The short answer to 'will I get multiple W2s if I switch payroll providers?' is yes, sometimes.
But that shouldn't stop you from making a change if your current provider isn't working out.
The good news? There are ways to switch payroll providers while keeping the process headache-free. Let's talk about it.
Breaking Up with Your Payroll Provider
Have you ever had to end a relationship? There are many ways to do it, and the effort you put in can make a big difference. For example, sending a text is easier than having a face-to-face conversation, but we all know which one is better. Similarly, ending a business relationship, such as with your payroll provider, requires clear communication to avoid issues later on.
Here’s what to keep in mind when parting ways with your payroll provider:
Key Responsibilities of a Payroll Provider
When you choose to outsource your payroll, there are a few responsibilities that your payroll provider takes on for your company.
Payroll providers handle several essential tasks, including:
- Paying employees
- Withholding taxes (both employee and employer)
- Filing quarterly state and federal taxes
- Filing W2s at the end of the year
Since your provider is responsible for these tasks, they make sure everything is handled properly to avoid fees or penalties. But what happens if you switch providers halfway through the year or quarter? Will both providers need to file partial unemployment returns and partial W2s? Let’s break it down.
There's No Such Thing as a Partial W2
The good news: there’s no such thing as a “partial W2.” There are only correct W2s and those that need to be corrected.
The bad news: if communication between your old and new providers isn't clear, you might end up with multiple returns or W2s. And if the wrong one gets filed, it could lead to an expensive headache.
To prevent this, follow these steps:
- Share Payroll Records: Send your new provider all payroll records for the current and previous calendar year. This helps them file accurate W2s and quarterly returns from the moment you start using their services.
- Notify Your Old Provider: Let your previous provider know that someone else will be handling your filings going forward. Although this might feel uncomfortable, doing it upfront will help avoid bigger issues later on.
What Happens if W2s Are Double-Filed?
If you find yourself with double-filed W2s, you will need to act quickly to resolve the issue. The best way to resolve this is to contact your old provider and ask them to reach out to the agency they filed with and retract the submission.
If letting them know they didn’t need to file on your behalf is uncomfortable, imagine how the conversation feels to let them know they need to contact the government on your behalf. It’s not fun, and if you don’t act fast, it could end up being costly.
If it’s too late to retract the submission, you may need to end up filing W2Cs for each of your employees, and since there is a fee per W2C, that can add up quickly.
The faster you act, the less painful the process will be. Delaying could result in unnecessary expenses and a lot of frustration.
The Importance of Clear Communication
Communication lapses happen. Sometimes the window for clear communication closes faster than we expect, or sometimes the expectation is that someone else will communicate.
Or, in very rare cases, it just wasn’t a priority, so it didn’t happen.
Thinking About Switching Payroll Providers? Rip Off the Band-Aid!
It’s hard to end relationships, but doing it the right way will prevent it from returning to haunt you later.
Think of it like breaking up with someone — it’s uncomfortable but necessary. If you delay or avoid the conversation, you may face bigger problems later. So, make sure both your old and new payroll providers are on the same page to avoid costly mistakes.
Thinking about switching payroll providers but not sure where to start? Learn 'How To Switch Payroll Providers Smoothly' in our next blog.
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