How to Move Payroll to a New Bank: Step-by-Step Guide

Switching business banks involves several critical steps, and moving payroll is one of the most important. Payroll is the lifeline of your employees, and any disruptions can lead to dissatisfaction or compliance issues. This guide will walk you through how to move payroll to a new bank seamlessly, ensuring your employees are paid on time and without errors during the transition.

Why Moving Payroll Matters

Payroll is a recurring transaction that directly impacts your employees and reflects your business’s reliability. Mishandling payroll during a bank switch can result in:

• Delayed payments to employees

• Errors in tax filings and deductions

• Compliance risks with labor laws

By following a structured approach, you can avoid these issues and ensure a smooth transition.

Step-by-Step Guide to Moving Payroll

1. Open Your New Business Bank Account

Before transferring payroll, ensure your new account is active and ready for use.

Key Steps:

• Gather required documentation (e.g., EIN, business registration).

• Verify account details like routing and account numbers.

• Test small transactions to confirm the account is functioning properly.

2. Notify Your Payroll Provider

Contact your payroll provider or software platform (e.g., Gusto, ADP, Paychex) to update your banking information.

What You’ll Need:

• New account number and routing number

• Effective date for the change

• Any additional verification documents required by the provider

Pro Tip: Notify your payroll provider at least 1–2 pay cycles before closing your old account to allow time for updates.

3. Update Direct Deposit Information

If you manage payroll internally or use accounting software (e.g., QuickBooks), update direct deposit settings with your new bank details.

Steps:

• Log into your payroll system and navigate to direct deposit settings.

• Enter the new account number and routing number.

• Test the updated information with a small deposit before processing full payroll.

4. Communicate with Employees

Inform employees about the change in banking details, especially if it might affect their direct deposits temporarily.

Best Practices for Communication:

• Send an email or memo explaining the transition timeline.

• Reassure employees that their payments will not be disrupted.

• Provide contact information for HR or payroll support in case of questions.

5. Test Payroll Transactions

Run a test payroll cycle using your new bank account before fully transitioning:

• Process payments for a small group of employees or use dummy transactions if possible.

• Verify that deposits are received on time and accurately.

6. Monitor Both Accounts During Transition

Keep both old and new accounts active during the transition period (typically 30–60 days) to catch any missed transactions or errors:

• Ensure all tax payments, deductions, and benefits are processed correctly.

• Confirm that no direct deposits are still linked to the old account.

7. Close Your Old Account

Once all payroll transactions have been successfully routed through the new account:

• Reconcile pending transactions in the old account.

• Obtain written confirmation of closure from your old bank.

Common Mistakes When Moving Payroll

1. Delaying Updates: Waiting too long to notify your payroll provider can result in missed pay cycles or errors.

2. Skipping Test Transactions: Failing to test deposits can lead to unexpected issues during full payroll processing.

3. Not Communicating with Employees: Lack of transparency can create confusion or distrust among employees.

4. Closing Your Old Account Too Soon: Keep both accounts active until you’re confident all transactions have been successfully updated.

How Holdings Simplifies Payroll Transitions

Holdings offers tools designed to make moving payroll easier and more secure:

Key Features That Streamline Payroll Updates:

1. Integrated Financial Tools: Manage payroll alongside invoicing, bill pay, and accounting directly from Holdings’ platform—eliminating manual updates across systems.

2. Secure Payment Management: Easily update direct deposit details through Holdings’ intuitive dashboard.

3. Zero Fees: Enjoy $0 monthly fees and no minimum balances while accessing premium features like high-yield accounts.

4. Real-Time Tracking: Monitor payroll transactions in one centralized dashboard for complete visibility.

With Holdings’ modern banking solutions, businesses can move payroll confidently while minimizing risks.

Final Tips for Moving Payroll

1. Start early—notify your payroll provider as soon as your new account is active.

2. Test transactions before processing full payroll cycles.

3. Communicate clearly with employees about the transition timeline.

4. Monitor both accounts during the transition period.

5. Keep detailed records of all updates for compliance purposes.

Switching banks doesn’t have to disrupt your payroll when you follow these best practices and leverage tools like Holdings that simplify the process.