5 certified payroll reporting mistakes that will cause delayed payments – learn how to avoid them.
Filling out weekly certified payroll reports can be a time-consuming and frustrating task, especially if you complete them by hand or have to manipulate data in order to create them. Transposition errors and other mistakes are bound to happen, no matter how careful you think you are being. Making mistakes on certified payroll reports will lead to more frustration and you’ll end up spending more time correcting the errors; mistakes will also put your company’s good standing in jeopardy with the General Contractor or Project Administrator.
Certified Payroll/Prevailing Wage reporting can be complex and varies by state. Learning how to avoid the following mistakes and submit the reports properly the first time will benefit you and your company.
- Your reports are rejected as inadequate or incomplete – you may not have submitted the proper form or some of the required information is missing. You’ve been told that you need to correct the forms and resubmit them by a new deadline or your company, and the General Contractor, will have to wait longer to receive payment. Delayed payments have a negative affect on everyone’s cash flow. The Labor Standards Clause of the final contract (and the bid package) for each job usually provides you with a sample of the certified payroll reporting form that you will be required to submit; it will also inform you if you are required to file your reports electronically.
- You didn’t pay your employees prevailing wage and you didn’t submit certified payroll reports - you’ll need to make wage restitution to your employees to bring their rate of pay up to the prevailing wage rate required on the job and then you’ll need to submit ALL of the certified payroll reports within 30 days from the time that the General Contractor was notified. Payments to both your company and the General Contractor can be delayed. The requirement to pay prevailing wages and submit certified payroll reports is included and usually discussed in the Labor Standards Clause of the bid package and the final contract.
- You didn’t pay your employees the rate of pay listed in the Wage Decision – you’ll need to make wage restitution to your employees, provide proof of the wage restitution, and submit corrected certified payroll reports within 30 days from the time that the General Contractor was originally notified. A Wage Decision is a listing of all the different Work/Trade Classification and minimum wage rates (base PLUS fringe) that must be paid to anyone performing work on the jobsite. Some Wage Decisions cover several counties and/or types of construction (residential and commercial) and can be difficult to read – in instances such as this, the Contract Administrator may prepare a Project Wage Rate Sheet or issue a Wage Bulletin, which will only show the Work/Trade Classifications and wage rates for a specific project. The Wage Decision is found in the Labor Standards Clause of the bid package and the final contract.
- Your employees Work Classifications do not match those listed on the Wage Decision – you’ll need to correctly classify your employees according to the Work/Trade Classification found on the Wage Decision, and quite possibly make wage restitution to your employees. You’ll need to provide proof of any wage restitution, if applicable, and provide corrected certified payroll reports within 30 days from the time that the General Contractor was originally notified. Each employee must be classified and paid accordingly, based on the type of work they are performing. If the Wage Decision doesn’t contain the correct Work Classification; a written request must be submitted. The written request must identify the Work Classification that is missing, recommend a wage rate, and provide a description of the actual work being performed. This written request should be submitted/discussed at the bid qualification meeting.
- Your reports have incorrect computations, unclassified “Other Withholdings”, or do not indicate how the fringe benefit portion of the prevailing wage is paid – you will need to submit corrected reports within 30 days of the date that the General Contractor was originally notified. While these items may seem trivial, they are all part of the requirements of certified payroll reporting. Always check the “math” on the final reports before submitting them, for example, the Federal WH-347 certified payroll report should match the employees paycheck exactly for gross wages ALL jobs, withholdings and net wages paid for the week, even if you use a software program to generate your reports you should verify that these numbers match before you submit the reports.
Learning to avoid these mistakes is in your best interest because will you avoid extra paperwork and be paid in a timely manner.
If you are manually creating the reports or having to manipulate large amounts of data to generate the reports, you aren’t saving any time (or money) and need to automate the process in order to eliminate the transposition errors and save valuable time that could be better spent on other tasks. I see many QuickBooks users discussing on the Intuit forums how they generate the built-in QuickBooks certified payroll report and either manually make corrections or print the report and then enter that data into a fillable Federal or State Specific certified payroll report on a weekly basis.
Make sure that you have thoroughly reviewed the Labor Standards Clause of the bid package AND the final contract package and provide your payroll administrators with the information that they need to correctly pay your employees. If you continue to submit incorrect certified payroll reports you will be in violation of certified payroll reporting requirements and this can mean that you will be disbarred; not allowed to bid on or perform work on prevailing wage projects for up to 3 years. Additionally, you may be passed over in favor of another company (even if you do top quality work) if you have a “checkered past” in meeting the reporting requirements.
Wage Restitution is the difference between what the employee should have been paid (base PLUS hourly fringe) and what they were paid.
If you are new to certified payroll reporting requirements, sign up for a 2-hour Certified Payroll Reporting Training webinar, $69.00 per person.
If you use QuickBooks and want to automate the entire certified payroll reporting process, request a Free 30-Day Trial of Certified Payroll Solution.
As described in press release IR 2011-31, the IRS issued interim guidance to employers, Notice 2011-28, on informational reporting of each employee’s annual Form W-2 of the cost of health insurance coverage they sponsor for employees. The IRS is also requesting comments on this interim guidance.
The new reporting to employees is for their information only – to inform them of the cost of their health coverage, and does not cause excludable employer-provided health coverage to become wages or income to be subject to tax. The cost will be reported in Box 12 wit Code DD on Forms W-2.
The Affordable Care Act provides that employers are required to report the cost of employer-provided health care coverage on the Form W-2. Notice 2010-69, issued last fall, made this requirement optional for all employers for the 2011 Forms W-2 (generally furnished to employees in January 2012).
Notice 2011-28 provides relief for smaller employers (those file with the SSA fewer than 250 Forms W-2 for the previous year) by making this requirement optional for them at least for 2012 Forms W-2. Therefore, any employer that files fewer than 250 Forms W-2 for 2011 (generally furnished in 2012) will not be subject to the requirements for 2012 Forms W-2. the relief for small employers will continue until further guidance is issued.
Other types of relief that will apply for 2012 and until further guidance include exceptions for:
- multiemployer plans
- separate dental and/or visions plans, and
- Forms W-2 that are furnished to employees who terminate before the end of a calendar year and request a Form W-2 before the end of the year.
For employers that are subject to the reporting requirement for 2012 Forms W-2 (or choose to report the cost of health care coverage on 2011 Forms W-2), the notice explains:
- how to calculate the cost of coverage, generally including amounts paid by the employer and employee, but also covering methods for self-insured plans;
- how to treat salary reductions for health flexible spending arrangements; and
- that employers will not be required to issue a Form W-2 to anyone to whom the employer would not otherwise issue one (such as retirees with continuing health benefits).
More information about the tax provisions in the Affordable Care Act is on the ACA page of IRS.gov.
QuickBooks Pro & Premier 2011 and Enterprise Solutions 11.0 offer new and improved Purchase Order Reporting.
The Open Purchase Orders Detail report is new in QuickBooks 2011 versions (Pro, Premier and Enterprise 11.0). As the name implies, the report displays items (cost codes) that haven’t been received in full.
I’m excited to see that after many years, Intuit has finally fixed the Purchase Order reports to ACCURATELY display open balances, without a lot of additional manipulation by the user.
To find the new report, from the Report menu in QuickBooks Pro and Premier 2011 and Enterprise 11.0 -> Purchases -> Open Purchase Order Detail.
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This report lists Purchase Orders by Items or Cost Codes that haven’t been received in full. By default, QuickBooks displays the following information for each Item or Cost Code:
- Date – the date of issue
- Num – the Number
- Name – the Customer and/or Job that the item ordered is for
- Source Name – the Vendor or Subcontractor who you placed the order with
- Memo – the Item or Cost Code description used
- Delivery Date – if you utilize the Delivery Date field on the form, the delivery date you entered will display
- Qty – the original Quantity, Units, or Hours that was ordered
- Rcv’d – what portion of the original quantity ordered has been received
- Backordered – what portion of the original quantity ordered has not yet been received
- Amount – the original dollar value
- Open Balance – the dollar value that has yet to be received
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QuickBooks groups the same items/cost codes together.
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Personally, I would change the way the report displayed information. Rather than to display the information based on Items or Cost Codes, I would like the information to be grouped by Customer and then by individual Job. To accomplish this, I would click the Total By drop down menu and select Customer.
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The Open Purchase Order report has been improved, as it now displays an accurate Open Balance, however, you cannot modify the report to pull in Customer, Job, or Item (Cost Code) Information, however, it only provides a brief summary.
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The Open Purchase-Orders by Job report has also been improved, as it now displays an accurate Open Balance.
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In order for any of these reports to work correctly you will have to enable the use of Purchase Orders (Edit menu -> Preferences -> Items & Inventory -> Company Preferences -> Inventory and purchase orders are active option must be checked); and you MUST use Quantities when you create a Purchase Order, when you receive the item, or enter a bill against it.
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My overall opinion is that for any company that issues Purchase Orders, this is a marked improvement in the overall functionality of QuickBooks.
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The American Recovery and Reinvestment Act of 2009 (ARRA), provides the State Departments of Transportation and Federal Lands Agencies with $27.5 billion for highway infrastructure investment.
With this money there also comes an increased level of reporting, which we will be adding to Certified Payroll Solution to better and more fully serve the needs of our customers who may be working on these types of construction projects.
ARRA Reports include:
- Monthly Employment Report – Form FHWA-1589
- Monthly Recipient Project Status Report – Form FHWA-1585 (a summary report in addition to FHWA-1589)
- Initial ARRA Project Plan – Form FHWA-1586 (a summary report in addition to FHWA-1589)
- Monthly Summary Employment Report – Form FHWA-1587 (a summary report in addition to FHWA-1589)
- Periodic Grouped Project Report – Form FHWA-1588 (a summary report in addition to FHWA-1589)
Watch for further updates in the next couple of weeks regarding the release of an update to Certified Payroll Solution which will provide these forms.
In the meantime, download a copy of the reporting requirements.
Also be sure to visit the Federal Highway Administration’s Question & Answer page (looks like it’s updated frequently) for Questions & Answers on American Recovery and Reinvestment Act of 2009 that have been raised by State DOT’s, by clicking here.
