Payroll Processing Entity Change Fees

February 12, 2025

by a searcher from George Mason University - School of Business in McLean, VA, USA

Greetings,
I am reaching out to the community to see if anyone has experienced excessive payroll processing company entity change fees post acquisition. I recently acquired an electrical contractor business in Northern VA, and employees live across four states: MD, VA, DC, and WV. It took about 3 months after the acquisition to get all of the tax and unemployment ID's registered. During that time, we continued to process payroll on the previous company taxes. Now that everything is ready for the entity change, I am being charged $4,600 in fees for the entity change, which appears excessive.

Any similar experiences out there with payroll processing entity changes?

Reply by a searcher
from New Mexico State University in Denver, CO, USA

Part of our services we offer is payroll services for clients, and we also utilize a large HR/Payroll platform to run everything from. $4600 sounds ridiculous. It doesn't take more than a few hours per state to establish entities, create TPA's (Third Part Authorizations) at each State's UI and tax withholding divisions so your provider can file and pay on your behalf; and then it is a simple matter of waiting for mail to arrive with account info (and some now provide the info electronically and immediately) and plugging it into the payroll provider's software. If you did that leg work and THEN they are charging the fees just to plug in account info and rates, I would inquire on the internal processes they need to take to make the change for sure. Most payroll service software makes it effortless to change entities or create a new instance for a new entity.

Reply by a searcher
from George Mason University in McLean, VA, USA

Your response is very helpful. I scheduled a phone call with their customer relations manager on Tuesday. My company did all of the legwork of filing the forms, they are just charging that for changing the amounts filed between the previous company and the new company. It has definitely been a pain to change entities in this payroll system.

+3 more replies.

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