A Restaurant’s Guide to Switching Payroll Providers (+ Free Checklist Download)

Picking the right payroll provider is important. A good one not only ensures that your employees are paid accurately and on time, but also plays a significant role in regulation compliance, operational efficiency, and team happiness.

Thanks to all the information at your fingertips, making the switch doesn’t have to be so hard. With a bit of legwork, you can smoothly change providers to one that serves your restaurant better—without you and your staff losing your cool.

Restaurant Payroll Migration Template

Stay organized when switching payroll providers using this detailed free payroll migration checklist.

Download now

Assess your current payroll provider

Before you switch providers, you need to decide if it’s a worthy undertaking. Ask yourself these key questions to analyze how happy you are with your current provider.

Recommended Reading: 7 Signs Your Restaurant's Payroll Company Isn’t Working Out

Choose a new payroll provider

After evaluating your current payroll system, you've gained insights into its strengths, weaknesses, and areas needing improvement. Now it’s time to research new providers, taking into account your learnings.

1. Identify your priorities and needs

List your top priorities for a new payroll provider. Is it perfect integration, enhanced compliance features, cost-effectiveness, or something else?

2. Research potential providers

Explore multiple providers and compare the checklist items against each company. Assess how well they align with your business needs and priorities. Consider integration capabilities and scalability.

3. Request demos and trials

Request demos or trials from the shortlisted providers. See for yourself their functionalities, user interface, and support features, making sure they meet the criteria laid out in your checklist.

4. Analyze costs and support

Evaluate the price (including hidden charges) against the benefits offered. Find out about each provider’s customer service and support so you know if they can be counted on to resolve issues quickly. For example, 7shifts offers several modalities to get in touch with their support teams.

“I switched to 7shifts Payroll from one of the “big” payroll companies. It has been an amazing experience from beginning to end. The price is great. Implementation was a breeze. Running payroll is extremely simple and the dashboard is user-friendly and up-to-date. One of the most impressive aspects of 7shifts is the customer service availability. I have used phone, chat, and video call, and they have all been informative and friendly. They follow up with you after you contact them, as well. I look forward to using their services for a long time!”
-Lewis Sharp, Owner-Operator Franchisee of Ellianos Coffee Co. in Jacksonville, FL

Recommended Reading: Ultimate Restaurant Payroll Guide

The best time to make the switch

Strategically, year-end is the best time to switch because it offers several advantages that can ease the process and set the stage for a more efficient start the following year.

1. The fiscal calendar

Year-end signifies a natural financial reset for businesses, meaning a clean slate in the new year and a reduced impact of the transition on operations. Bonus? Any regulatory changes or updated tax laws that come into effect at the start of the year are immediately complied with.

2. Tax filing and reporting

Should any problems arise during the transition, making the switch at year-end allows you to correct errors before the tax filing period begins. This prevents any last-minute challenges during tax-related reporting and gives time for adjustments.

Switching providers mid-year

While not preferred, switching providers mid-year isn’t impossible and comes with its own pros and cons. It’s up to you to decide which time of year is best for your restaurant.

Migrate payroll systems

You’ve picked your new provider, now it’s time to start transitioning. To ease the transition, follow these steps:

1. Review current contract terms

Take a look at your existing contract for cancellation clauses and fees. You may want to consider waiting until it expires if the terms align with your transition timeline.

2. Provide notice and ask for exports

Let your current provider know of your intention to leave, but don’t cancel yet. It's best practice to wait until you run your first payroll with your new provider before you cancel your current one. Ask them to give you exported lists of:

• Payroll records: employee data, payroll registers reports, payroll tax returns, and pay stubs
• Employee information (including terminated employees) so you can set up profiles within your new payroll software
• Federal Employer Identification Number
• State unemployment and insurance number
• W-2 forms

3. Set up your new processor

Work with your new payroll provider to set up your new payroll account. Some common restaurant business information they’ll need is:

• Federal Employer Identification Number (FEIN)
• State tax ID (SEIN)
• Bank account and routing number
• Pay period
• Pay rates

4. Coordinate tax filings

This is where switching at the end of the year comes in handy. But if you change providers mid-year, make sure you’ve determined which one will handle your tax filings for the year. Communicate with both so they’re kept in the loop.

5. Communicate with and onboard employees

Let your employees know about the upcoming switch and help them onboard to the new payroll processor. Your new provider will arm you with the steps involved for employee onboarding. Don’t forget to ensure they’re trained on how to access old and future pay stubs.

6. Run your first payroll

Give yourself some extra time to run your first payroll. You’ll want to review it with a fine tooth comb for discrepancies. Here are some common restaurant payroll mistakes to avoid.

Kelsea Schnitzler

Before I began writing for a living, I worked in restaurants for almost a decade. Now in the marketing world, I apply my experiences to create helpful content for the 7shifts community.