Is it too late to change payroll providers?

It’s the beginning of the year, and you are frustrated with your payroll provider, but you think it’s too late to switch. Sounds familiar, right? If you have had a similar thought, you’re not alone. Many business owners assume they have to wait until the end of the year to make a change so they can start the new year fresh, but that’s simply not true. You can change payroll providers at any time of the year. The key is knowing how to transition smoothly while keeping payroll running without disruption.

At Paper Trails, we understand that payroll is one of the most critical aspects of running a business. We also know that switching providers can feel overwhelming—no one wants payroll mistakes or compliance headaches. That’s why we help small businesses navigate payroll transitions with confidence and ease. In this article, we’ll walk you through when and why to switch, the steps involved, and the costs so you can make an informed decision. Let’s begin!

Is it too late to change payroll providers?

The short answer? No, it’s never too late to change payroll companies. While many businesses switch at the beginning of the year for convenience, payroll transitions can happen anytime. Transitions during the first quarter of the new year are not much more complicated than those at the beginning of a year, especially if your business processes payroll biweekly.

Changing payroll providers mid-year even has some advantages. You don’t have to rush the transition during the busy season for payroll companies, and a good payroll provider will help transfer historical data, ensuring compliance and accuracy. Further, if your current payroll provider has become an issue for you for whatever reason, waiting until next January could cost your business!

Why change payroll providers?

There are several reasons why small businesses decide to change payroll providers, either at the beginning of the year or anytime throughout the year. Some of these reasons can include:

• Payroll Errors – Mistakes in employee paychecks, tax filings, or compliance issues can lead to penalties and hurt your employee retention efforts.
• Poor Customer Service – If your provider isn’t responsive when issues arise, it can cause unnecessary stress and delays.
• Hidden Fees or High Costs – Many payroll companies charge hidden fees that add up over time. Or some start with highly discounted rates that rise rapidly after a certain time frame. If you’re overpaying for a system that doesn’t meet your needs, it might be time to switch.
• Outdated or Complicated Software – Payroll software should make your life easier, not harder. If your current system is clunky or lacks integrations with your HR and accounting tools, switching can save time and effort.
• Compliance Risks – Payroll regulations are constantly changing. If your provider isn’t keeping you updated or handling compliance properly, it could put your business at risk.

If you’re experiencing any of these issues, it’s worth considering a switch sooner rather than later. Waiting until the end of the year can result in fines from compliance errors or higher employee turnover for your business.

Steps in changing payroll providers

Switching payroll providers doesn’t have to be complicated. Here’s how to do it smoothly:

Step 1: Gather your payroll data

Before making the switch, collect all necessary payroll information, including:

• Employee details (names, tax info, pay rates, benefits, deductions)
• Year-to-date payroll records
• Tax filings and payment history
• Bank account details for direct deposits
• Time and attendance data (if applicable)

Having these records handy will make the transition seamless and prevent any payroll gaps.

Step 2: Let your payroll provider ensure a smooth transition

Once you’ve selected a new provider, they should guide you through the transition process. At Paper Trails, we will:

• Migrate your payroll data from the old system.
• Verify tax payments and filings to avoid compliance issues.
• Train you and your team on using the new system.
• Double-check the first few payroll runs to ensure everything is accurate.

By planning ahead and working with a knowledgeable provider, your payroll transition can be quick and hassle-free.

The cost of changing payroll providers

The cost of switching payroll providers varies depending on multiple factors. First, your current provider might have cancellation fees in their contract. At Paper Trails, we have no fees associated with canceling your payroll service. Second, most payroll companies charge an implementation, or onboarding, fee. This is for the time it takes to pull historical payroll data and setup your payroll and policy structure correctly. Finally, your business size will impact the cost. The more employees you pay and the more services you need will result in a higher per payroll cost. For information on Paper Trails pricing, check out our pricing page here.

However, the real cost is staying with a bad provider. Hidden fees, payroll mistakes, and compliance penalties can add up quickly. Investing in a reliable, accurate, and user-friendly payroll vendor will save money in the long run.

Conclusion

If your payroll provider isn’t meeting your needs, you don’t have to wait until next year to make a change. Changing payroll providers is possible at any time—and with the right company, it can be a seamless transition.

At Paper Trails, we specialize in helping small businesses manage payroll with ease. Our team is here to guide you through every step of the process, ensuring compliance and accuracy so you can focus on growing your business. Thinking about making a switch? Contact us today to discuss your payroll and HR needs—we’re here to help!