There is no question that payroll is one of the most important aspects of a construction business that needs to be managed effectively.
The sheer size of construction projects, as well as a slew of tax regulations, make construction payroll a complex process. Plus, with a large workforce, payroll can be time-consuming and stressful. A single mistake can lead to serious complications for your company.
This is why construction businesses are increasingly choosing to use payroll software to streamline the process of paying construction workers and complying with payroll tax laws.
Why should I use payroll software for my construction company?
There are several advantages to using payroll software instead of doing everything manually. First and foremost, it saves you time—the automation within the software dramatically reduces the time needed to calculate pay per employee each payroll run, prepare checks and reports as well as keep up with the changing tax regulations.
Payroll software saves you money by preventing math mistakes and helping you manage your payroll taxes. Automating the reporting and paying your taxes also helps you avoid extra penalties and fees that are more likely when you do things on your own.
Software, like Wagepoint, also offers features and add-ons that add value for your business. Things like online accessibility, accounting reports, and integrations with other key software can make the payroll process quicker and simplified.
How to choose the right payroll software for your construction business
With all the choice on the market, how do you choose the right payroll software for your construction business? We have your first steps toward evaluating and choosing the option that best fits your needs.
1. Outline your payroll needs
Before looking for payroll software, it’s best to take a step back and evaluate your current system. Identify your current pain points and what you would like to have to help set the criteria to judge potential systems with.
For example: If you often have employees working on multiple construction sites with varying wage rates, your payroll should be able to handle different locations and the tax laws associated with them. Being able to integrate with other software—like time tracking or accounting tools—can also be a factor in your decision.
Another piece to consider is pricing. Some payroll companies charge based on the services they provide and some are priced variably based on the size of your business. Some have more features than others, and you’ll see that on the price tag. (Psst—Wagepoint has transparent all-in-one pricing.)
With that in mind, it helps to know what kinds of providers are out there to better understand what you need versus what you can afford.
If you’re a large operation that coordinates many locations and nuances in your payroll, it may be best to go with a full-service product. This means all your payroll needs will be outsourced and dealt with exclusively by a provider—normally, you would have a dedicated specialist for your company that takes care of all things payroll for you.
While this option is extremely convenient and saves you tons of time, it’s also usually the most expensive since there is little to no effort expected of your business.
If you’re on a smaller scale or still growing, you may be more interested in a self-service platform, like Wagepoint. These providers give you all the tools necessary to run your own payroll smoothly, using your inputs to help guide you through the necessary processes. This is a less expensive option because it still requires you as the business owner to actually run the payroll each pay period.
2. Check the credentials of your payroll options
Payroll deals with sensitive company financial information so it’s crucial that you trust your payroll provider or software.
One way to judge a company’s reputation is by looking at how long they have been in business. If they have been doing payroll for years and have a good track record with others in the construction industry, it’s a good indicator of their expertise and reliability.
Don’t be fooled—that doesn’t necessarily mean the oldest providers are your best option. Often newer companies provide features that fit better with your company’s workflow, like software integrations and online paystub access. They were created to address specific pain points the veterans weren’t hitting, which means they might be specialized in reducing a pain point you have in your business.
To get the most accurate idea of what a provider will be like, you can check what their current customers say about them. Social media pages and online review sites are good sources of honest testimonials. If possible, get in touch with some of their clients and ask in detail what their experience has been like.
3. Look for exceptional customer support
User-friendliness is an important aspect of a payroll platform. And since payroll is such a time-sensitive piece of your business, it’s crucial you are able to contact customer support and have your issues fixed quickly and accurately.
To gauge the level of support offered by a full-service provider or self-service software, ask some of these questions:
- Will I have a dedicated account manager or will I talk to a pool of support agents?
- How can I reach your support team? Phone, chat, email?
- How knowledgeable are the support team agents?
- Are there specialists available for more complex issues and questions?
- What is the average response time for each support request?
Some of these questions are preference-based, but it’s a pretty universal need for support agents to have the expertise and people skills necessary to help you solve your payroll problems quickly. Customer reviews are also great for revealing the quality of support experienced by real clients.
4. Check the industry specialization for your payroll options
Because of the unique and complex nature of construction payroll processes, some providers that handle a broad range of industries just don’t fit the bill. You need to look for vendors that have experience working with construction businesses, or better yet, specialize in your industry.
This is important because payroll is the result of a range of different elements of your business and the laws that govern it. So when shopping around for a construction payroll provider, look for the following features:
Multiple location processing
One of the things that make construction payroll complicated is work is often done in multiple locations each payroll run. Different locations can mean different payroll tax and labor requirements. If you’re crossing state or provincial borders, a good construction payroll provider should have the ability to process all your job locations and stay up-to-date with the regulations of each location.
Multiple pay rate processing
It’s common for a construction employee to assume multiple jobs with different pay rates on a single time card. Choose a payroll system that can handle multiple pay rates for your workers.
Certified payroll reporting
When working under a federal contract or on a public works project in the US, you are required to send a certified payroll report (Form WH-347) each week to the agency overseeing the project. These reports list every employee, their work classification, hours worked, rate of pay including fringe benefits, and deductions.
Without these reports, you won’t be able to compete for government projects and consequently will miss out on work opportunities. Your payroll software should be able to at least produce the information necessary for these reports—and if you’re opting for a full-service option, should file them for you to the correct agency.
Similarly to certified payroll reports, many American and Canadian workers unions require detailed summaries of your employees and their work. Requirements vary between organizations, so your payroll system should be able to help you create custom reports that include the information you need to submit.
Because your construction company often handles multiple jobs with different expenses, it’s important to be able to track your labor costs per job. If your payroll system doesn’t attribute labor to a job automatically, look for a provider that integrates with accounting software that has a job costing function. That way, your labor expenses are easily tracked and attributed correctly.
5. Try the payroll software before buying
If it’s your first time shopping around for a payroll provider, look for options that allow you to have a trial before you commit. Trying it out will let you evaluate the software’s features and interface to check if it fulfills your payroll needs. Using the software in a typical pay period allows you to test if it can handle your workload and check for lacking elements that you can discuss with the vendor.
Be wary that running payroll during a trial can trigger a set of regulations that you must adhere to. In Canada, for example, adding or changing payroll providers requires a Record of Employment (ROE) to be generated for each of your employees because it is considered an “interruption in earnings.”
Many providers will allow you to access and see the software before running your first payroll, which may be a better option than jumping into a trial—especially if you’d like to test out several options before committing to one. (Wagepoint lets you create an account and explore the setup process free of charge. You’re only billed once you run your first payroll.)
Find what payroll system works for your construction company
When choosing a construction payroll provider, take your time to find a vendor that delivers exactly what you need. It can be challenging, but doing your due diligence is worth it. Your payroll woes will become a thing of the past and you will have more time to focus on how to grow your construction business.
Thank you to Handle for providing this guest content. They specialize in lien management for the construction industry.
The information we share on our blog is intended to be informational. It does not replace the expertise of accredited business professionals.
Author: Patrick Hogan is the CEO of Handle, where they build software that helps contractors, subcontractors, and material suppliers secure their lien rights and get paid faster by automating the collection process for unpaid construction invoices.