When you bid on municipal work or any Prevailing Wage work, there are systems you’ll need to put in place in order to build up your ability to eventually obtain bonding.
One of the easiest systems to put in place quickly is working with a payroll company, which can be an adjustment for a small contractor. But have no fear, the right payroll company will guide you through the process. Here’s what to look for:
- A company that’s rooted in accounting. For example, Liberty was formed by CPA’s to service our large base of construction clients.
- A company that understands Construction and knows it’s finer points. Our managing partners’ family has been working in the construction industry for 4 generations.
- A company that will process Certified Payroll Reports and understands the compliance side. More on that below.
- A company that understands how hard you work and how precious your time is. Every call to our office is picked up by a live person.
We know firsthand how hard you work and how important the right partners are for your business. Construction is in our blood, it’s who we are.
Once you’ve chosen the right payroll company, you’ll need to prepare for the process with some basic ground rules about what works and what doesn’t. There are three big steps each company has to acclimate to in order to step into municipal work:
- Stop paying cash. This is non-negotiable if you want to play with the big players.
- Get used to paying payroll taxes. They’re a must as well.
- Your employees must be legal, so say goodbye to employees with TIN numbers.
Remember, when you’re doing prevailing wage work, your certified payroll reports must match your payroll reports, failure to do so will result in heavy fines.
Next is getting set up with your payroll company. The role of a payroll company has vastly changed over the years. We used to simply issue checks to employees and deduct and pay the payroll taxes. Now, we are relied on to process certified payroll reports, track employee hours via phone apps, as well as track sick and vacation time. We also help with employee document management and on-boarding.
Cash flow can be a stumbling block for some contractors, so here are a few additional tips to keep you on the right track:
Since you’re not paying cash anymore and you’re not cutting a check on Friday, you’ll typically “a week in the hole”, meaning that your employees will work one week and then get paid the following week. Week is a key word here; New York State Labor Law requires manual workers to be paid weekly, and clerical and other workers at least twice per month. Bi-weekly is not an option. Most companies pay on Thursdays or Fridays, the choice is yours. Payroll companies also require that payroll is submitted at least 2 business days prior to check date.
A payroll service is similar to a bank, we move money around for you to pay your employees and your taxes. When you process payroll, we debit taxes, direct deposits and our fees directly out of your bank account. We are then distributing the money to the employees and paying your taxes as they are due.
We take out every tax for that period, paying some taxes that are due immediately and then holding the rest until their required payment date. This is the only way our tax service works, so get used to not having that tax money sitting in your bank account.
When you submit your weekly payroll, you’ll also send in your info for the jobs. This helps when preparing your certified payroll reports. We fill the forms out completely and send them back to you with your payroll package. If you’re working on a Prevailing Wage project, you’ll sign the report and submit them. We cannot sign or submit them on your behalf, this is something that you must do. We will make all of the necessary deductions and can report them for you if necessary.
Not only is the reporting required on your Prevailing Wage projects, but it’s incredibly helpful in your internal project budget tracking. Hannah will discuss this in a few weeks, but accurate reporting for labor hours on projects is required for report on a project’s budget. This in turn will help you become more profitable.
Once you’ve successfully processed payroll, you’ll have taken much of the burden off your own shoulders so you can concentrate on developing your apprenticeship program and bidding on more Prevailing Wage projects. Having the right payroll service will only help you succeed faster.