{"id":18878,"date":"2015-07-02T11:53:10","date_gmt":"2015-07-02T15:53:10","guid":{"rendered":"https:\/\/foundationsoft.com\/?p=851"},"modified":"2025-05-05T09:02:49","modified_gmt":"2025-05-05T13:02:49","slug":"10-construction-payroll-features","status":"publish","type":"post","link":"https:\/\/www.foundationsoft.com\/learn\/10-construction-payroll-features\/","title":{"rendered":"10 Construction Payroll Features Essential to Accounting Software"},"content":{"rendered":"

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It’s no secret that construction payroll<\/a><\/strong> costs represent the single largest operating expense for most contractors. What\u2019s surprising, though, is that so many contractors struggle to manage their payroll\u2014and their job costs\u2014when construction-specific software technology can make easy work of this increasingly complex process.<\/p>\n

You might be asking yourself, “Well, how many is ‘so many’ contractors?” According to Business Dasher<\/a>, 21% of small business owners admit to not knowing enough about bookkeeping.<\/p>\n

Whether a construction business is considering new construction accounting software or simply evaluating its current accounting system, contractors <\/strong>should consider 10 major features and capabilities to help in automating and streamlining payroll<\/strong>.<\/p>\n\"eBook<\/a>\n

<\/span>1. Timecard Entry<\/b><\/span><\/h3>\n

When it comes to payroll timecard entry, contractors need a flexible system. Construction companies vary greatly in how they collect payroll data<\/strong> (paper, spreadsheets, or remote timecard systems), what kind of data they collect (by crew, job, employee, or a combination), and how the information is transmitted to the office (via fax, phone, the Internet or intranet).<\/p>\n

Therefore, construction payroll software<\/strong> should support unlimited digital timecard<\/a> styles and methods, and it should seamlessly integrate with third-party timecard applications.<\/p>\n

Some construction-specific systems offer their timecard designs with pre-defined defaults and protected fields to help prevent errors and save time. In addition, good construction payroll software provides proofing reports as well as equipment and production tracking from timecard entries.<\/p>\n

<\/span>2. Multi-State, Multi-Locality and Multi-Job Processing\u00a0<\/b><\/span><\/h3>\n

In a single payroll run, it\u2019s not uncommon for construction employees<\/strong> to work on a number of jobs in multiple states and localities. They also may perform work under various trade classifications or receive different pay rates\u2014all on a single timecard. As a result, a must-have payroll feature for many contractors is the ability to automatically compute different tax rates and deductions, as well as changing pay rates, depending on job location.<\/p>\n

The ability to assign an employee\u2019s time to multiple jobs and phases, along with automatic calculations of various deductions<\/strong>, is not only a huge time saver for payroll personnel, but it ultimately leads to a greater understanding of how and where labor job costs are spent.<\/p>\n

<\/span>3. Job Cost and General Ledger Integration<\/span><\/h3>\n

If contractors hope to track and manage their job costs effectively, they need a system that integrates payroll with general ledger<\/strong> and job costing<\/a> <\/strong>modules. Good construction accounting software assigns a job number to every labor and employer burden dollar so data can be pulled from either the general ledger or job costing by job.<\/p>\n

The integration of payroll data into the general ledger software<\/a> can lead to another advantage: overhead allocation. Not only should the system track labor dollars and the standard employer burden (FICA<\/strong>, FUTA<\/strong>, SUTA<\/strong>, workers\u2019 compensation<\/strong>), but it also should be flexible enough to allocate company-specific burdens, such as company-paid health insurance or paid vacation\/holiday time.<\/p>\n

With the ability to define and track these expenses and then automatically allocate payroll-related overhead expenses to jobs, contractors can more closely determine the net profit (rather than gross profit) of each job.<\/p>\n

<\/span>4. Certified Payroll<\/span><\/h3>\n

The inability to produce certified payroll reports<\/strong>, such as prevailing wage and statement of compliance, can become a major roadblock that prevents open shop contractors from competing for government-funded jobs. Most construction-specific accounting systems should be able to instantly produce these reports for any payroll period. The sign of a good certified payroll<\/strong> feature is the ability to re-run a report from prior periods, even after the correction of errors or omissions.<\/p>\n

Also important with regard to prevailing wage jobs is a software product\u2019s ability to allocate and accrue fringe benefits<\/strong> for employees. For example, a feature referred to as the \u201cfringe benefit reduction factor\u201d can automatically credit the company for existing non-cash fringe benefits paid on the employee\u2019s behalf, thereby reducing the fringe portion of the prevailing wage rate<\/strong> by the cost of current fringe benefits.<\/p>\n

This feature not only makes it easier for contractors to comply, but it also saves them money by helping them avoid paying the fringe portion of prevailing wage in cash.<\/p>\n

<\/span>5. EEO And Benefit \/ Deduction Reporting<\/span><\/h3>\n

In addition to certified payroll reports, many contractors need help with the burdensome work of preparing detailed reports\u2014in precise formats\u2014for other government agencies. The manual preparation of Equal Employment Opportunity reports<\/strong> (which are required to bid on or comply with government-funded jobs) can be eliminated with a construction-specific program that instantly generates reports detailing the total number of employees on a job, the number of minority workers on a job and the number of minority hours worked within a specific period.<\/p>\n

A good construction payroll system<\/strong> also features a generous number of user-defined deductions that allow for instant computation of:<\/p>\n