Switching to Collective Payroll from another payroll provider

Switching payroll providers takes careful timing. Your previous payroll provider, Gusto (our payroll partner), and Collective all work from the same dates and records, so your W-2s, payroll taxes, financial reports, and tax returns stay accurate. This article walks you through what you'll do and what to expect.

This article is for S Corp tier members. If your S Corp already used Gusto before joining Collective, see Add Collective to your Gusto instead.

When this applies

This process is for you if all of the following are true:

• You joined Collective with an S Corp.
• Your S Corp paid you as an employee in a year that Collective is filing your Business Tax Return (Form 1120-S).
• You used a full-service payroll provider other than Gusto, such as ADP, Paychex, or QuickBooks Payroll.
• Your provider ran payroll under the same EIN we have on file for your business.
• You can still access your provider's software and reports.

We can't onboard members who calculated and paid state and federal payroll taxes themselves, or with another individual, in a year that Collective is filing the Business Tax Return. If that's your situation, reach out to your Collective team.

How the switch works

The whole switch usually takes about 2 weeks before your first payroll with Collective.

Step 1: Tell us about your previous payroll during payroll setup

When you set up payroll in your dashboard, you'll be asked about your previous payroll provider. You'll enter:

• Your previous provider
• Your first pay date with Collective, which needs to be at least 2 weeks out
• How many employees and former employees you paid this year
• Your pay schedule, and whether anyone works remotely

Step 2: Give Gusto access to your previous payroll account

After setup, our team will send you a message titled "Action Required: Transitioning your payroll to Gusto." In it, we'll ask you to:

1. Add the Gusto email address from that message as a Full Access Administrator in your previous payroll account. If you use QuickBooks Payroll and adding a user would require an upgrade, add it as an Accounting Firm instead.
2. Reply to confirm access is set up, and tell us your previous provider, your last pay date with them, and any health benefits you offer.

Gusto uses this access to copy your payroll history for the year. Once Gusto has everything it needs, this usually takes 5 to 7 business days.

If you can't give access, upload your documents instead

Download these reports from your previous provider and upload them in your dashboard under Documents, then Upload, with the document type set to Other:

1. Paystubs for every payroll this year, showing current and year-to-date amounts. You don't need these if you're switching on January 1.
2. Payroll journal or payroll details reports for each quarter this year.
3. Federal payroll tax returns (Form 941) for each completed quarter. You don't need these if you're still in the first quarter.
4. State quarterly payroll reports for each completed quarter.
5. Proof of payroll tax payments, such as an agency payment report.
6. A payroll tax liability report showing anything still outstanding.

Payroll providers use different names for the payroll run report:

If you can't find a report, ask your previous provider where it lives in their software. If you're still stuck, reach out to your Collective team.

Choose your final payroll date

You choose the last date you'll run payroll with your previous provider, and tell us in your reply in step 2. After that date:

• Don't run any more payrolls with your previous provider.
• Don't run a payroll with Collective until we confirm your switch is complete.

Final payroll taxes and filings

Your previous provider is responsible for paying payroll taxes and filing quarterly reports (Form 941 and state returns) for the quarters it ran your payroll. Gusto files from your first payroll with Collective forward, along with your year-end W-2s and your federal unemployment tax return (Form 940). Gusto can't go back and file earlier quarters, so make sure your previous provider has paid all taxes and filed your final quarter before you cancel.

Providers differ on when they take payroll taxes from your business checking account and send them to tax agencies. A few examples:

• ADP: For each payroll, ADP withdraws all payroll taxes from your business checking account and sends them directly to the tax agencies. Ask ADP for an Agency Payment Report.
• Paychex: For each payroll, Paychex withdraws the money and holds it for a period of time before sending it to the tax agencies. Tell them: "Please do not give me a refund of payroll taxes collected. Please send them to the tax agencies."
• QuickBooks Payroll: For each payroll, QuickBooks withdraws the net pay from your business checking account. Depending on your setup, it either doesn't deduct payroll taxes and expects you to pay them, or deducts them at the end of the quarter and sends them to the tax agencies. Tell them: "Please do not give me a refund of payroll taxes collected. Please send them to the tax agencies."

When to cancel your previous provider

Keep your previous payroll account active until your switch is complete, since Gusto needs access to copy your history. If you're in a contract, check for a cancellation fee.

Once we confirm your switch is complete:

1. Check that no payrolls are still scheduled with your previous provider.
2. Confirm your final quarterly filings are done.
3. Cancel your previous provider.

Run your first payroll with Collective

Wait until we confirm your switch is complete before running your first payroll with Collective. If you run it before your history is copied over, your taxes, reports, and W-2s may not be accurate. When you're ready, go to Payroll, then Overview, and select Review and run.

If you ran payroll last year but not yet this year

This section is for members whose S Corp ran payroll with another provider in the prior year but hasn't run payroll yet in the current year. If you've already run payroll this year, follow the steps above instead. If your previous provider was Gusto, see Add Collective to your Gusto.

Don't run payroll with your previous provider this year, and turn off auto-run if it's on. Our team will ask you for the prior-year documents below, or for access to your previous payroll account so the reports can be pulled for you.

Documents to upload

Upload these for the periods Collective is doing your bookkeeping:

• All pay stubs
• All federal quarterly payroll tax returns (Form 941)
• All state quarterly payroll tax returns
• All quarterly wage and tax register reports
• All quarterly payroll liabilities reports, plus one quarter prior
• Your filed W-2

If you ran payroll without a payroll provider

If you ran payroll without a payroll platform like ADP, Paychex, or Wave, provide all federal and state quarterly payroll tax returns for the quarters Collective is doing your bookkeeping. You'll also need a spreadsheet with these amounts for each of those quarters:

• Gross wages
• Federal income tax withholding
• State income tax withholding, and other state or local tax withholding if applicable
• Employee and employer Social Security tax
• Employee and employer Medicare tax
• State and federal unemployment tax
• 401(k) employee deductions and employer contributions, if applicable
• Health, dental, and vision insurance employee deductions and employer contributions
• SEP IRA employer contributions, if applicable

If you have questions about your switch, reach out to your Collective team. They're here to help.

Disclaimer: The information contained in this document is provided for informational purposes only and should not be construed as legal, financial, or tax advice.