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Should You Use Construction Accounting Software to Handle Payroll Internally?

If your company is searching for new construction accounting software, one of the big decisions that you’ll need to make is whether or not you want to use the software to handle your payroll functions or if you will be outsourcing your payroll to an external service provider. This article will provide some tips and advice about the pros and cons of each option.

Handling Payroll Internally

Modules that are built in to some construction software packages enable you to easily track all of the details associated with your organization’s payroll. The software can be made to run reports that make it easy to complete year end government reporting as well as tracking time and labor costs on the client, project, or employee level. These software packages generally begin with some generic templates that can then be modified to show the data that your company is most concerned about seeing. This ease of use will allow you to quickly see things like how many hours were spent the the Tiger Boulevard project in the past 3 months or how much time Mike Davis has spent on projects X, Y, and Z since June. This kind of data can be very powerful in showing how efficiently your labor force is being utilized and can shed light on areas to make improvements.

Using your own software to do payroll also has the advantage of eliminating the need for double data entry. Since the entire system will be integrated, as soon as an entry is made for Mr. Davis in Project X’s job cost, the same data is automatically entered on his individual payroll statement as well as in every other relevant area (the client’s labor statement, time spend on the task over all jobs, etc.). This improved efficiency results in less time spent on data input and monitoring, leaving more time for value-added activities throughout the entire organization.

Outsourcing Payroll Tasks

If you prefer the ease of sending payroll information to an external payroll service and having them handle the details you can obviously still continue to do so. External payroll services are nice because they specialize in that area, so their accuracy when it comes to report generation, tax reporting, and so on will be top notch. They allow payroll and tax reporting to get done properly with minimal oversight from the construction company, which is preferable to some companies that do not have the necessary level of expertise on staff to ensure everything is done properly.

If you decide to use a payroll service, you will probably still need to have an accounting system that is compatible with the system that they use, which is something to consider when you’re looking for new construction accounting software. Before making any new investments, check with your payroll service provider to ensure that the system you are considering will be compatible with their system to prevent a huge, and costly, headache down the road.

To Each His Own

In the end, the choice you make will depend on your personal preferences. If you prefer to have hands on access to all the information in real time, then handling payroll internally is probably the way to go. On the other hand, if you want to simplify your day to day operations by not having to worry about payroll, then outsourcing is probably your best choice. You will need to decide which provides the most value to your company, and each company will be unique in that manner. There is no right or wrong answer that can be applied to all companies.

Samuel Daggle writes articles for construction and manufacturing businesses that are looking for ways to use construction software to improve their business. Check out his other articles for more information about construction accounting software.

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