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Construction Payroll, Should I Do It In-house or Outsource It?

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Construction payroll can be complex and many business owners wonder if they should hire a payroll clerk and issue payroll in-house or if they should outsource it.

payroll is an important part of job costingAs a contractor a significant portion of your job costs involve payroll and labor burden (taxes, worker’s compensation insurance, general liability insurance, company paid fringe benefits etc.) and you need to have these numbers included in your job costing reports so you can analyze your bidding practices and know whether or not you made a profit on the job.  If your employee paychecks are not run through your accounting software you loose this vital piece of job costing information.

Construction payroll can be complex and the lure of an outside payroll service such as Intuit Full Service Payroll, ADP, Paychex, Ceridian, etc. can look pretty attractive to a busy contractor who is trying to do everything himself; but don’t be fooled!

Sure, most outside payroll services say that you can import your paycheck transactions into QuickBooks – but it is done via journal entries and with journal entries you cannot job cost and when you cannot job cost your payroll you are missing out on some really important information that will help you determine whether or not you made money on the job.

Payroll is something that most people can learn – even if they have no prior experience.  When I was hired for my first bookkeeper/office manager position I didn’t have a clue about payroll – but I had a very good teacher!

QuickBooks Enhanced or Assisted Payroll can handle most complex situations – with the exception of multi-state payroll (it fails miserably at multi-state payroll).  It will record your tax liabilities and generate the required reports that you need to submit to government agencies.  You need to be aware of when the payroll tax money must be submitted and make sure that these tax deposits are made on time.  Both of these services will also allow you to job cost your payroll so that it becomes an integrated part of your job costing reports and you won’t have to work with data from two different sources.

Don’t get me wrong – payroll is not something to be taken lightly and I’m certainly not going to say that it’s always easy – but with proper training a person can learn to handle even the most complex union payroll.  So if you are currently outsourcing payroll and feel that you are missing vital information; consider bringing it in-house and hire someone to teach you and to monitor things on a regular basis until you are sure that you have a good grasp on the situation.


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About Your Host:

Nancy Smyth, Certified QuickBooks ProAdvisor

Nancy Smyth, Sunburst Software Solutions, Inc.
QuickBooks Construction & Payroll Expert

I've been using and supporting QuickBooks products since the early 1990's. I've worked with thousands of contractors, assisting them with QuickBooks setup, Certified Payroll Reporting requirements, AIA Billing and Weighted-Average Overtime.

QuickBooks is a powerful product, but learning how to use it in your construction business can be difficult. I hope you find resources available here to be helpful.

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