Guides/Payroll
I use GustoSwitching payroll providers: when and how to do it
Most of the work in a payroll switch is deciding which system owns which paycheck. Here’s how to pick the date, what to pull from the old provider, and how to split the tax filings so nothing gets filed twice.
Shanin Drucquer, owner of Iconic LandscapingGusto user since 2024 · Updated October 2026
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Short answer
Switching payroll providers is cleanest at the first payroll of a new year, when there’s no year-to-date history to move. A quarter start is next best; mid-year works too, but every earlier paycheck has to be entered in the new system.
1
Provider that can file each quarter’s 941
Jan 31
Due date for last year’s Q4 941, 940, and W-2s
$184,500
2026 Social Security wage base, tracked year to date
4 yrs
How long the IRS says to keep payroll tax records
Have these ready
- Your EIN and legal business name, exactly as the IRS has them
- Your federal filing form (941 or 944) and deposit schedule
- State withholding and unemployment account numbers, and your unemployment tax rate
- Your payroll bank account
- Each person’s pay rate, deductions, and benefits
- Your current provider’s contract or service agreement
Step 1 of 8 · 10 min
Pick the first check date in the new system
Choose the first payday the new provider will run, then the last one the old provider will run. Every check date should belong to exactly one system. The check date, not the work dates, decides which year and quarter wages count in.
Watch out
Work done December 15–31 and paid January 15 is next year’s payroll. If you’re switching on January 1, that paycheck runs in the new system.
Step 2 of 8 · 10 min
Read your current agreement
Look for the notice period and how notice has to be given, any renewal date or early-termination fee, and whether payroll, benefits, time tracking, and retirement each cancel separately. Then check how long you keep access to reports after you leave.
Ask the old provider to confirm in writing the end date, the final invoice, and which filings they’ll still make.
Step 3 of 8 · 20 min
Pull reports from the old provider
Download everything before you give notice, while access is certain. A January 1 switch needs little more than employee details. A mid-year switch needs the year so far.
What to download
- Employee details: names, addresses, pay rates, hire and termination dates
- A quarter-to-date summary for each quarter already finished this year
- Every paystub from the current quarter
- Forms 941 and state returns filed this year
- Tax deposit confirmations
- Deduction and benefit totals, like 401(k) and HSA contributions
Step 4 of 8 · 60 min
Set up the new account and sign Form 8655
Enter your company, federal and state tax details, and bank account, set the pay schedule, and invite your team so they can fill in their own SSN, address, and bank details. Form 8655 authorizes the new provider to file and pay payroll taxes for you.
From ShaninMy Gusto setup took about an hour, with my EIN and state tax numbers in hand.
Step 5 of 8 · 15 min
Enter earlier payrolls from this year
If you’ve already paid anyone this year, the new system needs those payrolls so its year-to-date totals, quarterly returns, and W-2s are right. On a January switch with no payrolls yet, there’s nothing to enter. When you’re done, compare total net pay against the old provider’s year-to-date totals.
In Gusto, payroll history is entered during setup. Coming from QuickBooks, ADP Run, or Paychex, you can upload the old provider’s reports instead of typing each check date.
GustoAdd previous payroll records
First check date Jul 10
- Q1 quarter-to-date totalsEntered
- Q2 quarter-to-date totalsEntered
- Q3 paystubs, Jul 1–Jul 91 check date left
Screens are recreated with example data. Step 6 of 8 · 10 min
Split the tax filings in writing
Only one provider can file a quarterly return for any quarter; a second filing is rejected. The old provider files the quarters that finished before you switched, and the new one files from the quarter of its first check date. Write down who makes each remaining deposit and return, and who issues W-2s.
Watch out
If you switch mid-quarter, some state taxes are paid only at quarter end. The old provider should refund what it collected for that quarter so the new one can pay it in full.
Step 7 of 8 · 15 min
Check the first payroll line by line
Before you submit, compare the new payroll with a recent one from the old system: gross pay, each tax, deductions, and net pay for an hourly employee, a salaried one, and anyone with garnishments or benefits. Chase down every difference before payday.
New Gusto accounts start on 4-day direct deposit, so the first payroll is due by 4 pm PT four business days before payday.
Step 8 of 8 · 10 min
Close the old account after its last filings
Give notice the way your agreement asks, but keep access until the old provider’s final returns are filed and you’ve saved its reports outside its portal. On a January switch, that means after the January 31 deadline for the fourth-quarter 941, Form 940, and last year’s W-2s.
Watch out
The IRS says to keep employment tax records for at least four years. Don’t count on the old provider’s portal to hold them.
Step 1 of 8 · Pick the first check date in the new system
Add previous payroll records
First check date Jul 10
- Q1 quarter-to-date totalsEntered
- Q2 quarter-to-date totalsEntered
- Q3 paystubs, Jul 1–Jul 91 check date left
Recreated with example data
January 1, a quarter start, or mid-year
The first payroll of the year is the simplest switch: there are no year-to-date wages to carry over, and the old provider finishes the year it started. A quarter start is a clean break for quarterly filings, though wage totals from earlier quarters still have to move.
Neither date is required. Mid-quarter switches work; they just mean more records to enter and more taxes to split between the two providers.
| Switch at | What moves to the new system | Who files what |
|---|---|---|
| First payroll of the year | Employee details; no payroll history | Old provider finishes last year, including W-2s. New provider files everything from Q1. |
| Start of a quarter | Quarter-to-date totals for each finished quarter | Old provider files finished quarters. New provider files from this quarter, plus the year’s W-2s. |
| Mid-quarter | Quarter totals plus every paystub from this quarter | Same split, and some state taxes for the current quarter may need refunding and repaying. |
Gusto’s split. Other providers work the same way, but confirm the handoff with both.
What a mid-year switch changes
Several payroll taxes stop once an employee earns a set amount in the year. Social Security tax applies to the first $184,500 of wages in 2026. Federal unemployment tax applies to the first $7,000, and state unemployment taxes have their own caps. A new system that doesn’t know what someone already earned this year will keep taxing past those limits.
W-2s are the other reason history matters. Gusto issues one W-2 per employee for the year, covering wages from both providers, so it needs complete year-to-date records. The old provider must not file W-2s or other annual forms for that year once you’ve switched.
Deductions with annual limits, like 401(k) and HSA contributions, carry over the same way. Enter the totals so the new system stops contributions at the limit.
A January 1 switch, working back from payday
Here’s how a switch for the first payroll of 2027 lines up, for a business paying on Fridays. Christmas and New Year’s Day both fall on Fridays this time and aren’t business days, so the last two weeks of December go fast.
| When | What to do |
|---|---|
| Early November | Read your agreement and give notice if it requires it. |
| By early December | Download reports, open the new account, enter company, tax, and bank details, and sign Form 8655. |
| Mid-December | Invite employees, answer any document requests (Gusto reviews them within a business day), and set a January first check date. |
| Thu, Dec 31 | Last check date with the old provider. |
| Mon, Jan 4, 4 pm PT | Submit the first Gusto payroll for a Fri, Jan 8 payday, on 4-day deposit. |
| By Jan 31 | Old provider files Q4 941, Form 940, and 2026 W-2s. Then close the account. |
A suggested schedule built from Gusto’s deadlines and the IRS due dates. If your payday is weekly, count back from your own first January payday.
Switching to Gusto
Gusto is built for the setup to be done yourself, online, with no contract and free account setup. Simple is $49 + $6/person, and Plus is $80 + $12/person; there’s no fee to switch.
Coming from QuickBooks Online, QuickBooks Desktop, ADP Run, or Paychex, you can upload an employee report and a payroll history report during setup instead of typing each payroll; Gusto says that saves about 10 minutes per employee. The upload only works during onboarding and doesn’t set up deductions or contributions, so you add those yourself. From anywhere else, you enter earlier payrolls by check date in the same step.
Gusto files quarterly returns starting with the quarter of your first Gusto check date and issues the year’s W-2s. Leaving a PEO is simpler on history: if the PEO paid you under its own EIN, you start fresh with nothing to enter. If it used your EIN and tax accounts, Gusto can only take over at the start of a quarter.
- Upload reports from QuickBooks, ADP Run, or Paychex, or enter payrolls by hand
- Sign Form 8655 so Gusto files and pays your payroll taxes
- Employees enter their own SSN, address, and bank details
- First payroll on 4-day deposit; 2-day unlocks after 15 days and one successful payroll
“Both times a tax notice showed up for my landscaping company, Gusto sorted it out.”
Shanin Drucquer, Iconic LandscapingCommon questions
When is the best time to switch payroll providers?
The first payroll of a new year, because there’s no year-to-date history to move and the old provider finishes the year it started. The start of a quarter is next best.
Can you switch payroll providers mid-year?
Yes. The new provider needs your payrolls from earlier in the year so it can track wage limits for Social Security and unemployment taxes and issue correct W-2s.
Who files W-2s if I switch payroll providers mid-year?
With Gusto, Gusto does: it issues one W-2 per employee covering wages from both providers. Make sure your old provider doesn’t also file W-2s for that year.
Who files Form 941 for the quarter I switch?
Only one provider can file a quarter’s 941. The old provider files the quarters that finished before you switched; Gusto files from the quarter of your first Gusto check date.
How long does it take to switch payroll providers?
Setting up Gusto took me about an hour, with my EIN and state tax numbers ready. Leave a few weeks before your first payroll for notice periods, document requests, and the 4-day deposit window new accounts start on.
Does Gusto charge to switch?
No. Account setup is free and there’s no contract. You pay the monthly plan: Simple is $49 + $6/person.
What can Gusto import from my old provider?
From QuickBooks Online, QuickBooks Desktop, ADP Run, and Paychex, Gusto can import employee details and payroll history from uploaded reports during setup. Deductions and contributions are set up separately.
Do I need to enter payroll history if I switch on January 1?
Not if Gusto runs your first payroll of the year. Gusto’s setup has an option for when you have no payrolls to report for the year.
Sources: Gusto: enter previous payrolls during setup, Gusto: payroll transfer automation, Gusto: onboarding guide for employers, Gusto: direct deposit payment speeds, Gusto: how to switch payroll providers, Gusto pricing, IRS: employment tax due dates, IRS: Form 8655, IRS: federal unemployment (FUTA) tax, IRS: employment tax recordkeeping, SSA: contribution and benefit base.
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