📝 Overview

A parallel test runs your payroll side-by-side in both your legacy system and DaySmart Payroll to confirm that earnings, deductions, taxes, and benefits are calculating correctly before you go live. Completing this process gives you confidence that your setup is accurate and your first live payroll will run without issues.

🛠️ Before You Begin

Before running your parallel test, confirm the following are in place. Catching setup gaps early will save time during reconciliation.

Data Integrity & Preparation

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Employee master data: Confirm worker records match between systems, including names, IDs, addresses, SSNs, hire dates, pay rates, exemptions, and any other relevant fields.
YTD data: Verify that all prior wages, taxes, and benefit balances have been migrated correctly and balance against your prior payroll provider's reports.
Tax setup: Check work and resident tax jurisdictions, SUI rates, SUI account numbers, local tax setups, and any voluntary deductions or exemptions.
Banking data: Confirm routing and account numbers and pay methods for all workers.
Earnings codes & deductions mapping: Confirm that earning and deduction codes from your legacy system map correctly to DaySmart Payroll.
Pending worker updates: Apply any worker data changes that occurred in your legacy system to DaySmart Payroll before the test begins.

Defining Your Test Scope

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Decide what you're testing and how before you start:

Pay periods: Will you test one full payroll cycle or multiple? Will both hourly and salaried employees be included?
Population coverage: Are you testing your full workforce or a representative sample, such as workers across different tax states, pay frequencies, or multiple work sites?
Comparison level: Will you check totals only, or go line-by-line across gross-to-net, tax per jurisdiction, and deductions per employee?
Success criteria: Define an acceptable variance threshold upfront, such as $0.01 per employee, so you know what constitutes a pass.

System Configuration to Verify

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Earnings calculations: Hourly, salary, multiple rates, multiple locations, overtime, shift differentials, bonuses, and PTO payouts.
Tax calculation: Account for rounding differences between systems and define a tolerance threshold.
Benefit deductions: Confirm pre-tax vs. post-tax designations and applicable limits.
Third-party deductions: Garnishments, child support, and other court-ordered deductions.
Accruals: PTO, vacation, and sick balances, including accrual rates and rules.
Manual adjustments: One-off or retroactive payments should be entered the same way they were handled in your prior system.

⚙️ Running the Parallel Test

Follow these steps to run your parallel payroll test in DaySmart Payroll.

Step 1: Complete Onboarding & Review Payroll Setup

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Confirm that employer onboarding is complete in DaySmart Payroll.
Confirm that all worker onboarding is complete, including personal information, contracts, work location, tax information, payment methods and types, time off, and benefits.
Verify your employer profile for accuracy: pay schedules, deduction codes, benefit plans, and tax tables should all match your legacy system.

Step 2: Gather Payroll Data

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Collect all payroll inputs needed for the test period:
- Gross earnings, hourly rates, and hours worked
- Taxes (federal, state, and local)
- Benefits and deductions
- Employer contributions
Collect the most recent live payroll register from your legacy system. You'll use this as your comparison baseline.

Step 3: Run the Parallel Payroll

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⛔️ Important Note: Do not advance past Step 2 in the Payroll Processing Cycle. Proceeding further will trigger a live payroll submission and initiate money movement.

Enter all payroll inputs in DaySmart Payroll: hours worked, salaries, overtime, bonuses, and any other applicable earnings.
Proceed to Step 2 in the Payroll Processing Cycle to create a draft payroll. Review the hours and earnings screen.
Select the radio button to download and preview the payroll journal and cash requirements reports. Do not advance beyond Step 2.
Process payroll as normal in your legacy system for the same pay period.
Generate full payroll reports from both systems for comparison.

Step 4: Compare Outputs

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Build a side-by-side comparison matrix using reports from both systems. Your matrix should include the following at both the company and individual employee level:
- Gross pay
- Tax withholdings
- Deductions
- Employer contributions
- Net pay
Reconcile totals at the company level: wages, taxes, deductions, and general ledger.
Highlight any variances for investigation.

🧠 Tip: Reports to use for comparison: gross-to-net report, tax liability report, payroll journal, and cash requirements report. Pull these from both systems to ensure an apples-to-apples comparison.

Step 5: Analyze & Resolve Variances

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Reference the variance threshold you defined before the test. Any differences within tolerance can be documented and accepted.
For variances outside your threshold, investigate the root cause. Common sources include:
- Misaligned deduction or tax codes
- Incorrect jurisdiction setup
- Missing benefit elections or garnishments
- Differences in calculation methods, such as overtime or accrual rules
Document all discrepancies in a test log, including the root cause and the correction made.

Step 6: Adjust & Re-Test

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Correct any configuration issues in DaySmart Payroll: earnings codes, tax setup, benefit deductions, or other affected settings.
Rerun the parallel payroll test following the same process above.
Confirm that results now align with your legacy payroll within your defined tolerance.

Step 7: Validate & Sign Off

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Confirm all employee and employer totals reconcile within your accepted threshold.
Document the following for your records:
- Variances found
- Corrections made
- Final sign-off confirming go-live readiness
Retain copies of all test run reports as part of your implementation audit trail.

🔔 Once your parallel test is complete and sign-off is confirmed, you're ready to process your first live payroll in DaySmart Payroll.

🔧 Dual Maintenance

Once worker onboarding is complete, there may be a gap between that point and your first live payroll. During this period, your team is responsible for keeping employee data up to date in both your legacy system and DaySmart Payroll. This is called dual maintenance, and it ensures your records are accurate when you go live.

What Needs to Be Maintained in Both Systems

Until your first payroll is processed in DaySmart Payroll, apply all of the following changes in both systems:

Worker Profile Information

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Name or address changes
Federal, state, or local tax withholding updates, such as new W-4s or state tax forms
Direct deposit or banking changes
Employment status changes: hires, terminations, leaves of absence, and rehires

Worker Pay Information

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Pay rate changes, including hourly and salary adjustments, merit increases, bonuses, and overtime rates
Job titles, departments, cost centers, or work location changes
One-time payments or adjustments needed for the first payroll

Deductions & Benefits

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Benefit enrollment or plan changes, especially if open enrollment occurs during your migration period
Per-pay-period deduction updates, such as medical, dental, FSA, or HSA changes
401(k) or other retirement contribution changes
Child support orders, garnishments, or loan repayments that are added or modified

⚠️ Reminder: If open enrollment or mid-year benefit changes occur during your migration, confirm whether current benefit plans will carry over or new plans are being introduced, and make sure deduction amounts match benefit elections in both systems.

⛔️ Failing to maintain both systems during this period can result in payroll errors, incorrect tax filings, and delayed direct deposits on your first live payroll run.

📋 Parallel Test Checklist

Use this checklist to track your progress and confirm all steps are complete before going live.

Preparation

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Collect the most recent live payroll register from your current provider
Confirm employee master data in DaySmart Payroll
Verify year-to-date (YTD) balances are loaded into DaySmart Payroll
Confirm pay schedules: frequency, period dates, and pay dates

Data Input & Setup

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Enter or import current payroll data: hours, salary, commissions, PTO, and bonuses
Validate recurring deductions: benefits, retirement, and garnishments
Confirm employer tax rates and settings: FUTA, SUTA, and local taxes
Add one-time adjustments: retroactive pay, manual checks, etc.

Run Payroll in Both Systems

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Process payroll in your legacy system
Create a draft payroll in DaySmart Payroll (do not submit)
Generate full payroll reports from both systems

Comparison & Reconciliation

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Compare gross pay at the company and employee level
Compare tax withholdings at the company and employee level
Compare deductions at the company and employee level
Compare employer contributions at the company and employee level
Compare net pay at the company and employee level
Reconcile totals at the company level: wages, taxes, deductions, and GL

Issue Resolution

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Document all discrepancies in a test log
Investigate root causes of mismatches
Correct setup errors in DaySmart Payroll
Re-run the test payroll if fixes were made

Final Review & Sign-Off

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Validate that all employee and employer totals reconcile
Ensure all differences are documented
Obtain payroll or finance team sign-off
Confirm readiness for go-live payroll cycle

❓ Frequently Asked Questions (FAQs)

Find answers to common questions or additional details that may not be covered in the main instructions.

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