A crew finishes a long concrete pour on Friday. The foreman has handwritten timecards in the truck, two workers split their day between jobs, and the office needs payroll approved before the weekend. That is where payroll mistakes happen.
This subcontractor payroll guide is built for trade contractors who need a faster, cleaner way to turn field time into accurate pay. The goal is not more paperwork. It is knowing who worked, where they worked, what they should be paid, and what that labor actually cost each job.
Start With the Right Worker Classification
Before you run a single payroll, make sure every person doing work for your company is classified correctly. This is not just an office detail. Misclassifying a worker can create tax penalties, wage claims, insurance problems, and issues on public or prevailing-wage jobs.
Employees are generally paid through payroll. Your company withholds required taxes, pays its employer payroll tax share, and follows federal, state, and local wage-and-hour rules. Independent subcontractors typically invoice for completed work and handle their own taxes, but the label alone does not make someone an independent contractor.
If you set a worker's schedule, direct how the work is done, supply the tools, and keep that person on your crews day after day, that worker may be an employee under applicable rules. Classification standards can vary by state and by agency, so talk with a qualified payroll professional or labor attorney when the situation is unclear.
For actual subcontractor companies, payroll usually means paying your own field and office employees. Payments to outside specialty subs should be tracked separately through accounts payable, contracts, lien paperwork, insurance certificates, and tax reporting requirements.
Build a Payroll Process That Starts in the Field
Accurate payroll starts when the shift starts, not when someone in the office tries to decode timecards Friday afternoon. Every worker should have one simple way to clock in, clock out, identify the job, and record breaks when required. A field-friendly time and attendance workflow helps keep those records tied to the right employee and job.
A practical process has four parts: capture time daily, review it against the job, approve exceptions, then send approved hours to payroll. When those steps happen in order, payroll becomes routine instead of a weekly scramble.
Capture hours by employee and job
A single total of 40 hours is not enough for a subcontractor. You need to know whether those 40 hours went to the school addition, the retaining wall, the service call, or shop cleanup. Without job-level time, labor costs land in a vague overhead bucket and job costing becomes guesswork.
Have crews select the job before they clock in. If they move jobs mid-day, they should switch jobs at that point, not try to remember later. For work that includes multiple cost types, such as rough-in plumbing and finish plumbing, use simple cost codes that match how you estimate. Keep the list short enough that crews can use it without calling the office.
Mobile time tracking works best when it is field-friendly. A foreman should be able to review the crew, correct an obvious missed punch, and submit the day from the jobsite. If the process takes 15 minutes per person, it will not hold up when work gets busy.
Record the details that affect pay
Hours are the foundation, but they are not the whole record. Payroll may also depend on regular versus overtime hours, shift differentials, paid time off, per diem, bonuses, prevailing wage classifications, or travel time.
Set these rules before payroll week. Decide who approves overtime, how you handle drive time between jobs, and whether a foreman can adjust a crew member's time. Document the policy and apply it consistently. A clear rule is easier to defend than a different answer for every crew.
Do not wait until the end of the pay period to catch missing information. Review daily logs and time entries each day. A foreman can still remember why a worker left early on Tuesday. By Friday, the details are usually gone.
Review Time Before It Becomes Payroll
The payroll review should be quick, but it should not be casual. Compare submitted hours with the work completed, crew assignments, daily logs, and job photos when needed. You are not trying to police every minute. You are catching errors before they become overpayments, underpayments, or bad job-cost data.
Look for patterns that deserve a closer look: a worker clocked into two jobs at once, missing lunch breaks where your policy requires them, unusually high overtime, hours charged to a closed job, or a crew that reports more time than the foreman expected.
Managers should approve time based on what they know from the field. The office should review it for policy, coding, and payroll accuracy. Those are different checks, and both matter. When one person handles everything, small mistakes can move through the system unnoticed.
A correction trail also matters. If hours change after submission, record who changed them, when, and why. Clean records protect the company if an employee questions a paycheck months later.
Calculate Labor Cost, Not Just Gross Pay
Gross wages are only part of what a worker costs the company. To price work accurately, job costs should include the full labor burden: employer payroll taxes, workers' compensation, unemployment insurance, benefits, paid leave, and other direct labor costs your business carries.
For example, a framer paid $28 per hour may cost the company substantially more after burden. If an estimate uses only the base rate, the job can look profitable on paper while labor eats the margin in real life.
Your burden rate will depend on your company, trade, location, insurance history, and benefits. Review it at least annually, and sooner if workers' compensation rates, health coverage, or payroll taxes change. Use the same rate assumptions in estimating and job costing so the office is comparing like with like.
This is where job-level payroll data pays off. If the masonry crew is consistently spending more hours than estimated on layout and setup, you can see it before the next bid goes out. That is a pricing decision, not just a payroll detail. Clear reporting and exports make those labor trends easier to review across jobs.
Handle Overtime and Prevailing Wage Carefully
Overtime rules are not optional, and they are not always as simple as paying time-and-a-half after 40 hours. Federal rules provide a baseline, while state and local rules can be more protective. Some locations calculate overtime daily, require special break rules, or have specific rules for certain industries.
Public work and prevailing-wage projects add another layer. Workers may need to be classified correctly by the work they actually perform, paid the required wage and fringe amounts, and included on certified payroll reports. A laborer doing work that belongs under a higher classification can create a compliance problem even if the rest of the payroll is accurate.
Keep project-specific wage determinations, classifications, fringe calculations, and approved time records together. Do not try to reconstruct certified payroll from memory at the end of the month. If your team does prevailing-wage work regularly, use a payroll provider or compliance expert that understands construction reporting.
Keep Payroll and Job Costing Connected
The best payroll process does more than get checks out on time. It gives owners a current picture of labor cost by job, crew, and cost code.
When payroll data lives in one spreadsheet, job budgets in another, and invoices in a third system, the office spends too much time moving numbers around. More importantly, the numbers arrive too late to help. By the time a monthly report shows a labor overrun, the crew may already be off the job.
Use one source of truth for field time and job activity whenever possible. A system built for subcontractors, such as SimplySub, can help crews track time by job while giving the office cleaner records for payroll review, job costing, and accounting workflows. The right tool should reduce steps for the field, not add another app crews avoid.
Set a Weekly Payroll Rhythm
Consistency is what makes payroll manageable. Choose a schedule your office and crews can follow every week. For example, crews submit time at the end of the last shift, foremen review it that day, managers approve exceptions the next morning, and the office finalizes payroll after that.
Your exact schedule depends on your pay period, payroll provider deadlines, and how often crews move between jobs. The key is setting clear cutoffs. Last-minute time changes should be the exception, not the normal process.
Keep payroll records organized by pay period and job. Save time entries, approvals, pay reports, correction notes, and any required compliance records. Retention requirements vary, so confirm how long your business must keep payroll and time records under federal, state, local, and contract rules.
Common Payroll Mistakes That Cost Subcontractors
Most payroll problems are not caused by complicated math. They come from disconnected information and rushed decisions. Watch for these common issues:
- Paying from handwritten timecards without checking job assignments or overtime.
- Coding all labor to one job or overhead, which hides job overruns.
- Treating regular crew members as independent contractors without reviewing classification rules.
- Waiting until payday to ask about missing punches or unclear hours.
- Using outdated labor burden rates in estimates and job-cost reports.
- Letting payroll corrections happen without a record of the reason.
Fixing these issues does not require a corporate-sized back office. It requires a repeatable process that fits how your crews actually work.
Good payroll should feel boring. Hours come in from the field, supervisors confirm them, the office processes them, and labor costs show up where they belong. When that rhythm is in place, your team spends less time chasing timecards and more time protecting the margin on the work already underway. To see how SimplySub can support field time and payroll workflows, schedule a demo or review SimplySub pricing.
