5 Essential Tips for Simplifying Construction Payroll

Payroll is a favorite time for employees who get their paychecks. However, for the staff tasked with running payroll, the process can be challenging and complex. Payroll is necessary for every construction company, but it doesn’t have to be complicated. By leveraging digital tools and automation, payroll teams can simplify the process. 

Here are five tips for simplifying construction payroll: 

Eliminate Manual Time Sheets 
The first step to simplification is getting rid of physical time sheets. Construction offices used to have stacks of papers with notes of each employee’s time in and out, which then had to be entered into the payroll system. That's still the case for many companies. The entire process is cumbersome and opens the doors for countless potential errors, from misplacing a timesheet to entering incorrect information or putting time in for the wrong employee. In recent years, many companies have moved to digital time sheets that are still manual, such as employees entering their time on a spreadsheet or digital form. Those digital options eliminate some of the headaches but still require data transfer and significant time in the payroll process. 

Eliminating manual time sheets in favor of an integrated or automated system is one of the easiest and best ways to transform the payroll process. Instead of spending time finding their forms and filling them out for every in and out of work, plus lunch, PTO, and vacation time, employees can now start their work faster and be more efficient. Payroll staff don’t have to sort through numerous forms or spreadsheets to input data for payroll systems. The American Payroll Association estimates that the average time spent calculating time cards is seven minutes per card. Multiply that by even a small group of employees, and payroll staff is spending a significant amount of time manually calculating time before they even get to the payroll process. 

Automate, Automate, Automate 
In the age of AI and automation, construction companies need to automate as much of the payroll process as possible. Automation can turn repetitive and mundane tasks into quick wins and significantly speed up the payroll process. 

Not sure where to start? Consider these potential opportunities for automation in the payroll process: 

• Transfer data from HR to payroll. When a new employee is hired, or circumstances change with a current employee (such as a raise or deduction change), an automated payroll system can seamlessly integrate with HR to automatically pull in the correct information, ensuring every employee is paid accurately every pay period. 
• Run payroll. Running payroll typically includes calculating hours, including overtime, bonuses, raises, and PTO, and then totaling how much each employee has earned. Automating this process means the system calculates and considers everything to seamlessly provide the sum of each employee’s hours and earnings. 
• Track time. An automated system can easily and quickly calculate how many hours each employee worked, including PTO, overtime, and other special situations. It can also provide a running total of weekly or bi-weekly hours. Automating this process allows employees and managers to easily see each employee’s hours over time. 
• Calculate and file taxes. Instead of manually calculating taxes for each employee, an automated system can correctly apply the correct taxes to each employee's wage and then send those taxes to the proper government agency. Automated systems can even update with changing tax codes and regulations, ensuring taxes are always calculated and deposited correctly. 
• Make deposits. An automated payroll system can securely store employees' direct deposit information and transfer their paychecks into their accounts. This saves employees the time of manually entering every account number or connecting accounts to employees' paychecks every time. 
• Store records. Payroll comes with lots of paperwork, including an I-9 and W-4 form for each employee, plus other documentation. An automated system can also streamline data storage and provide a secure, cloud-based file storage system that payroll staff can easily search to find the information they need.

Automation reduces the chance of error and ensures employees are paid correctly and on time. 

Streamline Compliance with Accurate Data 
Much of the stress of payroll is due to it being one of the most regulated functions in a company. Aside from paying employees the correct amount, payroll must also meet federal, state, and local regulations around tax withholding, reporting, employment eligibility, and more. Companies that don’t comply with payroll risk fines, audits, penalties, and lawsuits — all of which are expensive and time-consuming. 

Data is at the heart of compliance. When payroll data is accurate, companies can more easily stay in compliance. But when data is entered incorrectly or miscalculated, companies can easily fall out of compliance. Using digital and automated systems instead of manually entering and calculating payroll simplifies the entire system and helps companies stay in compliance. 

Integrate Systems 
Many construction companies fall into the trap of having multiple systems, such as individual programs for time tracking, deductions, employee files, tax calculations, benefits, and more. As we’ve established, the more times data is moved between systems or the more it is spread across numerous platforms, the greater the chance for error. 

The answer to this problem is integrating all payroll systems into one centralized system. This way, when changes happen in one system, such as an employee changing their deduction withholding, the information is automatically shared across all other related platforms, ensuring the most up-to-date and accurate data. A centralized system also saves payroll staff the time (and frustration) of working across multiple systems and opening numerous tabs to get the needed information. 

Digitize Approvals 
One of the final steps of the payroll process is getting approvals. But unfortunately, this step can also be one of the biggest roadblocks. Handing a manager a stack of timecards to approve doesn’t mean the approval will happen right away — especially for construction managers who are often in and out of the office and at job sites. Simplify the process by digitizing approvals. With this automated process, managers and leaders can get a push notification at the end of every week or pay period and easily enter a dashboard to approve time cards — no paper shuffling, waiting, or missed approvals. 

If you’re ready to simplify your construction payroll and have more time to spend building your business, turn to hh2, a leader in cloud-based construction management software. Click here to learn more and schedule a free demo.