Outsourcing payroll is pretty straightforward for the typical American business. A company signs on with a payroll provider like BenefitMall, chooses the level of service desired, and then goes from there. It is all pretty simple from a functional standpoint. But what if your business is not normal?
There are some industries with payroll needs that are unique to them. Take trucking, for example. A small, one-man operation has very few payroll needs because there is no staff to pay. But what if that independent trucker decides to take on a few more trucks and drivers? Then there are questions of worker classification, how the drivers will receive their pay, and so forth.
A couple of other industries with unique needs are construction and food service, particularly restaurants. BenefitMall is a company that offers specialized solutions for both. Specialized solutions take into account the unique conditions under which construction companies and restaurants operate. Some of what they have to consider is described below.
Worker classification is more of a problem for the construction industry than restaurants. Construction companies frequently hire contractors and subcontractors rather than maintaining a staff large enough to handle everything on their own. While this may seem straightforward enough, it really is not.
The way state and federal regulations define contractors is not always clear. Ambiguity in the law can get a construction company in trouble without management ever knowing it. A specialized payroll solution takes this into account. It ensures that certain boundaries are not crossed, boundaries that would cause an independent contractor to be classified as an employee for tax purposes.
Withholding and Reporting
The next challenge for construction and restaurant industry businesses is one of withholding and reporting. Take your typical restaurant with servers earning a base wage plus tips. How tips are collected and paid determines how they are reported for tax purposes.
There are multiple regulations at the federal level governing individual tips, tip-sharing programs, and combining tips with base pay to meet minimum wage obligations. All of this can be terribly confusing to a payroll service without a good understanding of the restaurant industry.
In construction, contractors are paid for their work without regard for withholding or reporting. That is because contractors are self-employed. They are responsible for reporting and paying their own taxes. But if a worker is improperly classified as a contractor when he is indeed an employee, failing to withhold and pay taxes on behalf of that employee could get a construction company in trouble.
Time and Attendance Issues
Time and attendance can also be a problem for companies in certain industries. To begin with, there are certain employees in every industry who are considered exempt from federal rules governing overtime. These are generally salaried employees not required to work a set schedule. They are not eligible to earn extra pay for working in excess of 40 hours per week.
In some Industries, like construction, a significant percentage of workers are exempt by virtue of being contractors. As a result, company owners may not have a reliable system in place for tracking time and attendance among employees. But where does that leave the non-exempt office worker? His or her time still has to be properly tracked so that overtime can be paid when necessary.
It should be clear to see that outsourcing payroll when your business has unique needs is not a straightforward proposition. It is best to look for a payroll provider offering specialized solutions for your particular industry. You can never be too careful about making sure payroll is done right.