Switching from Gusto or OnPay to do-it-yourself payroll

Many small S-corporation owners start with a payroll service such as Gusto or OnPay. Later, some decide to run payroll themselves. You might want more control, or you might have only a few people on payroll. This guide covers what you take over from the service, what to collect before you leave, and how to set up the federal side so nothing gets missed.

You were always the responsible party

A payroll service does the work, but the legal duty stays with you. The IRS says that the employer is ultimately responsible for the deposit and payment of federal tax liabilities, even when a third party makes the deposits. If deposits are missed, the IRS may assess penalties and interest on the employer's account. The employer may also be held personally liable for certain unpaid federal taxes.

Publication 15 (2026) says the same thing: using a payroll service provider or reporting agent generally doesn't relieve the employer of the duty to make sure returns are filed and taxes are paid on time.

So switching doesn't add a new legal duty. You take over the work and the checking that a service used to do for you.

What you take over

When you leave a payroll service, these jobs become yours:

Figuring each paycheck: gross pay, federal income tax withholding, and Social Security and Medicare taxes.
Paying your employees (including yourself) from your business bank account.
Making federal tax deposits through EFTPS.
Filing Form 941 each quarter, and Form 940 for FUTA tax each year.
Preparing Forms W-2 and W-3 at year end.
Handling state withholding and state unemployment reports.
Keeping payroll records.

For the 2026 Social Security and Medicare figures, Publication 15 gives:

Tax (2026)	Employee rate	Employer rate	Wage limit
Social Security	6.2%	6.2%	$184,500 per employee
Medicare	1.45%	1.45%	No limit
Additional Medicare Tax	Withhold on wages over $200,000 in a calendar year	No employer share	None

For more on paying yourself as an owner-employee, see How to pay yourself from an S corporation.

Step 1: Pick a clean switch date

The cleanest switch date is the start of a calendar quarter. Then the service files the full quarter before you leave, and you file every quarter after. A mid-quarter switch can work too, but you have to agree with the service on who files that quarter's Form 941.

Get this right. Publication 15 says to file only one Form 941 per quarter. Filing more than one return for the same period can cause processing delays and IRS letters. Ask the service in writing which returns it will file for you, including any year-end forms, and which ones it won't.

Step 2: Download everything before you leave

Your access may end when you cancel. Before you do, save copies of:

Every pay stub or payroll register for the current year, with year-to-date totals for each employee.
Every Form 941 and Form 940 the service filed for you.
Prior-year Forms W-2 and W-3.
Each employee's Form W-4 and state withholding certificate.
A list of every federal and state tax deposit, with dates and amounts.
Your state account numbers and deposit schedules.

You need year-to-date wages to keep calculating correctly. Social Security tax stops once an employee's wages for the year reach the wage base. For 2026 that is $184,500 per employee (Publication 15). Additional Medicare Tax withholding starts once an employee's wages for the year pass $200,000. You can't track either limit unless you start from the right year-to-date numbers.

Keep these records. Publication 15 says to keep all employment tax records for at least 4 years.

Step 3: Set up your own EFTPS access

Federal tax deposits must be made by electronic funds transfer, and that is generally done through the Electronic Federal Tax Payment System (EFTPS). The IRS suggests that employers who use a payroll service register on EFTPS to get their own PIN so they can check that their deposits were made. If you already did this, you're ahead. If not, do it now.

Some points from the IRS EFTPS page:

EFTPS is free and run by the U.S. Department of the Treasury.
New enrollments can take up to five business days to process, so enroll well before your first deposit.
You can schedule payments up to 365 days in advance, and you can change or cancel scheduled payments.
You can view your payment history.

The IRS has stopped new EFTPS enrollments for individual taxpayers. As of Nov. 12, 2026, individuals can no longer use EFTPS to make payments. That change is about individual taxes. If you're unsure how it affects your business account, check the current instructions on the EFTPS page.

When you log in, look over the payment history. Make sure the service's deposits match its reports to you. Then use the same login to make your own deposits. For a walkthrough, see How to make an EFTPS payroll tax deposit. To find out whether you deposit monthly or semiweekly, see Payroll tax deposit schedules: monthly vs. semiweekly.

Step 4: End the reporting agent authorization and check your address

Many payroll services act as your reporting agent. You give that authority on Form 8655. It lets the agent sign and file certain returns, make deposits and payments, and receive copies of IRS notices. When you leave, confirm with the service that it will stop filing and depositing for your EIN after your switch date. For how to formally end the authorization, check the current Form 8655 instructions.

Check your IRS address of record too. The IRS strongly suggests not changing your address of record to the payroll provider's, because IRS letters go to that address. If it was changed in the past, Publication 15 says to file Form 8822-B to notify the IRS of a business address change.

Step 5: Set up your state accounts

State withholding and state unemployment are separate from federal payroll. You'll need your state account logins and your filing and payment schedule. For Oklahoma employers, see OkTAP withholding registration and Form WTH-10001 and the Oklahoma OES-3 quarterly unemployment report. Confirm with the service which state returns it filed for the current period, so you don't file a period twice or miss one.

Step 6: Run your first payroll carefully

For your first payroll on your own:

Start from each employee's year-to-date totals from the service.
Use the current Form W-4 on file. Publication 15 says to ask new employees for a signed 2026 Form W-4.
Figure withholding with the IRS Publication 15-T percentage method.
Pay employees from your business account.
Record the tax you owe and schedule the deposit in EFTPS.
Compare your numbers with the service's last pay stub. Look for jumps that don't make sense.

If you find an error on a Form 941 you already filed, Publication 15 says to correct it on Form 941-X, one for each return you're correcting. File it separately from your regular Form 941.

Why on-time deposits matter

The income tax and the employee's share of Social Security and Medicare you withhold are called trust fund taxes. You hold that money for your employees until you deposit it. If trust fund taxes aren't paid, the IRS can assess the Trust Fund Recovery Penalty against any responsible person who willfully fails to pay them. Corporate officers and shareholders are on that list. The penalty equals 100% of the unpaid trust fund tax. Once it is assessed, the IRS can take collection action against your personal assets.

The IRS says the way to avoid this penalty is to make sure all employment taxes are collected, accounted for and paid on time. Put every deposit date on a calendar. See Payroll tax penalties and how to avoid them and the S-corp payroll calendar.

Switch checklist

Pick a switch date (ideally the start of a quarter)
Get written confirmation of which returns the service will file
Download payroll registers, filed returns, W-2s, W-4s and the deposit history
Record each employee's year-to-date wages and taxes
Enroll in EFTPS (allow up to five business days), or confirm your existing login
Confirm the service stops filing and depositing under Form 8655 after your switch date
Make sure the IRS address of record is yours
Gather state withholding and unemployment logins
Run and check your first payroll, then schedule the deposit

Where Selfroll fits

Selfroll is a free tool for small S-corporation owners who run their own payroll. It does the withholding and payroll tax math, keeps a deadline calendar, and fills draft copies of Forms 941, 940, W-2 and W-3 for you to review. You send the pay, make the deposits, and sign and file the forms yourself.

Sources

This guide is general information, not tax or legal advice. Check current IRS, SSA and state rules or ask a CPA.