As a construction business owner, you have a lot on your plate. You need to manage your employees, oversee projects, ensure compliance with regulations, and keep your clients happy. Amidst all this, you may be tempted to handle your payroll to save costs and maintain control.
At face value, it seems like a great idea. If you're a small business owner with just a few employees, you probably think hiring a payroll specialist is an expense you can avoid.
You feel that you can handle it yourself. You intend to keep your staff paid right and on time. What could go wrong, right? Well, lots, actually. And before you know it, it's now a costly mistake, and you need to spend more money to make it right.
Why doing your own company payroll is not a great idea:
1. Time-consuming
Payroll processing is a time-consuming task that requires attention to detail, knowledge of tax laws, and expertise in accounting. As a construction business owner, your time is better spent growing your business and focusing on your core competencies.
If you don't have a finance background, you'll likely spend a substantial amount of time calculating employees' work hours, computing taxes and other deductions, creating payslips, processing, and filing.
And even if you have a bit of a background in bookkeeping, are you sure you want to spend your precious time doing these tasks instead of focusing on the core aspects of your business?
By delegating payroll processing to a professional, you can free up time for strategic planning, marketing, and business development.
2. Risk of errors
Payroll processing involves complex calculations and compliance with federal, state, and local regulations. Any payroll mistakes can result in penalties, interest, and legal liabilities. By outsourcing payroll to a professional, you can reduce the risk of errors and ensure compliance with regulations.
A payroll specialist knows the ins and outs of taxes, overtime, contributions, sales commissions, and bonuses. The bottom line is that another professional can do it better, and while they're at it, you can get back to doing what you do best– like growing your business!
3. Costly mistakes
Payroll mistakes can be costly for your business. For example, you may be subject to penalties and interest charges if you fail to withhold the correct taxes. Similarly, if you misclassify employees as independent contractors, you may be liable for back taxes, penalties, and legal fees.
Sure, you can learn about relevant tax adjustments and benefits procedures if you want to. But then again, you'd be spending more time educating yourself, not to mention the possibility of making costly mistakes. Payroll processing requires expertise in accounting, tax laws, and compliance regulations. As a contractor, you may not have the time or resources to keep up with the latest changes in payroll regulations.
A professional construction bookkeeper can help you avoid costly mistakes and protect your business from financial risks. You can benefit from their expertise and ensure compliance with regulations.
4. It's aggravating
There's no denying that payroll processing can be stressful, especially when you don't know what you're doing. Reduce stress and spend more time on business activities that drive profits and growth. You can also eliminate the risk of burnout and improve your work-life balance.
Better Practices
Payroll is one of those things that starts simply enough. You create your construction business, outsource contractors, or hire part-time crew, and things tick along. It's straightforward and sufficient to keep everything in line at first, but what happens to most companies is that they grow!
This is a great thing, but it also means that payroll becomes more complicated. As such an essential aspect of your business, payroll must run smoothly. Getting paid is, after all, the primary reason that most people come to work.
Still not quite ready to outsource? How about try this approach:
1. Simplify
Keep things as simple as possible wherever you can. One way to do this is by switching to direct deposit. This will drastically reduce the work put into issuing and tracking payments.
2. Schedule
At least once per year, and preferably more, it's crucial that you (or your payroll professional) take some time to create a payroll calendar. Highlight any dates that may cause a lag in your employees' pay.
It will also allow you to plan for any potential shortcomings or other issues arising from holiday closures or oddities in the calendar. Making a payroll mistake is a surefire way to lower employee morale, so it's essential to be aware of these dates ahead of time.
3. Automate
The computer can be your best friend. Finding the right software to help with payroll can automatically take care of simplifying and scheduling, freeing up valuable time for your payroll specialist.
It also eliminates the potential for human error in payroll processing and creates a crystal-clear picture of your finances. Many options are available these days that are easy to learn and straightforward to maintain.
4. Brush up
Payroll rules and regulations can change frequently and for any number of reasons. It's important to stay informed on any changes in your region and proactively plan for them.
A lot of time can go into correcting a payroll error, so know what's happening to avoid this. With more and more employees being hired remotely, it's also important to be aware of any regulations on those geographically located in a different area from your business.
5. Get help
If hiring a full-time in-house payroll staff is impractical, you can always come to us and let us take care of your payroll. Whether you need weekly, fortnightly, or monthly processing, our team is flexible enough for you.
As construction accounting specialists and payroll experts, we can make your employees happy with timely and accurate wages, maintain tax compliance, and significantly ease your back office burden.
In conclusion
Payroll is most effectively managed when it's simple, straightforward, and coordinated. When it starts getting tough to keep it that way, it's likely a sign that your company has grown and you're ready for more robust support.
Outsourcing payroll to a construction accounting professional can save time, reduce errors, avoid costly mistakes, benefit from expertise, and reduce stress. This will allow you to focus on growing your business and achieving your goals.
PS
We offer free resources to help you save time and money that you can download and print now.
About The Author:
Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com
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