Around the world, the new year is viewed as one of the best occasions to start fresh, even for switching payroll services! But the truth is that the mid-year mark (when quarter 3 begins on July 1) is an important window of opportunity to change your payroll provider and save money heading into the second half of the fiscal year. Here are 3 reasons mid-year is the right time for a payroll switch:
1. A month or two into quarter 2, you're looking for expenses that are easy to reduce.
Whether you started running payroll with a new provider in January, or you've had the same accountant or company handling your payroll and taxes for years, by this point in the year, you know if — and how dramatically — you need to cut costs in quarter 3.
Good news: Payroll is one of the easiest financial expenses you can manipulate and control! Maybe when you started your business, you went with one of the most popular providers, but now you're realizing name recognition isn't worth the price tag. If you need to reduce expenses starting now, there's no reason to keep overpaying for payroll for six more months. December 31 is a long way away, and if you run payroll weekly, per-payroll costs are already burning a hole in your pocket. Make mid-year your moment!
2. Contrary to popular belief, a mid-year switch is not significantly more difficult than a new-year switch.
While it's true that a new-year payroll switch means no one has to worry about collecting or entering year-to-date information, that's no longer a significant barrier to a mid-year switch. Why? Because today, many payroll providers, like TransNational Payments, will enter payroll history and tax information on your behalf — at no cost!
Online, cloud-based payroll makes it easier than ever to transfer data; it takes payroll experts no time at all, and it's a simple trade-off for winning your business and ensuring proper account setup. Payroll providers who offer free setup will also help clarify who is responsible for filing which taxes during the transition period. They'll even provide guidance on which employee, tax and business documents you need to request from your previous provider before you close your account or cancel services.
We make it easy: Free account setup. Unlimited payrolls.
1 free employee every month. Starts at only $30/mo!
3. If you wait until the middle of a quarter, you're putting yourself at risk for some serious tax headaches.
It's early August and you're fed up with poor customer service, technical support or high fees from your current payroll provider. Now, you have a decision to make: Wait until the end of the quarter or fiscal year to switch — which could be anywhere from five to 20 payrolls away at minimum — or switch payroll services in the middle of the quarter. You may be surprised to hear that option one is likely your best bet.
Why? If you change payroll providers in the middle of a quarter, your previous provider will either pay or refund any quarterly taxes collected but not submitted to the IRS or the state, back to you. If any taxes are refunded, your new payroll provider will have to re-collect and submit those taxes on your behalf. It's not uncommon for providers to immediately cancel tax services, with or without notice, resulting in unnecessary penalties and interest payments for your business. To avoid all of this, you'll need to work closely with your former and new payroll provider to get clarity on who will be handling your partial quarterly taxes, like SUTA or FUTA taxes, how year-end taxes will be managed and when you'll get the tax deposits and documentation you'll need from your prior provider.
Better yet, switch payroll services mid-year — it's easier than ever!