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Articles From Lumsden McCormick

Selecting the Right Payroll System for Your Construction Business

Construction payroll can be complex, but with the right system in place it doesn't have to be stressful. Up-to-date payroll software generally saves money by preventing costly math mistakes and helping you manage payroll taxes. It also can save time by automating reports and, in many cases, integrating with other systems. Here are some best practices to follow when choosing or upgrading your payroll software.

Identify Your Payroll Needs

If you're using an old payroll system, chances are employees are getting bogged down by paper processes, software bugs, or other inefficiencies. When choosing a new solution, you'll want to think about future projects and choose options that will not only meet current demands, but also grow with your business as it expands and evolves.

A user-friendly platform is a high priority for most construction companies, and remote access is a must for both socially distanced on-site workers and work-from-home employees. Certified payroll reporting may be necessary if you perform federal government jobs or take on public works projects. Multiple location processing is needed if you operate in multiple locations with varying tax and labor regulations.

Other construction-specific features that might make your payroll process more efficient include:

  • Multiple pay-rate processing on a single timecard to handle wages for employees who work on several jobs with different pay rates,
  • Union reporting, which is similar to certified payroll reports, and is required by many unions, and
  • Job costing to automatically track and attribute labor expenses per project.

Whatever software you choose, it must integrate well with time-tracking, general accounting, and other software for seamless information-sharing. When different systems are able to cross-communicate, you can unify functions such as inventory management, document management, estimating, and reporting. So be sure to include your company's department and project managers in payroll purchasing decisions.

Rely on Specialists

Your payroll software vendor needs to understand your industry and cash flow cycles to deliver exactly what you need. Find what a prospective vendor's current customers are saying by checking social media pages and online review sites. If possible, get in touch with some of these customers to ask about their experiences using the provider's services.

Payroll is time-sensitive, which makes it imperative that your vendor can act swiftly to fix problems when they arise. Find out whether you'll have a dedicated account manager or a pool of support agents. Ask how knowledgeable they are, how you can reach them (phone, chat, email), and what their average response time is.

Also look for options that give you a trial period before you commit to buy the software. Using the solution in a typical pay period allows you to determine whether it can handle your specific needs and workload. Many providers allow access to certain software features before running your first payroll, which may be a better option than a full-blown test drive — particularly if you're looking at several options or if you operate in a jurisdiction where running payroll during a trial can trigger compliance with a set of regulations.

Get the Support You Need

The provider you choose should offer training and support to help your accounting staffers master the system before they need it to process payroll. Also, before full implementation, inform workers outside of your accounting function about the new payroll system — including what they can expect and how it's likely to improve payroll processes. In particular, notify them about changes related to time-entry procedures and deadlines.

Although larger construction companies with dedicated accounting departments should maintain the latest payroll software, this may not be feasible for smaller businesses. As an alternative, you may want to outsource payroll by choosing a full-service product that's exclusively managed by the software vendor or a third-party payroll service.

Where to Start

If you're uncertain about selecting the right payroll system for your business, consider working with a payroll technology consultant with experience handling the complexities of the construction industry. He or she can help you assess your current system to identify what's working and what isn't. Then you can decide which features you need in a new software solution.

Or contact us. We can help evaluate your current payroll system and refer you to appropriate vendors.

Selecting the Right Payroll System for Your Construction Business

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Michē has over 18 years of experience providing tax and advisory services to commercial businesses and individuals. She has extensive experience with pass-through taxation of partnerships and S corporations and individual taxation, specializing in the areas of real estate, energy, and professional services. Additionally, Michē is responsible for providing services such as business tax planning, individual tax planning, personal wealth, and succession planning.

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