When employees do their jobs, they expect timely payments for their time, work, and expertise. However, payroll for construction is more complicated than payroll in many other industries. Knowing how to accurately calculate workers’ paid time while complying with strict tax rules will help shield you from making costly mistakes.
Here, our construction accounting experts explain what you should know about construction payroll management.
What Makes Construction Payroll Different From Other Industries?
Standard payroll processes often struggle to meet the needs of construction companies due to the industry’s complexities. Payroll laws change often, which can lead to inaccurate pay for employees. If that happens, workers may lose trust in their employer, which could cause problems with unions.
So, what makes payroll for construction companies unique? Common factors include the following:
- Multiple jobs for various employees: The payroll department must keep track of different employees working different jobs, which can lead to confusion.
- Different pay rates: It’s not uncommon for employees to perform more than one job for one company, which can lead to multiple pay rates. Their earnings at one job site may differ from their earnings at another.
- Requirements for multiple states and cities: Sometimes, employees work in and live in different states, and construction businesses operate across state lines. Payroll must comply with all state and federal laws.
- Certified payroll: When construction crews work on special projects, like government-funded jobs, each employee needs a certified payroll form to ensure timely payment.
- Union requirements: You may have to account for additional payroll requirements if employees are part of a union.
How To Do Payroll for a Construction Company
Learn how to do construction payroll in four steps:
- Track employee hours: Keep track of each employee’s job, role, and pay rate with the help of a construction time card app that lets workers clock in and out.
- Calculate all time data: Manual contractor wage calculation is time-consuming but necessary if you’re not using time tracking software. The software may calculate time data automatically.
- Apply necessary deductions: Subtract deductions from each employee’s gross pay to determine their net pay. Standard deductions include wage garnishments, FICA, and state, federal, and local taxes.
- Make the payments: After calculating everything, pay each worker via check or direct deposit.
The Connection Between Construction Payroll Management and Job Costing
Payroll and job costing go hand-in-hand. Labor is usually the bulk of job costs. By tracking labor costs for each job, you will gain a better understanding of your company’s labor costs, scheduling effectiveness, and staff efficiency.
Turn to Miyares Group, L.L.C. for Help With Your Construction Payroll Needs
Knowing how to do payroll for a construction company without making common mistakes, like employee misclassification and failure to account for overtime pay, isn’t simple. However, our experts at Miyares Group, L.L.C. are here to help. As a reputable CPA firm in Miami, Florida, specializing in construction accounting, we can handle everything from job site payroll processing to advice on labor cost tracking solutions.
Ensure timely and accurate payments for your employees. Contact Miyares Group, L.L.C. today for your consultation.