Context
This article is aimed at members joining Collective who already ran payroll during the current year using a payroll platform other than Gusto. Members joining Collective who have not run payroll during the current year but did run payroll in the prior year should refer to this article: Switching Payroll Providers at the End of The Year. If you were using Gusto as your previous payroll provider, disregard the remainder of these instructions and refer to this article instead: Add Collective To Your Gusto.
Switching payroll companies mid-year takes a lot of work. It must be performed with precision to ensure that future quarterly reports and annual W2s are filed correctly with State and Federal agencies. It is also important that your accounting software matches what occurred in your previous payroll software.
Note: If you are in a contract with your current payroll company, you may receive a cancellation fee due to breaking this contract before joining Gusto. We recommend that you do not cancel your current payroll provider until onboarding is complete. Make sure you are comfortable with this before joining Collective.
If your company ran payroll this year before joining Collective, please follow these directions. It is very important to follow the steps below.
Stop running payroll through your payroll provider, but keep your prior payroll account active until your onboarding accountant instructs you to cancel it.
Confirm with your payroll provider that they filed or will file all payroll reports for prior quarters.
Confirm that your prior payroll provider remitted all federal and state payroll taxes on your behalf for all payrolls you ran through your prior payroll system. You do not want your prior payroll provider to refund any payroll taxes to you. It is important that when you begin using Gusto at Collective, all of your prior payroll tax liabilities have been paid.
Download or request documents (described below) from your prior payroll provider and upload to your Collective dashboard.
Directions for Documents
Please obtain the following documents from your prior payroll company before meeting with your onboarding accountant. Either download these documents or email your prior payroll provider with the following request (please share the exact following language with your payroll company). In order of importance:
Detailed payroll journal reports for each quarter in the current year. Also called payroll details report by some payroll providers. The detailed payroll journal report should show the breakdown of employee and employer tax separately for each employee for each paycheck issued.
Quarterly 941 Report for each quarter that has passed. These are the reports that are filed with the Federal government. Not needed if still within the first quarter.
Any Quarterly State payroll reports specific to the state in which you are registered as an employer. Not needed if still within the first quarter.
Every paystub for the year. Each paystub should show the amounts for that particular paystub as well as YTD (year-to-date) amounts. (Not needed if you are switching payroll providers on January 1st.)
Any agency payment reports or proof of tax liability payments.
Payroll liability report showing all payroll liabilities that are currently outstanding. This report may include medical insurance premium payments, retirement payables, or other fringe benefits.
Directions for Payroll Taxes
Please tell your payroll company to submit tax liability payments to agencies for the payrolls you have already run. Below are some nuances for different payroll companies.
ADP
How They Work
For each payroll run, they withdraw all of the payroll taxes from your business checking, and send that money directly to the various payroll agencies.
What You Need To Tell Them
Ask them for to supply you a "Agency Payment Report"
Paychex
How They Work
For each payroll run, they withdraw money from your business checking account and hold it for a period of time before sending those payments to the tax agencies.
What You Need To Tell Them
Tell them "Please do not give me a refund of payroll taxes collected. Please send them to the tax agencies."
QuickBooks Payroll
How They Work
For each payroll, they withdraw the net pay from your business checking account. Depending on your setup, they either:
Deducts no payroll taxes from your business checking and wants you to make the payments (or)
Deducts the payroll taxes from your business checking account at the end of the quarter and submits that money to the tax agencies.
What You Need To Tell them
Tell them "Please do not give me a refund of payroll taxes collected. Please send them to the tax agencies."