The short answer to, will I get 2 W2s if I switch payroll providers? 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 break up with them that will ensure a smooth transition. Let’s talk about it.
Have you ever had to break up with someone? There are many ways to end a relationship, and the effort you put in can make a world of difference in the outcome. Sending a quick text is much easier than a face-to-face conversation, but deep down, we all know one is the wrong choice. Ending a business relationship is similar. Doing it the right way will take some more communication than might feel comfortable, but it’s better than doing things the wrong way. When you tell your current payroll provider that things aren’t working out, here are some things to be sure to let them know so you don’t run into any issues.
Breaking Up with your payroll provider
When you choose to outsource your payroll, there are a few responsibilities that your payroll provider takes on for your company. Typically, these responsibilities include paying your employees, withholding employee and employer taxes, filing quarterly state and federal taxes, and filing W2s for your employees come year-end. Because the payroll provider is taking on responsibility for these tasks, they will make sure that everything gets done to avoid being liable for any fees or penalties. This is typically a very convenient part of the service that gets provided, but what happens when you switch your payroll provider halfway through the year, or halfway through the quarter? Will both providers need to file partial unemployment returns and partial W2s?
There is no such thing as a partial W2
The good news: there is no such thing as a partial return or a partial W2 – there are only correct W2s and ones that need to be corrected. The bad news: if your communication with your old and new providers is not clear, you may end up with multiple returns or multiple W2s. And if the filing agency accepts the wrong set, that would be one expensive headache to fix.
When you make the switch, you should send your new provider all the payroll records for the current and past calendar year. That way they will be able to accurately file your W2s and quarterly returns from when you first start using their services. The second important step is to communicate with your old provider that someone else will be filing on your behalf. It can be uncomfortable to communicate with a business you are breaking off ties with, but if you don’t do it on the front end, it will only get worse.
What happens when you double-file W2s
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 have them reach out to the agency they sent the incorrect files to so they can 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.
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. It’s hard to end relationships, but doing it the right way will prevent it from returning to haunt you later. Ask the guy who broke up with his girlfriend via text on Valentine’s Day how it all ended. Was the new paint job on his car worth avoiding the discomfort?