Construction payroll services explained in simple terms
If you’re running a construction business, you’ll know that managing payroll is a complex and time-consuming task. You’re probably also aware of construction payroll services – but do you fully understand what they are and how they can help you?
Read on to discover more about payroll services in construction and the many benefits of letting someone else manage the burden on your behalf.
Why construction payroll is complicated in the construction industry
Payroll management is more demanding in construction compared with many other industries. This is mainly due to fluctuating work schedules, overtime, multiple worker types (employees, agency staff etc), site bonuses, and project-based accounting which requires job-cost tracking.
You also need to consider Construction Industry Scheme (CIS) requirements for sub-contractors, as well as frequent legislative updates from HMRC. Getting any of this wrong can lead to disputes, penalties or legal issues.
What are construction payroll services?
A construction payroll service is an organisation that manages your payroll services for you. It has specialist knowledge of the construction industry, and looks after all its unique challenges including:
- keeping track of varied hours and multiple different pay rates
- taking PAYE and Construction Industry Scheme (CIS) deductions
- ensuring compliance with employment and tax regulations
- submitting returns to HMRC
- processing various types of wages for union and non-union employees
The benefits of using a construction payroll service
An efficient construction payroll service will save you a lot of work and prevent you from making costly mistakes by:
- calculating deductions automatically, submitting HMRC returns and verifying subcontractors – ensuring CIS and PAYE compliance so you avoid fines and meet your legal obligations
- accurately managing multiple pay rates, job roles, bonuses and overtime – ensuring fewer payroll errors and reducing the risk of disputes
- providing real-time payroll summaries and job-costed reports – offering excellent financial oversight and giving you more control over budgets
- automating tasks such as payslip generation, timesheet processing and pension enrolment – reducing your administrative workload so you have valuable time for your office and site teams
- ensuring workers and subcontractors are paid accurately and on time – improving worker satisfaction and reducing staff turnover
- using flexible tools that can adapt to changing team sizes and structures – providing scalability for expansion and bringing on more workers
The risks of not using a construction payroll service
If you don’t use a construction payroll service, you’re putting yourself at risk of making errors with timesheets and pay rates, and therefore being on the receiving end of staff disputes and walkouts.
You might also misclassify workers (especially under IR35) or provide late or incorrect information to HMRC, which could result in hefty fines and penalties, and damage to your organisation’s reputation.
Types of construction payroll services
There are several types of construction payroll services offering varying levels of support depending on your unique needs:
- CIS payroll specialists: experts at dealing with deductions and returns for subcontractors under the CIS.
- Umbrella companies: effectively ‘employers’ for agency workers and contractors, handling National Insurance, tax and pension contributions under PAYE.
- Managed payroll bureaus: businesses that run your payroll only, leaving legal and employment responsibilities to you.
- Full-service outsourcing: organisations that manage everything from payroll to HR and compliance.
How to choose a construction payroll services provider
When you’re looking for a construction payroll services provider make sure they:
- are experienced in construction and understand CIS and relevant HMRC obligations
- have passed their compliance checks and HMRC audits
- offer easy to understand and transparent pricing
- have the capability to scale alongside your growth
- provide client testimonials that evidence their capabilities and levels of service
Construction payroll services are invaluable to today’s construction managers, ensuring you pay your workers correctly, remain compliant with legislation, and stay on top of other important work by offloading time-consuming admin and unnecessary stress.
Get in touch to find out more about how Bishopsgate’s expert construction payroll services can support you and your organisation.