Payroll: One Size Does Not Fit All

Face it: Payroll processing is a pain for many contractors. Especially given the complexities of construction payroll—including varying rates for contractors working on multiple jobs in multiple states and localities—this can be an incredibly time-consuming process. Also, government-sanctioned projects add a whole level of complexity to the process, with different pay rates, fringes and reporting. It’s no wonder that the office staff cringe when the time comes to process payroll. But, there is a solution that could offer savings to contractors looking for a better way to handle payroll: construction-specific payroll services.

Construction payroll is different from that of any other industry, so why do contractors routinely outsource their payroll to general payroll providers? While big-name providers offer the basics—checks, direct deposit and tax services—they often can’t directly handle the unique complexities involved with processing construction payroll. Construction-specific payroll services, however, understand the industry and were built to handle the payroll tasks that come with construction.

When working on a prevailing wage job or a union job, construction companies are required to pay fringes. Typically, these companies are also required to track and report fringes separately from wages. However, calculating and tracking these fringes manually can be difficult. Construction payroll services can automatically calculate fringe distribution and produce the reports contractors need.

Construction-specific payroll services also have the ability to integrate with third-party fringe distribution services. Contractors save money when they sign up with a benefit plan because they are not required to pay taxes on fringes paid to a third party. Through this integration along with detailed tracking information and reporting capabilities, construction business owners can be sure that their employees’ fringes are being distributed properly.

In any given pay period, a construction business owner may have employees working on multiple jobs in multiple states and localities—all with varying pay rates. Keeping track of different pay rates for all employees on a given crew can be difficult to do manually, but construction-specific payroll services can simplify the process.  

When entering time, contractors working with construction payroll services simply specify which job employees are on, and their pay rates are applied automatically, based on the job and the trade. This is especially useful when construction companies are working on a variety of jobs. For instance, when employees work on prevailing wage jobs, their pay rates may differ from their standard rates. In addition, fringes may be built into the pay rate, which further complicates manual tracking. With a construction-specific payroll service, all of these calculations are automated, so contractors don’t have to worry about entering the wrong pay rate.

Construction-specific payroll services also allow for other types of automation. For example, instead of requiring that users enter workers’ compensation classes for each employee, job and task, many services allow workers’ compensation to be automated based on the state, task and other variables. When an employee is clocked in, the workers’ compensation class will be applied automatically.

When it comes to construction payroll, reporting is essential. Whether it’s tracking labor costs, submitting certified payroll reports, handling union reporting or tracking workers’ compensation, reporting remains a critical aspect to running a successful construction business.  

Union reporting and tracking is often provided as well as certified payroll reports for contractors performing prevailing wage work. New hire, EEO minority compliance and workers’ compensation reports are just a few other reports that many construction payroll service providers can supply. Having these instant reporting options available increases efficiency, allows contractors to better track their labor costs and opens up job opportunities.

One of the most obvious benefits of using a construction payroll service is that it saves time. Timecard entry is easier, as most of the data defaults in. Handling multiple states and localities on one timecard can be done effortlessly, and many construction-specific payroll services also offer mobile solutions to make entering time from the field easy and efficient.

Another way that contractors can save time is by importing data from third-party time-tracking software. Some construction payroll services are able to integrate with accounting software packages to reduce double entry and the risk of error. And it’s easy to produce recurring timecards for those members of staff whose timecards are the same each pay period.   

Finally, construction payroll services take care of filing taxes, act as a company’s representative if there are any discrepancies and help create an audit trail as a reference.

Payroll services with a focus on construction exist for a reason: to give contractors a more tailored option than payroll providers that serve multiple industries. Construction-specific payroll services fit the bill for many contractors looking to outsource the process so they can focus on growing their business.