations thinking it’s time for a new vendor:

  • Customer service is lacking — emails go unanswered, or it takes too long to troubleshoot issues
  • Their current provider is making too many mistakes in filing payroll or paying associated taxes
  • Integrations don’t meet their current needs, or they start using a new tool in the middle of the year that their current payroll software doesn’t integrate with (accounting software, project management software, etc)
  • The current software platform does not include HR functionality to handle back-office tasks such as PTO requests, sick days, or compensation inquiries
  • The employee self-service options are difficult to use or the payroll software doesn’t provide online portals
  • Some firms begin their fiscal year in the summer. If they are migrating to a different payroll software, they have a timeline in which they will research tools in March or April and budget for spending in June or July

Did you know?

73% of accounting professionals say they rely on their payroll service provider for compliance with tax regulations


Source: 2024 OnPay Accounting Outlook and Market Survey

Things to keep in mind before your mid-year move

  • Your clients might pay their employees at different intervals and with different pay schedules. Will the new vendor be able to support various departments, pay groups, or pay frequencies used by your clients? It can be beneficial to confirm if any necessary specializations are in the new payroll provider’s wheelhouse.
  • Make sure that the new provider has access to all the correct historical payroll data or is able to pull the necessary data from your previous provider. Will you have to migrate this data or will your new provider handle this for you (and if so, is there a cost involved?)
  • How much does it cost to migrate data? Be sure to inquire about migration costs. OnPay takes care of this task without a fee (but almost all other providers will have an upcharge).
  • Payroll taxes are such an important part of the equation, and Uncle Sam expects his share. It pays to double- and triple-check that your new provider can help to ensure that all taxes are accounted for and can be administered correctly and on-time. Most should be able to review any previous taxes from past quarters so that all information is accurate when migrating and tax payments continue to be made.
  • When moving, you’ll still need to make sure tax filings from early in the year are handled by the provider you were using at that time. Don’t just count on it — better to be safe than sorry and double-check with them.
  • Can the new vendor handle your client’s specific industry needs? For example, if your accounting firm helps agriculture or farming businesses, there are going to be payroll software companies that are unable to file Form 943. OnPay does, but keep in mind that not all providers do.
  • Will you need a window of time between your old and new providers to make sure all of the employees who work for your clients get paid? In other words, will you need the previous platform to still be running to pay employees one last time so that there’s no downtime when you switch?
  • See if the new vendor has an employee self-service portal where day or night workers can view pay stubs, update personal information, and access tax documents. Most modern platforms should have this available.

Payroll puts you ahead

75% of accounting professionals agree that offering payroll aligns with their goals to develop client accounting services


Source: 2024 OnPay Accounting Outlook and Market Survey

Get data ready to be migrated

Making sure information gets from point A to point B properly — and securely — is one of the most important parts of moving to a new payroll software company. That’s because whoever you choose to work with is going to need your clients’ employee data and year-to-date payroll reports that show the wages, deductions, and payroll taxes. This will be important so that tax forms, other documents, and records are accounted for as year-end approaches. Below is a table with information that’s likely to be a big part of this transition process.


Pro tip: Get the data in the table below ready around 30 days before moving to your new vendor.


Information your clients need to switch payroll providers
  • Staff lists with Social Security numbers and mailing addresses for all employees. This will be critical when tax time comes around and W-2s or 1099s need to be prepared. Be sure to send this information to your new provider securely.
  • W-4s for all employees — these were likely completed during the onboarding process when the employees were hired.
  • Any employee garnishments and supporting documents
  • Any employee deductions should be accounted for in the new system
  • Current year copies of Form 941 payroll filings — the current vendor should be able to share these with you.
  • Bank account information for your company
  • Direct deposit information for workers, if your clients are paying employees this way
  • Company tax identification (tax ID numbers)
  • State unemployment rates for all states that you report to
  • Year-to-date payroll summary by employee and by quarter
  • Special or additional compensations, like different pay rates, tipped wages, clergy housing, bonus policies, and shareholder insurance
  • Accrual policy and balances


Questions that should be asked and answered

When considering a new payroll provider, asking the following questions can help to make a smooth transition.


  • Will the new provider manage the process of importing all employees’ historical payroll data into the new system (and if they do, will they charge a fee for this service)? Remember, this likely isn’t going to happen through an API or software automation between the current system and the new vendor. In other words, there’s probably no one-click magic button that moves everything over — it is very much a manual process.
  • Does the new provider offer integrations with other systems you use, and can they confirm with you before making any changes?
  • Does the new provider provide training so that you can see how everything works?
  • Does the new provider have a dedicated account team that is easy to reach?
  • What type of support do they offer?
    • Will you mostly communicate via email?
    • If you prefer speaking with a customer service rep, do they offer phone support?
    • Or live chat if you prefer to get answers this way?
    • If support is unavailable, will they have a help center where you can get most of your questions answered?
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What to keep in mind when switching

Communication is key

It can be a good idea to give your clients advance notice before making a change, as it may take them some time to get used to the idea of a new system. For instance, the process for requesting paid time off might work differently, and workers will need to find their earnings information in a new place.


Dive into the data

Give your clients (and yourself) time to review data in employees’ profiles, such as prior wages, and be sure to look at SUI rates for your state. If you review all the pay items and deductions and something seems off, at that point the new provider should immediately help you with changes or corrections. It’s much harder to do this type of “data snapshot” once you start running payroll, so don’t let this fall by the wayside.


Get past this mishap

Don’t forget to send a “missing” payroll to the new provider you’re working with. In other words, you’ll want to share any last payroll you have run with the previous provider. Think of this as the “in-between” time: A small gap between closing out your old service, and moving to the new one. Why do we point this out? It’s to make sure that all the previous payrolls are accounted for in the new system. In our experience, you want to ensure the new provider has this information upfront. When they start processing live payrolls, everything picks up at the right “taxation point,” so all the numbers sync up. Moving forward, this helps to make sure taxes are in the right quarters, and all Social Security maximums are correct. Remember, you don’t know what you don’t know (and neither will the new provider). Share as much information as possible to keep disconnects at a minimum.


Keep an eye out

Be on the lookout for emails, calls, and follow-ups after you sign up with your new vendor and move all the information over. During the switch, an onboarding team and specialists will make sure that everything is set up correctly so you can hit the ground running. If they are calling or reaching out, there’s likely a reason they need to speak with you (or may need additional information).

Accountants regularly conduct research

Over 50% of accountants regularly explore new payroll software options


Source: OnPay 2024 Accounting Outlook and Market Survey

Special taxation is a reason to switch

Another reason why accounting firms use the middle of the year to switch is because there are tax considerations that their current provider is unable to assist with. For example, shareholder insurance is taxed differently than W-2 wages. Clergy housing is not taxable but must be reported on W-2s, and not every payroll company can properly account for this. Is it easy to mark clergy members as exempt from Social Security and Medicare taxes (FICA) when running payroll? Is your company FUTA or SUTA exempt, and is your current provider able to handle the calculations? Depending on the needs of your clients, it could be time for a company to switch because they have a more sophisticated setup that their current provider is unable to address.

No matter when you want to switch — we’re here to help

Though moving to a new payroll provider can seem overwhelming, a little preparation can go a long way. No matter when you decide that the time is right to migrate your practice’s clients to a new vendor, our team can help you every step of the way. Good luck as you research different options — our team is excited to help make this transition as smooth as possible.

Talk to us and see how easy it is to offer payroll services your way.

Jon Davis is the Sr. Content Marketing Manager at OnPay. He has over 15 years of experience writing for small and growing businesses. Jon lives and works in Atlanta.