December 16, 2021

Quick Guide to Switching Payroll Companies

The Wrapbook Team
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Running a production company comes with its own unique challenges. While filming multiple projects, working with film crews that often change with each production, the inevitable responsibility of payroll becomes particularly challenging. But unfortunately, many payroll service providers have failed to keep up with the industry’s distinctive demands. If your company has found itself in a tough spot with one of these services, you might be looking into switching payroll companies. Luckily, switching isn’t really that complicated. 

If you find yourself putting off making the switch out of fear of the transition, we’re here to tell you that not only can it be simple but depending on the type of provider you switch to, it can actually save you tons of time. And as a producer, that’s the holy grail. 

So for this post, we’re breaking down the steps you need to take to move on to a new payroll service that better suits your needs.

First things first, why would you want to switch & how do you gauge if it’s worth it?

Before we get into how you switch, we wanted to shed light on why you might want to and if those reasons are justifiable for the amount of time it takes to actually switch. 

For many producers, headaches often come in the form of wasted time---wasted time on monotonous tasks that either keep them away from the project at-hand or prevent them from moving onto the next job faster. The general problem of payroll systems is that they’re antiquated in nature, and seem to exacerbate this time drain.  

Providers that still use paper timecards leave production coordinators with the nightmare of manually entering all of their necessary information. And many companies lack key integrations with budgeting and accounting programs, and so producers or coordinators are left with manually entering all of their data, constantly adjusting info in their budgeting software whenever mistakes are made and edits are needed. 

Not to mention, staying up to date with changing laws and remaining tax compliant can take up time as well. Producers often don’t have this time for the on-going education required to avoid penalties. 

So, it’s likely worth switching if the company you’re switching to can give you all of this time back. And if you’re switching to an Employer of Record provider who handles tax compliance for you, the switch itself is actually even easier than switching to another third party provider. For more on gauging if it's worth it or not, be sure to read through our ebook.

So if this is at all similar to your story, it’s probably worth it to make the switch. But there is still something else to consider...

When should you switch payroll companies?

The timing of when you make your payroll provider transition is important. Often, the best time to switch is right at the start of the new year, a new quarter, or right before the first project of the year. The main reason for this is because you want to avoid paying double unemployment for the same employee---this can happen if you’ve already paid into this throughout the year. 

Mention this to your prospective payroll company to see how you can still switch reasonably and affordably. You might find yourself in a position where you’re actually spending more money on wasted time and avoidable inefficiencies that significantly offset any money you're spending on unemployment. But ultimately, this decision will be different for everyone.

How to switch payroll providers

As with most things in life, how to switch payroll providers can be simply broken down into a series of manageable steps for you and your business. Most of the process of switching payroll companies is actually deciding to switch and doing the proper research on which of the online payroll service providers will be best for you.

We’ll break down what you might want from your previous provider and what your new company will need.

What to collect from your previous provider

*Note, when switching to a company like Wrapbook, you don’t need to take any steps in order to migrate over. However, if you’re switching mid-year, you’ll still need to ensure tax filings from early in the year are handled by the provider you had during that time. 

The below considerations are most helpful 1) if you’re switching to a company that isn’t an EOR, 2) if you just want this information for your records or, 3) and more commonly, if you’re switching to any type of company mid-year, (even EORs). 

For your own purposes, you may very well want your data from your previous provider kept safe and in your hands. You’ll also want to be sure you handle tax filings correctly when switching mid-year. 

Below, we’ve laid out other optional steps you might want to take to secure this. 

1. Review your current contract’s details & provide timely notice

Giving your previous payroll provider timely notice will be a courtesy to them and give you a solid timeline for working through your payroll transition. Reviewing your current contract will also remind you of certain features that you may want to either change or keep with your new payroll company and even provide useful comparisons when working out a contract with your new provider.

2. Request ROEs for a change of payroll provider

This may or may not be relevant - it depends on your provider and the region you’re in. But Record of Employment (ROE) documents may be needed before you run your last payroll with your old provider. This will give your new payroll company access to the pay period breakdown of insurable earnings when they prepare ROEs for you. But again, an EOR like Wrapbook doesn’t need this. This could be helpful when switching to other payroll providers, but always check with them first. 

3. Request payroll register reports

Be sure to request thorough payroll register reports from your previous provider. These reports should include all payroll information, such as year-to-date wages and deductions for each of your employees. If switching mid-year, this information will be important for your new provider. When changing payroll providers mid year or even switching payroll companies mid quarter, you’ll want to make sure your new provider has the proper information for quarterly and year end tax reports.

4. Request copies of paystubs

Collect copies of your employees’ previous paystubs and tax documents, again, especially for providers who will be taking over payroll mid year. Your new provider will not have access to paystubs, W2s, W4s, or 1099s processed through your former provider. Your employees will often need these for their own tax filings or additional record keeping. Either collect all of these documents from your previous provider or set up a clear line of communication with them to allow employees to access them as payroll data providers. Be sure to outline the distinction between the two providers to your employees so that they understand where to find their relevant paperwork if you plan on switching payroll companies mid year. 

5. Coordinate filings & expectations with the previous provider

Ensure that your old provider will send the IRS a Year-End Report. The IRS will need to receive reports from both of your providers if your company plans on switching payroll companies mid year.

A general step of your transition process will be maintaining communication with your former provider. Even in the most smooth of payroll transitions, you will still need to regularly communicate with them to ensure all of your employees’ paperwork is readily available and that your previous tax filings are in order.

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Migrating to an employer of record service

Switching over to an EOR is a cinch because it requires zero migration of previous data. Typically, you’ll have a laundry list of things to do just to make the transition happen. Here’s a quick comparison of the steps you’d have to take when switching to another third party service vs. something like Wrapbook (a production payroll software that’s an Employer of Record). 

Switching Payroll Companies - EOR Migration - Wrapbook
Switching to an EOR is simple process.

How to switch payroll providers gets all the easier when making the switch to an Employee of Record. With EORs, they handle all of your tax filings and compliances under their federal ID number. 

Even with the nuances of taking over payroll mid year or switching payroll companies mid quarter, Wrapbook tries to keep migration as simple as possible. Many people have made the switch because they often find that they waste more time and money with slow workflows than they do actually taking the time to switch. 

Here’s a step-by-step guide of how to switch payroll providers and cut down the unnecessary anxiety of switching payroll companies with a provider like Wrapbook.

1. Apply for a Federal ID number

You will need to apply for your business Federal ID number, also known as Employer Identification Number (EIN). Your payroll will be filed under our ID number, but you still need a Federal ID number for their business’s other tax responsibilities including Sales Tax, Corporate Tax, and other Business taxes. 

To apply, visit the IRS for a quick 15 minute application.

2. Open a company bank account

With Wrapbook, your company bank account will be directly linked to the software. For payroll disbursement, we’ll pull the funds directly from your account and withhold all necessary federal and state payroll taxes.

3. Put in a Workers' Compensation application

Workers’ compensation will be the next important step as it is among the responsibilities that you will still have under an EOR provider. Workers compensation is a government-mandated, federal disability compensation program that administers monetary benefits to workers who become injured during their employment. For each production project, you will have to file a workers’ compensation application. As your new provider, we’ll then place it under our name and work with your insurance company who will disburse payments when and if needed. If you already use Wrapbook’s insurance, this is even easier.

4. Log into your payroll provider and start a new project

Once you’ve met the previous steps, you’re ready to start your next project. With Wrapbook, you can log into the system and create a project for an upcoming production. 

5. Invite workers to the project for self-setup

Once your project is created in Wrapbook, you can start inviting workers to the project. Crew members will be able to enter all the information you need to start onboarding and paying them. They can enter union status, information to generate W2 and/or 1099s, their bank account routing number, and more. 

And with integrated startwork documents, crew members can easily sign off on NDAs, read crew agreement deals, and have all of those documents for review in one place.

With EORs, payroll will become the responsibility of your provider. Though you no longer have to worry about withholdings and compliances, it will still be your responsibility to communicate with your employees that you have moved to a payroll service. It will also be up to your company to remind workers when to submit their timecards for payroll.

Keep in mind that how to switch payroll providers will vary according to which provider you ultimately settle on. 

Wrapping up

Switching payroll providers may seem daunting. However, when it comes to the legacy of inadequacies plaguing production payroll services, the biggest risk may be not switching. When you find a company that actually saves you time, it becomes a worthwhile endeavor. If you choose to switch to an Employer of Record like Wrapbook, learn how seamless the switch actually is.

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Last Updated 
December 16, 2021


At Wrapbook, we pride ourselves on providing outstanding free resources to producers and their crews, but this post is for informational purposes only as of the date above. The content on our website is not intended to provide and should not be relied on for legal, accounting, or tax advice.  You should consult with your own legal, accounting, or tax advisors to determine how this general information may apply to your specific circumstances.

About the author
The Wrapbook Team

The Wrapbook Team consists of individuals who are thrilled about building modern software tools for creators. We’re a team of compassionate and curious people dedicated to solving complex problems with sophisticated solutions. You can find us across the U.S. and Canada.

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