Transitioning Payroll Providers: Navigating the Change

January 10, 2024
minute read

While the term "End of Days" might sound a bit dramatic, parting ways with an existing payroll provider is indeed a significant decision for employers. Referred to as "termination" in the payroll world, this process involves complexities beyond a simple cancellation. From reasons like pricing concerns to issues with service, employers choose to switch payroll providers for various reasons.

Let's delve into the intricacies of this transition process and understand how a payroll provider handles termination.


Most employers rely on payroll services for filing employment taxes, paying employees, and managing quarterly and annual taxes. Payroll providers gain authorization through Power of Attorney forms (POA) or Third Party Administrator forms (TPA). When terminating a payroll service, the employer needs to sign these forms with the new provider, granting them the necessary authorization. Rest assured, when you sign up with FRIDAY, this is automatically a part of the onboarding process, and takes less than a minute.


Leaving a payroll provider involves transferring a substantial amount of information, including quarterly and annual reports, employee withholding forms, and paystubs (if not already stored elsewhere). It's not just about leaving a provider; it's also about transitioning your entire system of payroll records. Clear communication about the decision to leave allows the current provider to assist in pulling the correct forms and ensuring a smooth transition.


Timing is crucial when leaving a service. Since payroll taxes are filed quarterly, departing in the middle of a quarter could lead to additional collection of unpaid liabilities. Managing the transition between pay periods and ensuring no information gets lost in the process can be challenging. Sometimes. planning a switch at the beginning of a new year or new quarter offers a clean start, eliminating the need to migrate wages and focusing solely on setting up demographic data.


Informing your current provider about the decision to leave is essential for obtaining accurate records and ensuring a proper shutdown of services. The type of payroll provider you're switching to and from matters; if it's from another payroll service, the original provider will shut down completely. However, if transitioning from a professional employer organization (PEO), the original provider may need to continue filing through the end of the year. Lack of notification can lead to issues like missed and duplicate filings, emphasizing the need for careful consideration before switching providers.

I’ll be back.

Terminating a relationship with a payroll service doesn't always mark the end. Some employers return to their previous provider, often lured by enticing deals that didnt work out. Many FRIDAY clients find their way back shortly because no one matches FRIDAY's simplicity and support. The ease of use and dedicated support are distinctive features that set FRIDAY apart in the realm of payroll providers. The reinstatement process has its complexities, but that's a topic for another time.

In conclusion, transitioning payroll providers requires careful planning, clear communication, and an understanding of the potential challenges involved.