How to Streamline Construction Payroll and Choose the Best Construction Software
Why is construction payroll complex?
Construction payroll is different from payroll in other industries because of the unique characteristics of the construction industry.
Construction is the second largest industry in the world. In the United States, more than 7.6 million people are employed in construction. In this blog, we’ll discuss what’s unique about construction payroll, some ways to simplify construction payroll, and the qualities/items to look for in construction payroll software
Unlike many other companies which pay their workers a bi-monthly salary or total up the number of hours worked by part time employees, construction payroll must account for workers who work in different jurisdictions that have different tax regimes, variable pay rates for each task that an employee performs, union deductions, and worker’s compensation. For companies that work on Federally funded projects, there are additional requirements for submitting certified payroll.
Your construction workforce could be in the hundreds one month and increase to thousands quickly as you can take on new projects.
In addition to all the complexities of the industry, construction continues to be one of the least digitized industries. That means many construction companies employ a mix of paper and digital processes to collect labor hour data, assign labor hours to specific jobs, and process and distribute paychecks. Construction payroll is particularly vulnerable to human error because of the large amount of data that must be input every week.
Here’s a short list of the items that your payroll application must include:
Full Time Employees, Part-timers, Contractors, and Subcontractors.
Some construction companies employ many people full time and keep them employed. Some companies subcontract workers, hiring them for a particular project and lay them off after the project’s completion. Other companies use a mixed approach. Each employee’s employment status and their work location will translate to different payroll taxes.
Projects in Different States
Companies that build projects in different states must adhere to the taxation and reporting regulations in the jurisdiction where they are completing work.
Union and Non-Union Payroll
On jobs that employ a union workforce, the union or unions require detailed reporting of the employees and their work.
Construction companies that work on Federally funded projects are required to submit weekly payroll reports (Form WH-347) to the Department of Labor to show compliance with prevailing wage laws.
Integrated Job Costing
Ensure your payroll application integrates completely with a robust job cost system so that it can provide analytics and a “single version of the truth” across all reporting, operations, accounting, and decision-making activities.
Payroll reporting must include multiple different types of reporting, including union reporting, certified payroll, as well as accounting for the labor hours accruing to each of the company’s particular projects.
Finally, construction payroll must also account for their employee benefits like Sick Accrual, Overtime, and Insurance.
What can help construction companies streamline payroll as much as possible?
Automation for Accuracy
Eliminate human error by automating as many payroll processes as possible such as verifying data and calculating overtime. Using payroll processing software that’s made for construction means that key reports for governments and unions are built in and generated automatically. Automate the collection and distribution of data as much as possible with mobile apps.
Integrated mobile time tracking eliminates errors from re-keying timesheets and saves time by giving your office staff real time access to approved labor hours, labor rates, and other project data without having to chase down paper timesheets.
Cloud Based Software Means Consistent Access to Data
The use of technology can mean a big improvement in your organization’s payroll processing. If you’re using integrated cloud construction software that allows your team to input, approve, and access data, then you’ll be able to reduce mistakes and streamline your payroll process.
Five Qualifiers for the Best Construction Payroll Software:
- Flexibility to accommodate multiple types of pay.
- Reliable enough to pay your team accurately and on time.
- Scalable so that it can accommodate a workforce that can grow or shrink by hundreds in a short time as projects scale up or wind down.
- Excellent embedded, integrated reporting to file payroll documentation with your federal and state governments.
- Superior digital workflows for collecting, processing, and distribution of payroll.