5 Tips on Managing Payroll for Construction Businesses

Dec 15, 2021

Payroll might not be the first thing that jumps to mind when you think about making your construction business more efficient and cost-effective, but the truth is that payroll is one of the easiest places for mistakes to be made and time to be wasted.

With labor compliance, prevailing wage reporting, and different types of employees across numerous job sites, effective payroll management is one of the most important aspects of running a successful construction operation. Whether your business is long-standing or just starting out, it’s never too late to get construction payroll help in order to streamline processes and increase performance. Here are five tips from 4Corner Business Services to help make your construction payroll processes the best they can be. 

1. Embrace Technological Integration

In our increasingly digital world, it’s never been easier to streamline payroll processes. Manual data processes are costly, producing waste in the form of time and errors. Tracking hours by hand, transferring data from time cards or other written documents into spreadsheets, and even the delivery of physical paychecks to workers are all time consuming business methods that provide opportunities for human error — as well as openings for greater problems or disputes down the road. 

If you haven’t already made the change, digital time tracking is one of the easiest ways to upgrade your payroll efficiency. Digital tracking systems hold employees accountable, reduce the need to transfer/decipher employee handwriting, and make missed time and mistakes easy to document and fix. Additionally, it’s never been easier to increase administrative efficiency through linking and integration of business technology platforms. Many modern time tracking and attendance systems eliminate the need to transfer data by hand, instead exporting the data directly to a linked payroll software system.

Switching to direct deposit of employee paychecks is another easy way to digitally increase business efficiency. This simple change reduces payroll processing time, provides digital verification of delivery, and makes things easier for both general employees and payroll departments. No more hassle over mailing checks or waiting for workers to pick them up, and employees will rest easy knowing their money is going directly into their account every pay period. 

Updating and integration of payroll systems saves time, reduces waste, and helps eliminate costly mistakes. As more and more technological advances happen in payroll software and data reporting systems — with new options like geofencing, automatic reports, and advanced logging capabilities for government contracts  — every business, big or small, can be looking for new ways to cut unnecessary costs and increase efficiency. 

2. Be Thorough and Eliminate Mistakes

Construction payroll involves a great many complicated, moving parts. From hours tracking, withholdings, overtime calculations, prevailing wage classifications, and labor law compliance, there are an incredible number of variables to handle — all of which create openings for mistakes. The good news is that while simple human errors may be frustrating, they’re easy to cut back on with a little work. 

The application of a systematic approach to payroll processing can help your business identify and eliminate common mistakes. Critical steps for each payroll cycle should be placed on a trackable checklist, with each step being checked-off upon completion, and notes being made for any issues/discrepancies. This step-by-step process may seem a tedious approach, but it reduces room for errors and allows for documentation that can be easily referenced in the event of future issues. As common and recurring mistakes are identified and recorded, payroll problem areas can be double-checked and sources of error can be fixed. Looking at payroll with a fine-toothed comb will increase accuracy, efficiency, and labor compliance, and will continually improve your business’ payroll processes in the long run. 

Read More: 5 Common Payroll Mistakes and How to Avoid Them

3. Classify Workers Correctly

Proper worker classification is paramount in the construction industry, and even businesses with the best intentions can end up in legal trouble, paying costly fines, or paying six figure sums of back wages to misclassified employees. Take the time to research construction employee classifications, and carefully decide which of your workers is a W-2 employee or an independent contractor.

4. Be Transparent with Workers

Clear communication with employees about policies, labor, and wages can help save you a world of headache. By being transparent about things like internal policies, payment structure, taxes, paid leave, sick leave, overtime, garnishments, benefits, union dues, and safety rules & regulations, your employees will have a greater level of trust for you and your business, and they’ll have less questions and potential issues in the future. Your payroll or HR department will spend less time fielding questions, and your employees will develop more respect for your workplace — decreasing employee turnover and fostering a better environment of teamwork across job sites. Happier employees are especially important now, among construction labor shortages and other modern stressors in the industry.   

5. Choose the Right Payroll System for Your Business

Having a payroll software system that fits your business’ needs can make all the difference. Older systems, in addition to being prone to bugs and crashes, have been made outdated by rapid advances in computing and systems integration. When looking at new payroll systems, it is important to identify your company’s specific needs.

When choosing a new payroll product, ensure that it integrates well with other services, like time tracking. Some payroll programs also integrate with inventory systems, reporting systems, or other useful programs — so it may be a good idea for you to see if specific department or project managers have needs that could be filled with certain payroll product features.  

Consider construction industry-specific services you need from a payroll product, such as options for certified payroll reporting for government jobs, union reporting, multiple pay rate processing for employees working on multiple job sites with different rates, multiple location processing for employees in multiple states, and labor & expense tracking. 

Construction businesses can benefit from choosing a payroll processing product with a high level of customer support — you’ll need a vendor with a team that can provide swift help in the event of time-sensitive issues. Read customer reviews on prospective payroll products and shop smart. If you’re unsure or split between several options, consider utilizing a product’s free trial window to see if it can handle your business’s needs. Above all, make sure your company’s payroll professional understands the benefits of a new system and is able to effectively learn the system. Many payroll product vendors provide training or educational resources to supplement their products, so you can ensure you’re getting the most out of a given system. 

Get the Construction Payroll Help You Need

If you want your current payroll system vetted for top efficiency, or if you just need help deciding which payroll vendors or programs are right for your company’s needs, 4Corner Business Services can help. We’re experts in construction business growth and accounting, and we can provide your business with assistance in everything from accounting & bookkeeping, taxes, and business consultation. Contact us today to see how 4Corner can make your business excel!


business consulting

Setting Financial Goals for Small Business

Being a small business owner can be exciting and frightening at the same time. Every business owner has their own reasons.


What Should Your Business Accountant Do For You?

If you’re a small business owner or thinking about starting a small business, you’re likely focused on saving as much money.


5 Tips on Managing Payroll for Construction Businesses

Payroll might not be the first thing that jumps to mind when you think about making your construction business efficient.


Let Us Help Get Your Business Finances In Order.