Switching payroll providers feels risky. Missing a payroll deadline, losing employee data, or facing compliance issues during migration can have serious consequences. But staying with an outdated, expensive, or poorly-supported provider is costing you money and headaches every pay period.
The good news? Thousands of companies successfully switch payroll providers every year—and with proper planning, your migration can be seamless. This guide walks you through the exact steps, timing considerations, and pitfalls to avoid.
Get our complete payroll switching checklist with timeline templates and data collection worksheets.
Download Free Checklist| Timing | Pros | Cons |
|---|---|---|
| January 1 (Start of Q1) | Clean year start, fresh W-2s, new tax year, easier reconciliation | Holiday season prep, vendors busy, higher implementation demand |
| July 1 (Mid-Year) | Mid-year clean break, vendors less busy, time before year-end reporting | Mid-year W-2s required, more complex tax reconciliation |
| Start of Quarter (Apr 1, Oct 1) | Quarter-clean break, easier quarterly reporting | Still requires partial-year reconciliation |
What to do:
Questions to ask vendors:
Essential data to export:
Who to notify:
Implementation tasks:
Critical testing step:
Training priorities:
Go-live checklist:
Final tasks:
| Category | Specific Data Points | Where to Find It |
|---|---|---|
| Company Info | Federal EIN, state tax IDs, legal business name, address, NAICS code | Tax filings, state revenue department, IRS documentation |
| Employee Data | Full name, SSN, DOB, address, hire date, pay rate, pay type (salary/hourly) | Current payroll system export, HRIS, onboarding paperwork |
| YTD Earnings | Gross wages, tips, bonuses, commissions, taxable benefits | Payroll register reports, quarterly filings (941, state equivalents) |
| YTD Taxes | Federal income tax, Social Security, Medicare, state/local taxes withheld | Payroll tax reports, 941 filings |
| YTD Deductions | 401(k) contributions, HSA, FSA, health insurance, garnishments | Benefits administration reports, payroll deduction summary |
| PTO Balances | Accrued hours, used hours, policy rules | Current payroll system, time-off tracking reports |
The Problem: YTD totals don't transfer correctly, causing over/under-withholding for the rest of the year.
How to Avoid: Manually verify YTD totals for every employee before first payroll. Run a reconciliation report comparing old provider's YTD to new provider's imported totals. Pay special attention to:
The Problem: Employees working in multiple states or local tax jurisdictions aren't set up correctly, resulting in incorrect withholdings.
How to Avoid: Create a spreadsheet of every employee with their work location(s), including remote workers. Many companies discover they have tax obligations in states they didn't realize during this process.
The Problem: Active wage garnishments (child support, tax levies, student loans) don't transfer, putting you in legal violation.
How to Avoid: Create a separate garnishment tracking document with case numbers, amounts, recipient addresses, and court orders. Manually enter these into the new system and verify first payroll includes all garnishments.
The Problem: Time tracking or accounting integrations don't work with new provider, causing data gaps.
How to Avoid: Test integrations 2 weeks before go-live. Have a backup manual process ready for first few payrolls. Verify GL code mapping before first accounting sync.
The Problem: Direct deposit doesn't arrive on payday because of processing time differences.
How to Avoid: Ask your new provider about ACH processing timelines and deadlines. Some providers need 2 banking days, others need 3-4. Build in buffer time for your first few payrolls.
Why it's great for switching: Gusto offers free white-glove migration with a dedicated specialist who handles data import and setup. Their team will run parallel test payrolls and is available via phone during your first few pay runs.
Migration support: ⭐⭐⭐⭐⭐
Best for: Companies with 1-100 employees, switching from ADP, Paychex, or QuickBooks Payroll
Pricing: Starting at $40/month + $6/employee
Get Free Migration Help from Gusto →Why it's great for switching: Rippling combines payroll, benefits, and IT management. Their migration team handles complex multi-state setups and can import historical data going back several years.
Migration support: ⭐⭐⭐⭐⭐
Best for: Companies with 10-500 employees, especially those with remote/multi-state workforces
Pricing: Starting at $8/employee/month
See Rippling Migration Process →Why it's great for switching: Industry-standard platform with dedicated implementation managers, extensive compliance support, and experience handling large, complex migrations.
Migration support: ⭐⭐⭐⭐
Best for: Companies with 50+ employees, union workforces, or highly complex pay structures
Pricing: Custom (typically $60-150/employee/year)
Request ADP Migration Quote →Why it's great for switching: Affordable with solid migration support via chat and email. Good for straightforward payrolls that don't need extensive hand-holding.
Migration support: ⭐⭐⭐
Best for: Companies with 1-50 employees with simple payroll needs
Pricing: $40/month + $6/employee (often includes one month free during switch)
Try OnPay Risk-Free →| Timeframe | Tasks | Responsible |
|---|---|---|
| 6-8 weeks before | Research providers, request demos, check references | HR/Finance Lead |
| 6 weeks before | Select provider, sign contract | Decision maker |
| 4-5 weeks before | Request data from current provider, notify stakeholders | Payroll Admin |
| 3-4 weeks before | Kickoff with new provider, begin data upload | Payroll Admin + Implementation Specialist |
| 2-3 weeks before | Complete system setup, configure integrations | Payroll Admin + IT |
| 1-2 weeks before | Run parallel test payroll, verify accuracy | Payroll Admin + Finance |
| 1 week before | Train staff, send employee communications | HR + Payroll Admin |
| Go-live week | Process first live payroll, monitor closely | Payroll Admin (with vendor support on standby) |
| After 1st payroll | Reconcile, close old provider, archive records | Payroll Admin + Finance |
Plan for 6-8 weeks total from initial research to first live payroll. The actual data migration and system setup typically takes 2-3 weeks, but you need lead time for vendor selection, data gathering, and testing.
Only if you switch mid-year AND your old provider requires it. Most providers will handle year-end W-2s that include both old and new payroll data if you provide accurate YTD totals. Switching on January 1 avoids this entirely.
No—always start with the beginning of a new pay period. Splitting a single pay period across two providers creates reconciliation nightmares and potential compliance issues.
By law, your payroll data belongs to you. Most contracts include data export provisions. If your provider refuses, escalate to their legal/compliance team and reference your contract. Document all requests in writing. As a last resort, manual entry is possible but time-consuming.
Usually minimal: verify their direct deposit information is correct, re-enter W-4 withholding preferences in the new system (some providers can import), and set up login credentials for the new employee portal. Communicate clear instructions 1-2 weeks before go-live.
Download and archive everything before canceling your old provider—most only maintain data for 30-90 days after cancellation. Federal law requires payroll record retention for at least 3 years; some states require 7+ years. Store securely with other HR records.
Generally no—wait until after the M&A dust settles. Switching payroll providers during major business transitions adds unnecessary complexity. Exception: if the acquisition specifically requires a new payroll system for integration.
It varies by provider. "Full-service migration" typically includes dedicated implementation specialist, data import assistance, parallel test payroll, and phone support during first live payroll. "Self-service migration" means online guides and email support. Always clarify during the sales process.
Absolutely. Many providers waive setup fees, offer 1-3 months free, or discount annual plans for new customers. Mention you're actively switching (creates urgency) and ask specifically: "What switching incentives can you offer?" Get everything in writing.
Rushing the timeline. Missing critical setup steps (like YTD totals or tax jurisdictions) to hit an arbitrary deadline causes painful fixes later. Build in buffer time—it's better to delay one pay period than correct months of incorrect withholdings.
Download our complete payroll migration checklist with timeline templates, data collection worksheets, and vendor comparison guides.
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