As your business evolves, so should your payroll solution. Maybe you started with a simple spreadsheet, graduated to a basic online tool, and now you're wondering if there's something better out there.

Good news: There likely is.

In this blog, we'll talk about when it's time to switch your payroll provider, and what features to look for in new payroll tools. There's also a recommendation for a payroll provider that's widely trusted by startups, agencies, and small businesses across the US.

4 Reasons You Should Switch Your Payroll Providers

Your company is growing

As your business expands, so do your payroll needs. You might be bringing on new employees at a rapid pace, branching out to new locations, or implementing more intricate compensation structures. These changes, while exciting, put increasing strain on your payroll system.

Your once-suitable solution may now struggle to handle the volume and complexity of your evolving business. Perhaps it's faltering under the weight of multiple tax jurisdictions, or it can't quite manage the nuances of your new bonus structure. As your company grows, your payroll requirements naturally become more sophisticated.

If your current provider isn't keeping pace with these changes, it's time to consider an upgrade.

Compliance is becoming a headache

Keeping up with payroll regulations is like trying to hit a moving target. Tax laws change, minimum wages increase, and new employment regulations pop up seemingly overnight. If you're losing sleep over whether you're fully compliant, it might be time for a change.

The right payroll provider doesn't just process payments - they're your partner in compliance. They should automatically update tax rates, alert you to new regulations affecting your business, and ensure you're always on the right side of the law. This isn't just about avoiding fines (though that's important too) - it's about giving you peace of mind so you can focus on running your business.

Your HR tech stack doesn't play well together

In today's world, your payroll system shouldn't exist in a vacuum. If you're manually entering data from your time tracking system into your payroll software, or if your benefits administration is completely separate from everything else, you're wasting valuable time and risking errors.

Modern payroll solutions integrate seamlessly with other HR functions. Imagine having your time tracking, benefits, and payroll all talking to each other automatically. No more double entries, no more reconciling discrepancies at the end of each pay period. It's not just convenient - it can significantly reduce errors and free up your team to focus on more strategic tasks.

You need a tool that's user-friendly

A clunky, outdated interface can slow down your processes and lead to frustration among your team members. Modern payroll solutions offer intuitive, user-friendly designs that can significantly improve efficiency and reduce errors.

An easy-to-navigate system means less time spent on training and troubleshooting. Your HR staff can process payroll more quickly, leaving them more time for strategic tasks. Employees benefit too, with self-service portals that allow them to easily access pay stubs, update personal information, and manage their tax withholdings.

Moreover, a user-friendly tool often comes with mobile compatibility, allowing managers to approve timesheets or view reports on the go. This flexibility can be especially valuable for businesses with remote or distributed teams.

By switching to a more user-friendly payroll system, you're not just upgrading software — you're investing in productivity and employee satisfaction.

When is a Good Time to Switch Payroll Companies

The best time to switch payroll companies is typically at the start of a new year or quarter. This timing aligns with natural breakpoints in your financial reporting and tax filing cycles, making the transition smoother and minimizing disruptions to your operations.

Switching at the beginning of a new year is ideal because it allows for a clean break in terms of tax reporting. You'll receive W-2s and other year-end tax documents from your old provider for the previous year, while your new provider handles everything moving forward. This clear delineation simplifies record-keeping and reporting.

If a new year start isn't feasible, the beginning of a new quarter is the next best option. Quarterly tax filings and reports provide a natural transition point, reducing the complexity of mid-period switches.

However, don't let timing concerns prevent you from making a necessary change. If your current system is causing significant issues, it may be worth switching sooner rather than later. Modern payroll providers often have processes in place to handle mid-year transitions, including importing historical data to ensure continuity in reporting and compliance.

Before making the switch, ensure you have all necessary data from your current provider, including employee information, tax records, and year-to-date payroll data. Also, allow enough time for setup and testing with your new provider to ensure a smooth transition when you do make the switch.

Questions to Ask Your Potentially New Payroll Providers

When switching payroll providers, your goal is to not run away from a solution you don't like to something even worse or similar. You want to find a payroll provider that can streamline your processes, reduce administrative burden, and support your business growth. So don't hesitate to ask detailed questions - a good provider should be transparent and willing to address all your concerns.

Here are some key questions to consider asking potential payroll providers:

• How does your system handle multi-state taxation? As a growing business, you might expand across state lines. Ensure the provider can manage different state tax requirements efficiently.
• What level of customer support do you offer? Ask about availability, response times, and whether you'll have a dedicated account manager who understands your business.
• How does your pricing structure work as we grow? Understand how costs might change as you add employees or locations to avoid surprises later.
• Can your system integrate with our existing HR and accounting software? Seamless integration can save time and reduce errors in data transfer.
• What security measures do you have in place to protect sensitive employee data? Data breaches can be costly and damage your reputation. Ensure the provider has robust security protocols.
• How do you stay updated with changing payroll laws and regulations? Compliance is crucial. The provider should have a system for keeping their software up-to-date with legal changes.
• What reports can your system generate? Ensure you can access the financial and operational insights you need to make informed decisions.
• How does your system handle different types of employees (full-time, part-time, contractors)? Your workforce might be diverse, so your payroll system should be flexible.
• What's your process for transitioning data from our current provider? Understand how they'll handle historical data and ensure a smooth transition.
• Do you offer any additional HR features beyond basic payroll? Some providers offer benefits administration, time tracking, or performance management tools that could be valuable as you grow.

A Modern Solution for Growing Businesses

While the best solution will depend on your specific needs, Thera is worth considering if you're looking for a modern, scalable payroll solution that can support your business as it grows.

Backed by Y Combinator, Thera offers an all-in-one HR platform designed for the future of work. Here's why it's worth trying:

1. Global Reach: Thera supports payroll and contractor management in over 150 countries, making it ideal for distributed teams.
2. Compliance Made Easy: With built-in compliance features and a platform Registered Agent, Thera ensures you stay on top of regulations without the headache.
3. Versatility: From US payroll to global contractor management and affordable Employer of Record (EOR) services, Thera scales with your business needs.
4. User-Friendly Interface: Thera's simplified HR experience puts payroll on autopilot, saving hundreds of hours on operations.
5. Competitive Pricing: With EOR services starting at $199 and no hidden fees, Thera offers transparent, affordable pricing.
6. Support When You Need It: Thera provides dedicated Slack channels for immediate support, ensuring you're never left in the dark.

Book a demo with us today and discover why Thera could be the last payroll provider you'll ever need.

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