Payroll Migration Guide


Deciding to make the change from one payroll provider to another can seem like a big decision. We have aggregated a list of considerations depending on the type of migration you require.

Direct Employment to Direct Employment Migration

If you are currently directly employing your workers and want to continue doing so, you have all of the required information that’s needed to switch payroll providers. Processes may vary but overall what is needed are:

  • State Tax Information:

    • Income Tax IDs

    • Unemployment IDs

    • Withholdings Rates

    • Withholding Schedules

    • State Tax Logins

  • Additional Requirements:

    • Your new payroll provider should provide you with instructions on how to login and add them as a new Third Party Administrator

    • Workers Compensation Policy

    • Health Insurance Policy

    • Deductions Schedule

    • Matching Schedule

    • Determine if you need to transfer your broker of record

  • Critical Records:

    • Historical Payroll Journal (important if transferring during a fiscal year)

    • Past Filings (for record-keeping purposes)

Franklin’s Role in Your Direct Employment Transition

When you switch to Franklin from another payroll provider, we handle 99% of the steps above for you, all for $0. The only action that you need to take is:

  • Add us to your current payroll system

  • Add us as a Third Party Administrator in any applicable states.

Within 1 week, your migration will be complete and you will be using Franklin.

PEO / EOR to Direct Employment Migration

Moving off of a PEO can end up saving a company a lot of money depending on their size. Much of the services that a PEO provides would now be the responsibility of the employer directly, which can be much more cost-effective but requires a bit more administrative work upfront to get things set up.

  1. Create a list of the states you have employees in and register with local authorities.

    1. Most states have at least two required departments to register with - their department of revenue for income taxes, and the department that handles unemployment.

    2. This can be done either by applying directly through each state’s website, or going through a corporate registrar. The benefit of corporate registrars is that they can standardize the application process, monitor mail, and send reminders about deadlines.

  2. Apply for EFTPS for federal taxes. They will snail mail you a pin number that is important to maintain for your records

  3. Add your new payroll provider as a Third Party Administrator to each of your state accounts

  4. If you’re offering health benefits, solicit quotes through a benefits administrator. Since healthcare is largely administered through people’s jobs in the U.S., many companies find themselves in the position of either wanting to, or being required to offer their employees health insurance. This is also one of the largest operational expenses that some companies incur. When looking at a new benefits program, you generally need to complete a worker census for the broker which contains information about your worker population like

    1. Birthdates

    2. Zip Codes

    3. Marital/Family Status

  5. Apply for Workers Compensation Insurance. This insurance is separate from offering a health insurance program which is for the company. Most states require employers to maintain this kind of insurance although there are some exceptions in certain states and for sole proprietorships.

Once these policies / registrations are completed, you’ll be prepared to run payroll now as a direct employer. With a good payroll software, you can largely set it and forget it. You’ll need to renew your insurance policies once per year and the payroll processor will handle all of the required filings and generation of W2s and 1099s.

Franklin’s Support in PEO to Direct Employment Migration

With Franklin, migrating from a PEO to direct employment can be almost entirely outsourced. Our team can handle the tax registrations and insurance applications on behalf of our users free of charge. To learn more about migrating to directly employing your workers with Franklin, please reach out.

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Incubated by Serotonin, a product studio and marketing firm for transformative technologies.

Audited By

Powered by Alchemy

© Franklin Systems Inc. 2024

Incubated by Serotonin, a product studio and marketing firm for transformative technologies.

Audited By

Powered by Alchemy

© Franklin Systems Inc. 2024