Payroll processing is always a pain, but nothing compares to the tediousness of construction certified payroll. This is why it’s often considered a good idea to outsource it. Small companies with a few employees can even save money by outsourcing payroll. Furthermore, hiring a payroll service allows businesses to avoid tax reporting responsibilities.
What is Construction Certified Payroll?
Construction certified payroll doesn’t resemble typical payroll in other industries. This is because, in construction, employees don’t usually work in the same place. The site for construction keeps changing and the projects keep varying. This is the business that the construction industry is in. Thus the payroll is obviously different from a single organization that functions in a single place.
Contractors have to deal with unique problems like shifting pay rates and taxes that apply to multiple states. There is also the matter of unions and workers’ compensations that need to be taken in to account.
While many contractors would love to outsource their payroll duties, many payroll service firms aren’t designed for them. It still involves the delivery of checks, the calculation of taxes, etc. However, the special requirements of construction mean that outsourcing wouldn’t put a dent in the expenses. The labor-intensive work on the payroll is just too large a piece of the pie.
Construction payrolls would require someone to manually gather data from timesheets and then re-enter it into recording systems. This is needed to create necessary reports that evaluate performance. That kind of work is too labor-intensive for payroll services to handle. All they basically do is the calculation.
Requirements of Construction Certified Payroll
These are the basic requirements of construction certified payroll that not many services offer.
Certified Payroll Reports
This is a mandatory requirement for federally funded wage jobs. It’s used in many states and the reports are very complex. It’s cumbersome to prepare these reports without the help of a complex and automated system. Construction certified payroll services should be required to have a system that prepares these reports efficiently.
For example, every laborer registered through the US Dept. of Labor’s form WH-347, should be guaranteed a payroll report. Other forms that exist for different states should also be kept in mind, especially when construction sites shift.
Construction unions are some of the strongest in the world. Payroll processing requires their voices to be heard. Unions require that detailed reporting for their members be done for payrolls. And since most construction firms are working with multiple unions, reporting requirements vary widely. This can become overwhelming if there is no proper channel or process.
Great construction certified payroll services should be able to handle these requirements above all else. These requirements ensure that the workers’ rights are being upheld and the unions are happy. This should be beyond negotiation even if the level of complexity is very high.
Job Cost Reports
Standard payroll services can’t break down data according to the job that many employees do. Construction involves myriad jobs and a lot of time is spent entering labor hours manually into spreadsheets. These kinds of responsibilities and differences determine the diversity in the payroll. Contractors should then look for a service that can track labor hours, dollars and burden. The latter can be determined according to FICA, FUTA, SUTA, or workers’ compensation.
Calculating payroll would further require several options. These include cost code tracking, salary estimates vs. actual compensation, percent complete, unit pricing and projected costs for project completion.
New Hire Reports, EEO Minority Compliance/Workers’ Compensation
Labor-intensive contractors don’t find it easy to comply with federal employment taxes all the time. Manually tracking field employees that routinely change jobs and workers’ compensation classifications can be tedious.
Construction certified payroll would require critical employee data to be gathered constantly. In addition, gaps in data can really affect the compensation that workers are supposed to receive and can cause tension between employers and workers. Hence, construction certified payroll requires payroll data to be tracked and reported automatically, with maximum accuracy.
Pay Rates and Different Localities
The federal and state requirements of construction certified payroll vary widely. The taxes on the payroll are required by law for any industry or business. However, in construction, the payroll taxes become a little more complicated. This is because employees can work in different states depending on the project.
Furthermore, it’s not uncommon for employees to vary in terms of salaries as they go from project to project. Good payroll services have to take into account the ability to compute complex payrolls. This includes computing the federal and state taxes and the varying salaries. Also, since the payroll services need to file the taxes themselves, they need to be timely in their duties.
Most importantly, the contractor usually puts compliance in the hands of experts. The payroll service has to assume responsibility for filling out forms properly. This includes weekly, monthly, quarterly or annual taxes.
Construction certified payroll is a pain to process; however, it’s also a necessary duty that needs to be performed. If you follow the requirements outlined above, then you may find yourself processing the payrolls more effectively. We mentioned earlier that outsourcing payroll management is highly recommended because of the complexities. Want to learn more about how virtual assistants can speed up your workflow? Contact us today.