Hello, Jon Markee here, founder and CEO of MyBuilderCPA. Today, we’re diving into the complexities of payroll and how we manage it for our clients.
Understanding Payroll
Payroll is often riddled with misinformation, misconceptions, and complications. Each jurisdiction—whether it's a specific state or county—has its own set of payroll laws and regulations. At MyBuilderCPA, we don’t handle all these intricacies ourselves. Instead, we collaborate with a dedicated payroll service provider that manages payroll operations locally for you. This approach ensures compliance and accuracy without overextending our resources.
Choosing a Payroll Service Provider
Given the complexity and low-margin nature of payroll services, many smaller providers are being acquired by larger companies like ADP. We work with cloud-based, digital payroll service providers that integrate seamlessly with QuickBooks. This integration is crucial as it ensures accurate journal entries and simplifies the matching process in the bank feed.
Payroll Processing Frequency
Our professional recommendation is to process payroll twice a month, preferably on the 1st and 15th. This method helps smooth out payroll expenses throughout the year and avoids the confusion that arises from bi-weekly payroll schedules, which occasionally result in three paydays in a single month.
Transitioning to a New Payroll Provider
If you’re considering switching payroll providers, it’s best to wait until January 1st of the new year. This timing avoids complications and discrepancies in payroll reports and W-2s that can arise from mid-year transitions. However, you can start setting up your new payroll service before January 1st, ideally around November 1st. This allows ample time to enter all necessary information, invite employees to set up their records, and ensure everything is ready for the first payroll of the new year.
Integrations with Job Software
Using a payroll service that integrates with your job software, such as BuilderTrend or JobTrend, and QuickBooks is highly recommended. For example, BuilderTrend integrates with QuickBooks to allow seamless transfer of timesheets, enabling QuickBooks Payroll to handle paycheck calculations, direct deposits, tax payments, garnishments, and more.
Our Role in Managing Payroll
At MyBuilderCPA, we don’t directly process payroll or handle payroll filings. Instead, we act as a liaison between you and the payroll service provider. We communicate all necessary tax IDs and employee information to set up the system and ensure salaries and hours are entered accurately so that everyone gets paid on time.
W-2 vs. 1099 Classification
Determining whether a team member should be classified as a W-2 employee or a 1099 contractor is crucial. When in doubt, it’s often better to classify them as a W-2 employee to avoid potential payroll audits and penalties. We’re happy to conduct a person-by-person analysis to help you make the right classification.
Conclusion
Managing payroll can be complex, but with the right payroll service provider and seamless integrations, we ensure it’s handled accurately and efficiently. If you have any questions about how payroll works at MyBuilderCPA or need assistance with your payroll setup, please don’t hesitate to reach out.
Thanks for watching, and have a great day!