By Nancy Smyth
Contractors are a resilient group of business owners. There are very few things that make them want to turn tail and run for the hills. However, the words "prevailing wage" and "certified payroll" can make even the toughest contractor cringe.
A lot of contractors and their office staff are intimidated by prevailing wage work (and the thought of paying prevailing wage) because of the wage, fringe, and overall reporting requirements that go along with Public Works construction projects.
Prevailing wage work can provide your business with a lot of great opportunities and while compliance can be complex, paying prevailing wage can be made easier when you take advantage of the many resources that are available to you and have the right tools in place.
Estimators will work tirelessly to save money on materials, make sure that they get the best prices possible from subcontractors and then the company ends up flushing hundreds, if not thousands, of dollars of profit down the tubes due to inefficient processes in the office.
A real life story about inefficient & costly processes:
I recently spoke with a Union contractor who uses QuickBooks for their day-to-day accounting tasks. One of the Union fringe benefits is taxable and because they couldn’t figure out how to handle that in QuickBooks when paying prevailing wage they opted to use a construction specific web-based payroll service to handle payroll and create certified payroll reports.
Now on the surface that sounds like it might have been a good idea, BUT...
Entering employee hours in the web-based program to create paychecks, AND
Manually entering time, creating paychecks in QuickBooks and "tweaking payroll taxes" in order to get good job costing reports
The bottom line:
One of the first things that you should do before you start bidding on public works construction projects is to make sure that you educate not only yourself but your office staff about Prevailing Wage compliance in your state.
There could be:
Once you are familiar with the compliance requirements make sure that your internal processes and accounting systems can meet those needs – without someone having to do duplicate or triplicate data entry – in order to get the job done.
Start by hiring a consultant who focuses on the construction industry and make sure that you have a tax preparer that also focuses on the construction industry.
Discuss your fears and concerns with them.
It's likely that the advice you receive from them will provide you with guidance for everything from:
You’ll find that contractors, even those using QuickBooks, have a lot of tools and resources available to help them automate and increase their efficiency when performing complex payroll tasks.
Visit the Intuit Marketplace for add-on software for QuickBooks.
Construction specific payroll services or software programs can not only increase efficiency and accuracy when it comes to the actual payroll processing and paying prevailing wage – but they can also make quick work of generating:
Each of these various reports can quite often take hours or days to compile manually.
When you choose a payroll service or software program for paying prevailing wage, make sure that it integrates with your current accounting program; this will eliminate duplicate (maybe even triplicate) data entry as well as eliminate the need for someone to enter the same data in one or more software programs.
Finding a good (and I mean REALLY) good payroll service or add-on software program that will help you to manage prevailing wage reporting and paying prevailing wage can be a daunting task.
Here are just a few things to ask a payroll service provider:
Obviously cost is also a valid question.
Here are just a few things to ask a payroll add-on vendor:
Here are three major things to be on the lookout for:
Paying prevailing wage and processing construction payroll IS complex, but construction specific payroll service or add-on software can really take the pain out of compliance.
Any contractor who is currently struggling with their certified payroll reporting requirements (or paying their office staff to enter the same information more than once) should look for an alternative method to increase their efficiency, eliminate transposition errors, and eliminate redundant data entry.
I hope you've found this article informative. If you have questions please feel free to reach out to either myself or Diane.
About the Author: Nancy Smyth has supported Intuit products and end-users since 1986, with her primary focus being commercial/government construction contractors.
She has been a Certified QuickBooks ProAdvisor since the inception of the program in 1999; as President of Sunburst Software Solutions, Inc., she is a key player in the development of several QuickBooks Add-Ons for the construction industry.
She is also the author of the QuickBooks for Contractors blog and the Learn to use QuickBooks in your construction business website.
To learn more about automating certified payroll, AIA Billing and Payroll Wage Management, visit http://www.sunburstsoftwaresolutions.com/
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