Many companies have recently changed payroll vendors in January as it is the most ideal time to switch to a new outsourced payroll processing partner. However, many mistakes can be made when doing this. You should take the following steps to make sure that your first (and ongoing) payroll with your new vendor goes smoothly.
Payroll processing has a need for quite a bit of detail oriented data entry. Don’t make these mistakes:
- Being hard to reach: First and foremost, please be attentive to the e-mails and/or phone calls you receive from your new vendor. They are working in your best interest and in most cases are not just calling for the fun of it.
- Selecting wrong date to start: the important date is the check date. Even if the hours worked were in the prior year(or quarter), the actual check date is the important one to monitor.
- Not starting in the first month of a quarter: You should always start with a new payroll vendor in the first month of a quarter. This reduces the potential of tax problems, which is the easily the single biggest problem plaguing the payroll industry. If you have already processed a payroll in January, DO NOT let your potential new vendor talk you into starting in February or March. You should wait until April. This will dramatically reduce the chance of tax problems. If they insist on February or March, find a new vendor! These “mid-quarter conversions” significantly increase the potential of tax problems. Hot Tip: If your vendor insists on starting mid-quarter, they are acting in their own best interests, and not YOURS.
- Not validating data: Pay close attention to the “New Client Set-up Verification Report”, or whatever your payroll company calls it. This report shows in detail each employees data as well as corporate data. Check each employees information closely for correct social security numbers, addresses, deductions, gross salary, banking information, heath insurance costs, 401(k) calculations, loans, etc. Check the corporate entries for correct bank routing number and account number as well as federal and state ID numbers.
- Forgetting to re-assign your TPA: Make sure to go to EFTPS and your states tax and unemployment sites and make your new provider an authorized Third Party Administrator (TPA).
- Not double checking tax/unemployment payments: This is Very important!! You should periodically, at least a couple times a year, login to YOUR EFTPS account and/or state sites to validate that your new payroll company has been making tax payments on your behalf. This is particularly important if you are using a CPA/Bookkeeper to do your payroll. Since they do not do payroll as their core/primary business, they rarely have automated processes or tools to pay your taxes accurately and timely. They use e-mail reminders from Quickbooks, or self generated calendar reminders or to do lists to monitor payment activity. It is therefore more likely that they may miss payments. It is still rare, however still more likely to happen with these types of providers. Hot Tip: Remember that YOU are ultimately responsible for assuring that YOUR payments have been made.
- Not double checking time-clock compatibility: Many businesses utilize their Point of Sale (POS) or practice management software to monitor time and attendance. In most cases, these existing tools will not be compatible for direct upload into your new payroll system. However, most payroll companies have solutions to help with better managing time and attendance.
- Not setting up a regular process for reporting hours: Hopefully your new payroll company uses a dedicated service model whereby you will have a single primary point of contact, as we do here at ConnectPay. Make sure to start building a relationship with your assigned client manager and come up with how you would like to report hours. There are many options, from calling, to emailing, to faxing and most ideally doing it with a secure online system. Decide whom will call whom, what day you will do it, etc. Hot Top: This is your choice ultimately so select what is easiest for you.
- Not using secure systems to send data: Information required to run payroll is the Perfect Storm of identity theft information. When sending or receiving this personal, private information back and forth, make sure to utilize a secure system for doing so. If you don’t have one, your provider likely does. If they don’t, find a new one!!! Hot Tip: We all know to protect our Social security numbers, however, you should remember to protect your Federal and/or State ID’s with same diligence as you protect your SSN.
If you have any questions on payroll, or would like a FREE REVIEW of your current payroll solution, don’t hesitate to contact me.