What to Keep in Mind When Working on Payroll Reporting – A ProjectPro Guide
Payroll reporting is one of the most significant aspects of the construction business, especially leaning on a technology based solution like Construction payroll solutions software. Not because it is subjected to business productivity and revenue, but because of the Davis-Bacon Act.
Under this act, contractors and sub-contractors associated with Federally Funded Projects need to comply with payroll reporting regulations. However, many state and municipal laws are associated with payroll and can lead to business complications when it comes to payroll reporting in the construction industry.
This can be a cause of concern for construction firms since the inability to adhere to their guidelines could be a major threat to business. It may involve penalties, legal issues, and sometimes complete exclusion from government contracts. Moreover, the administrative costs involved in certified payroll could also restrict the scope of taking additional projects in both the public and private sectors.
However, there are certain ways in which the process to improve the frequency of government-funded projects could be improved. These include some resolving common errors which most construction firms tend to make with certified payroll reporting; preventing these may not only help reduce risk, but also prevent financial damage due to non-compliance.
Understanding Certified Payroll Reporting
Certified Payroll Reporting is a common term associated with construction projects that are directly controlled by the Government. These can be any public projects which are driven by Federal, State, or Local authorities and need construction firms to have a complete track of certified payroll data to qualify for the projects.
Once they comply with the laws, the construction firm needs to submit weekly reports submitted through the WH-347 Form as a part of Federal Project policies. Though reporting of information is mandatory, the contractors may skip the use of specific forms or reports for special contracts that require such terms.
Similarly, the requirements for submitting the reports are different for state and local governments while contractors are advised to be informed in order to comply with the laws. Let’s begin with a quick list of things which contractors tend to keep in mind with certified payroll reporting in order to avoid business loss.
Assign and Track Work Classifications
The general process of determining the rate of pay for a particular worker is done through work classifications, and it may vary depending upon the quantity of work involved. For example, the task of curing the concrete and the task of pouring the concrete are classified differently.
In simple words, people who are assigned to specific tasks may work on other jobs at the site as per the work requirements. However, the certified payroll reporting considers all their job roles, and the rate of pay and final wages are determined based on all the classifications of work for a particular individual.
Therefore, it is very important that contractors while working manually on tracking and assigning classifications should have a proper auditing system in place. Since work classifications is a significant aspect of payroll reporting, it is imperative to have the support of technology such as accounting software for Construction Company to streamline the things.
Incorrect Distribution of Wages
Wage distribution is completed after determining the hourly wages for a job in a particular category plus the fringe benefits associated with the category. These rates align with the guidelines of the Service Contract Act, or DBA, or both, along with some compliance of state or municipalities.
The certified payroll reports show the exact wage which may vary as per government policies and thus, must be revised from time to time to ensure correct wage distribution. Therefore, the contractors and construction companies should to stay updated to avoid any underpayment due to errors. However, the corrected reports should be submitted separately and must clearly reflect the amendments.
Time Related Errors
Time-related errors usually involve the hours for which the work is tracked to create the payroll. However, the certified payroll reporting is all about transparency in tracking hours concerning the work category as well as the wage rates decided by the Government. Therefore, a company which needs to be compliant for government funded projects needs accurate tracking of such data.
Since manual methods could lead to mistakes, it should be better kept on a system which can verify the start and end time of the workers’ shifts. Moreover, this should also include tracking of roles for employees. This can be streamlined with the help of employees by informing them to change their work classification every time their job role is switched.
Administration & Record-keeping
Contractors and firms that work on Government-Funded projects need to be informed and strictly comply with the regulations. Under the Davis-Bacon Act, the contractors are required to keep a record of all payroll data and other project related information in the reports:
- Name, Address, and Social Security Number of the worker
- Work Classification or category details
- Pay rate per hour along with fringe benefits
- Total work hours
- Actual Wage Paid
- A complete report of fringe benefits under any plans or programs of company policies
- Report for apprenticeship or training, whenever it is applicable
Also, the contractors or construction companies need to keep the records for a time of 3 years or 36 months at the worksite or place which has centralized records for all project data. Moreover, there must be a proper security plan that can help ensure data safety and backup for the records.
Mistakes in the payroll reporting process at any stage could lead to complex scenarios. These may involve heavy fines, legal issues, along with restitution. However, these issues could be a challenge for a firm that is growing, and therefore switching to an advanced payroll reporting system could be the best thing that can prevent errors.
For instance, Dynamics 365 accounting software could eliminate errors in the records and ensure that the data complies with government policies. In other words, administrating certified payroll accurately will protect your business.
Note: All the data provided in this blog is for general purpose. We recommend you consult with an expert attorney or visit the official website of the state government to ensure you comply with necessary reporting requirements and laws.
Are you looking for Microsoft Dynamics 365 Business Central based accounting and project management software that can help streamline the process for payroll reporting? Try ProjectPro and keep track of all your job schedules, work hours, and other data necessary for successful payroll reporting.