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How to switch payroll software: Tips for a seamless transition
Paying your employees the right amount shouldn’t take all your time. If it is, you may want to think about switching payroll providers. The right payroll software can simplify the process and make tax compliance smooth every year.
Read our guide on how to switch payroll companies - you can skip to the checklist, or find out information on the best time to switch providers, the process and what you need to bear in mind.
Table of contents:
Why might you consider switching payroll providers?
Your current payroll provider may not meet your needs for a number of reasons.
Your company may have grown to a size where your current provider can’t cope
You find the software difficult to use or not intuitive to your business’s needs
You feel unsatisfied with the level of customer service or their response times
Your current payroll software may no longer be providing good value for money
If you’re looking for a more streamlined payroll company, our checklist for switching providers can help you make the right decision. Here’s how to change to a payroll that works for you.
Checklist for switching payroll software
For a stress-free payroll software switch, we’d recommend following these steps.
Assess your current payroll software
This will help you understand what isn’t currently working, what you want to change and, therefore, what you want to see from your new payroll provider.
For example, you might want software that integrates fully with the rest of your accounting software.
Also, check for information about cancellation terms so you understand any costs involved. Some software providers might be very flexible, while others might come with a fee for cancelling early that will impact when you want to make the switch.
It can be simpler to switch at the end of a tax year, although it’s possible to switch providers mid year.
Reconcile your software with your accounting needs
Look for a new payroll software that meets your current and potential future needs. It’s important to consider the functionality itself, the overall cost of the system, as well as the benefits you’ll receive.
Want to know more? Try our article on the benefits of a payroll system.
Investigate other providers
It’s important to compare and weigh up the pros and cons of different payroll providers.
To help you make a decision, read our in-depth comparisons of QuickBooks vs Xero or Sage:
If you’re still using Excel or Google Sheets, here’s how to switch from QuickBooks from Excel.
Test and assess your new payroll software
This will help you to establish which system is most user-friendly and suits your business best. It also allows you to compare customer service.
If you have a lot of employees or complexity in your payroll (like multiple statutory payments or court orders), it’s useful to run both systems side-by-side. That way, the testing will pick up any distinct differences in outcomes.
Talk to the members of the team who will be using the software the most before you make a final decision.
Choose a new payroll provider
Before making a decision on a new payroll provider, ask yourself the following questions:
Does the new provider provide good value for money?
Is the software suitable for the size of your company?
Will you have enough access to reliable customer service?
Is the software easy to use and intuitive to your needs?
Have I discussed this with my accountant?
When you’re sure you’re ready to switch, it’s time to look at a contract with your new provider. QuickBooks has a helpful team on hand to guide you through the payroll switching process.
Notify your old provider and employees
If you can, do so right after payroll has been processed, so you will have plenty of time to finalise the move before the next payment cycle.
This process should include:
Send your final report of the year.
It’s generally best practice to do so on or before your employees’ last payday of the tax year. You will already have been making your full payment submissions (FPS) each pay run throughout the year, and this report should just be verifying the numbers. In some cases, you’ll need to send an employer payment summary (EPS) instead. In either case, your end-of-year submissions will need to be sent to HMRC before 20 April.
Read our payroll end of year checklist for more help.
Provide employees with their end-of-year forms.
Through our advanced payroll software, you can provide employees with their P60. Employees’ P60 forms summarise their total pay and deductions for the year, and have to be provided by 31 May. You also need to report on any benefits in kind - such as private healthcare, company cars or interest-free loans - through a P11d, which needs to be submitted by 6 July each year.
Roll out the new software
You may have already taken a few of the steps to set up the new payroll software during the trial period. Wrap up the process by adding in any additional information, so you can start the new tax year off on the right foot.
Follow the instructions provided by your new payroll company. They will likely need:
Business information such as your employer PAYE reference number and number of employees
Employees’ details including their national insurance numbers, tax codes, start dates, student loan information and other details
Payroll records such as all salary and wages payments, staff leave and absences, copies of all PAYE coding notices (P9T) which have been received, BiK information, employee contributions etc.
When the agreed date comes, migrate all your data across. Utilise support available from your new provider to make the process as smooth as possible.
While anyone involved directly with payroll will already know, it’s a good idea to send out a company-wide email or notice so the whole business is aware of the change.
It will help to prevent any confusion, such as payslips looking different, and ensure you’re being as transparent as possible with your team.
Benefits of switching payroll providers
Finding a payroll provider that suits you can help transform and grow your business. You’ll have more time to spend on running your business and focusing on what matters.
More streamlined
Save time and effort with software that understands your business. Choose a payroll provider that is compatible with other software and that factors in things like tax and compliance.
Greater level of control
Take care of your business and your employees. Say goodbye to mistakes in payroll, leading to happier and more productive employees, alongside seeing the big picture of your workforce.
Better automation
Forget manual entry and checking calendar dates, payroll software allows you to schedule it in, ensuring weekly, monthly and annual tasks are done on time by using smart automation.
More ROI
Get a full range of services from a trusted payroll provider. Give your business the edge with reliable customer service, automated employee payments, tax returns, reporting and more.
Less time spent on admin
If you’re still using spreadsheets for a rapidly growing workforce, you can run into trouble. Use a powerful payroll solution to get access to sophisticated tools and complex automation.
When is the best time to switch payroll software?
The start of the tax year is the most efficient time to change payroll providers.
The new tax year kicks off on 6 April each year, and runs until 5 April of the following year. Switching to a new payroll software around this time is a great idea.
1. You’ll have a few weeks between the end of the tax year and April’s month-end payroll to switch payroll providers. This should be enough time to let everyone know about the move, and to train the relevant members of your team about how the new software works.
2. You won’t have to carry over any historical data from the previous tax year into the next one. The business gets a clean break, and you don’t have to worry about compatibility issues (or human error) from information swapping between non-compatible platforms.
3. It’s simple to incorporate changes to tax thresholds. Each year, the UK government announces a number of changes to tax thresholds, rates and codes. By swapping payroll companies at the start of the new tax year, you can easily incorporate any changes.
Changing payroll providers mid-year
Changing payroll providers mid-year might not be as easy, but that doesn’t mean it should be daunting! Talk to your new payroll provider for support in the process, but there are a few things to look out for:
The first thing you’d need to check is whether there is cross-compatibility between the two providers, so you can import any historical data from the current tax year automatically. The last thing you want is to be entering all values manually. Even if you have a relatively small workforce, this increases the risk of errors with any data you input.
You will also want to carefully manage your timelines. Crossover between the two payroll companies could cost you extra as you’ll be paying for access to two sets of software at the same time. Managing the timeline well will also help prevent the production of duplicate filings.
Make sure that there is nothing in the small print that might incur additional costs to your bottom line (like a 30-day notice period from your old provider), or something that might disrupt the upcoming payment run in any way.
Luckily, most payroll companies do what they can to make switching mid-year as easy as possible, so chat with your new provider about what support they offer.
Common mistakes made when switching
Avoid any hiccups when switching your payroll software by watching out for these common slip-ups:
Not telling your stakeholders about it
Before any major software transition, make sure you secure buy-in from all stakeholders, whether that be your employees or accountant if relevant. The last thing you want is to have to switch back to a worse-suited payroll platform if your stakeholders have concerns with the new platform.
Not choosing HMRC-compliant software
Payroll software that is compliant with HMRC, makes the payroll tax process so much easier. Make sure to check how well your new payroll software integrates with the modern requirements of HMRC before committing to the switch!
Not being able to connect to other software
One extremely useful aspect of many payroll tools (QuickBooks included) is the ability to connect to other software, such as online banking. This enables for a seamless flow of data between the platforms and ensures accuracy.
Not planning enough time for the switch
While QuickBooks aims for a fast switch from your old provider, it’s vital to ensure that your switch does not overlap with a payment period. Switching straight after one month’s payment period will help make sure that the switch is completed before the next payday.
How to get started with migrating your payroll
We’ve made switching to QuickBooks as easy as possible. As well as interactive ‘get started’ guides, we also have support available. You can switch from any Payroll company to QuickBooks including Sage, Xero, BrightPay, KashFlow and HMRC Basic Tools.
1. Log in to QuickBooks Online
2. On the ‘Employees’ page, select ‘Let's go’
3. When prompted, select ‘Yes, import my data’
4. On the next page, select your previous payroll software and select ‘Next’
5. Click on ‘Upload file’ on the next page and select your exported XML file
6. On the last page, select ‘Next’ to start the import and that's it
Now that you’re equipped with everything you need to make the switch, it’s time to choose your payroll software before the current tax year ends. Your business will be running more efficiently before you can say “Happy Bank Holiday” to your colleagues and clients at the start of May.
If you’re on the lookout for a new payroll provider who can help you speed through every pay run, consider the QuickBooks Online Core Payroll system.
It offers a quick and painless setup process thanks to the Full Payment Submission (FPS) importer, which can automatically import all the important information about your business, including:
Company and employer details This includes your company name, address, employer PAYE reference number, pension information and other employer data. Try to make sure you have your pension reference information, all details of the employee and employer contributions, the taxation method used and whether you have used qualified earnings thresholds for the calculation of contributions on hand.
Employee details QuickBooks’ FPS importer tool will import the details of your employees automatically, including name, address, date of birth, national insurance number, tax code pay day and the payment method.
Pro tip: Check out a handy feature called pensionsync, which was designed to automatically pull updated pension information from supported providers back and forth between the system.
Information related to changes in the new tax year With QuickBooks Online Core Payroll, the majority of the changes made by HMRC are automatically integrated into the software. These can range from changes to tax codes, student loans and statutory payment rates.
Final review of employee payroll records Once everything has been added to the system, a final review helps to double-check everything before the first payment run of the new tax year.
Feel you’re better informed about switching payroll software? The QuickBooks blog covers a wide range of business-related topics – it’s all part of our mission to help small businesses grow.
Payroll made easy. Feel you’re better informed about switching payroll software? The QuickBooks blog covers a wide range of business-related topics – it’s all part of our mission to help small businesses grow.
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