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Q&A from Contractors – Payroll Outsourcing

Payroll Outsourcing question

Hey Fred, I have a question about payroll outsourcing-

We’re a mid-size contractor working on a variety of different jobs (including prevailing wage work) and the truth is that our payroll is getting to be too much to handle. We’re looking to do some payroll outsourcing, but I have no idea where to start. Is there a preferred time of year to start with a new service? How do I choose a payroll service? HELP!

-Charles

Hey Charles-

Great question! Technically, you can go live with a new payroll service anytime of the year. With that said, there are certain timeframes that may be more advantageous for some. Take, for instance, the beginning of any quarter throughout the year. This makes it easy to move over payroll history from previous quarters.

The most popular time of year to begin switching, however, is in the fourth quarter, giving you a January 1st live date. Why is this time the most popular? Because you won’t have to move over any of your payroll history, or worry about conflicts with tax filings. Plus, it gives you a fresh start to the New Year.

So where do you begin?

It’s best to determine what you need from your payroll outsourcing service, then do your due diligence and research services that fit those needs. Most contractors start by asking friends and business acquaintances who they use, but look deeper! Do your own research online, searching with keywords like “payroll providers for construction” or “construction-specific payroll service.” You might be surprised to find out that there are payroll outsourcing services just for construction out there that can handle construction-specific complexities, like your prevailing wage jobs. Looking into these services could save you a lot of time and a lot of headaches!

Construction-specific payroll outsourcing services work in the same way that generic payroll services do, but in addition to standard payroll processing, they offer construction-specific advantages. Pay rates can be automated based on job, type of work, and location of work. These services are also much more qualified to handle workers’ compensation and union reporting and tracking, as well as prevailing wage compliance—including Certified Payroll reports, EEO Minority Compliance reports, and more. And since they have construction experts on staff, they can work as your advocate with state taxing authorities.

Once you choose a payroll service, be prepared to work with your vendor and get them the items they need so that they can set you up as quickly as possible. This will give you extra time to get comfortable with the new system before going live.

Good luck!

-Fred

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