For construction companies having employees with multiple rates or different job classifications, pay scales and locations, payroll can be an annoyance. Dealing with different tax rates or earned sick time Laws only adds to the confusion. Fortunately, a payroll function is a standard requirement of any construction accounting software package.
Benefits
There are advantages to using the payroll feature in construction accounting software, including:
Self Sufficiency. Working with an outside vendor for payroll puts the company at the mercy of the vendor if changes need to be made or an error occurs.
Direct Deposit. With construction accounting software, the payroll module can handle direct deposit and email paystubs to employees.
Multiple Features for Critical Functions. The system can automatically manage employees pay rates, job classifications, different tax rates and compliance reports as well as provide earnings history and other information on employees.
Certified Payroll. When performing federal, state or local contracts, there are rules and regulations that must be followed to comply with Davis-Bacon law and contracts. Certified payroll reports are required to certify employees are paid the prevailing wage. Construction accounting software generates certified payroll reports by simply checking off a box.
Integration. Having payroll data feed directly into accounting software makes the process of managing jobs much easier. For example, payroll data can feed into job cost so contractors can instantly see how much is spent on labor and other costs. Many contractors don’t look at labor cost as a lump sum. Typically, labor cost is broken down into categories, types and in some cases phases.
If $200,000 was spent on labor on Job A, how much of that was for carpet installation for the first floor compared to the third floor? How much labor cost was associated with journeymen for the first two floors for Job B? A third-party solution for payroll require importing payroll data back into the accounting system, typically through an Excel spreadsheet, then the user would then have to manually calculate the breakdown of labor categories and types. Having detailed labor cost data helps forecast costs on future jobs for faster and better bids.
Changes in Payroll Requirements
Payroll requirements, such as state and federal tax rates, 401k deductions, wage garnishments and insurance payments, may change frequently. New laws may change the way payroll is handled as more states pass Family Medical Leave Act laws that require certain paycheck deductions. Construction accounting software will ensure these changes are accounted for and are adhering to the law.
With so many requirements and detail that goes into payroll, construction accounting software can streamline the process.
