• Robert Patin

In-House vs. Outsourced Payroll for Your Construction Firm

Construction payroll can be complex. As the owner of your construction firm, you likely do not have the time or ability to handle payroll processes yourself, which means your choices are either to hire a person in-house to accomplish the task, or outsource your payroll work to a third-party agency capable of taking on work as you give it to them.

It is important to work with professionals who can be trusted to accurately and thoroughly complete all payroll taxes. As a contractor, a large portion of the costs of your work involve payroll and labor, including taxes, worker’s compensation insurance, benefits and general liability insurance. You must include these figures in your job costing reports so you can more accurately analyze your bidding practices and whether you’re turning profits on the jobs you take on.

While hiring a person in-house for payroll does give you a person who will become more familiar with your company simply by virtue of being an employee, many construction companies find outsourcing payroll makes more sense for them. Here are just a few reasons why:

  • Reduced costs: If you bring on an employee specifically for handling payroll, you’re going to need to pay them wages, benefits and all other costs associated with hiring a new employee. By outsourcing your payroll, you only pay for the work you need without the extra costs associated with employees. In addition, a third-party payroll firm will have all the technology and operational processes they need in place already, meaning you won’t have to invest in new software or training.

  • Better compliance: You are required to follow certain state and federal payroll and tax regulations to avoid financial penalties. Companies that specialize in payroll know all of the deadlines for filings and reports, and stay on top of any changing government requirements. If you attempt to keep payroll in-house but don’t have staff who are familiar with all the codes and regulations affecting payroll, you could end up losing a significant amount of money in fines.

  • More time to spend on your business: Payroll can be very time consuming, especially if the people in charge of payroll are not sufficiently trained in the process. Outsourced payroll firms are able to take on the work and perform it accurately, allowing you to focus on other, more important areas of your company.

  • Access to new technology: Companies that specialize in payroll are much more likely to have up-to-date technology and software that make it easier for them to accomplish payroll processes quickly and without errors. Many companies that keep payroll in-house either rely on outdated software or use unorganized spreadsheets for tracking payroll and other financial issues.

Many business owners are hesitant to outsource any processes to other companies—it can be difficult to give up control, as well as access to some of your company’s important information. However, third-party payroll firms provide a variety of benefits and can help you save a significant amount of time and money that can be better invested in your other operations.

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