Managing payroll risks with Gusto’s Will Lopez

On this final episode of “The Better Way” Season Two, Zach’s joined by Will Lopez from Gusto to go in depth with payroll. Hear their discussion about how to simplify your processes and ensure you and your employees are set up for success.

Tune in to the full episode to hear why having reliable payroll processes and procedures will benefit your team and business.

ARE THERE COMPANIES THAT ARE TOO SMALL TO USE GUSTO’S PAYROLL PROCESSING SYSTEM?

“Absolutely not. In fact, if this were 20 years ago when software hit a desktop, I think pricing would have been very different and almost been a blocker for any small team to consider something like automation around payroll. But I mean, 2021, affording reliable and boosting your confidence in that payroll moment using software, and software that can be accessed anywhere in the world, so long as you have an internet connection, is an easy thing to do. And so, it’s a great way to curb the natural stress that happens around paying team members, or to your point, spending hours in front of payroll, trying to make sure that the team is taken care of. So, this is something that can be achieved.

The benefits that Fortune 500 and Fortune 1000 companies had, which were people, platform, stuff, whereas this integrated experience of payroll benefits and HR, is now available to everyone. And so that is a great thing.”

WHAT MISTAKES ARE PEOPLE MAKING WHEN THEY’RE RUNNING PAYROLL FOR THEIR BUSINESS?

“So, the common mistakes that we see, or at least I saw when I was in public practice because I’m an accountant by trade and been one for close to 20 years. The main theme for many companies is improper employee classification stuff. So, basically incorrectly saying that your team member is either a contractor versus an employee. And so, when classifying team members, they kind of fall into two main categories. They’re either employees or they’re independent contractors, one or the other.

It’s simple, but they’re both completely different when it comes to paying taxes and offering benefits. An employee of a company will often be allowed to access certain benefits, be able to collect overtime wages and have their own payroll taxes deducted from their paycheck versus an independent contractor is expected to report and pay their own taxes and are not subjected to minimum wage and overtime laws. And this is why the IRS, the Department of Labor, is always so keen and always all about making sure that the workforce is properly represented in that moment. And that is a common mistake in owning a business and more so in the construction and GM trade.

And obviously, the fallout from that is if you just improperly classify employees as contractors, if you get caught you will be required to pay back taxes on their work, along with accrued penalties and interest. And so, you may also owe even the back wages to that employee.”

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Will Lopez

Will Lopez | Gusto

Intro:

Welcome to “The Better Way,” a podcast by Buildertrend. Here you’ll learn to simplify and establish processes that will make meaningful changes to your company and help you achieve your goals. There’s a better way to run your construction business, the Buildertrend way. Tune in this season as Pro Services education coordinator, Zach Wojtowicz, chats with several experts about risk management.

On this final episode of season two, Zach’s joined by Will Lopez from Gusto to go in depth with payroll. Hear their discussion about how to simplify your processes and ensure you and your employees are set up for success.

Zach Wojtowicz:

Welcome back everybody to “The Better Way.” Today we’re joined by a very special guest, Will Lopez, from Gusto. Will is the head of the accountant community in Gusto. And Will, why don’t you take it from here and tell us a little bit about what that means.

Will Lopez:

Hey, Zach. Great to be here. Thanks again. Love Buildertrend and love our partnership. Yeah. So, head of the accountant community, basically what it means is I help empower my peers. I’m an accountant myself at Gusto and through Gusto. And so, I oversee the 10,000 accounting partners and their experiences at Gusto, making sure that their firms are taken care of because they work with clients all day long and businesses all day long. So, they empower employers. I empower them to help out their clients.

Zach Wojtowicz:

That’s awesome. Well, thank you for joining us today. Gusto is a newer partnership here at Buildertrend. And so, everybody at Buildertrend is learning more about what Gusto does and what they’re all about. Me, myself, I’m learning about more and more of Gusto. What’s the 10,000 foot view of kind of what Gusto is and who it’s for?

Will Lopez:

Yeah. So, Gusto is a people platform for businesses that help employers and business owners take care of their teams. And so, when we say the people platform, we mean that that team members of a company are people and so, they have a holistic experience around the payroll moment. And so, we exist really to empower employers in the payroll moments to help them support their teams with onboarding, payments, benefits, planning for retirement, financial wellness and so much more. So, Gusto really has been seen as a payroll only platform. We’re a lot more than that. We’ve become a full-fledged people platform.

Zach Wojtowicz:

Yeah, that’s awesome. And for our listeners out there, we probably have some Gusto users that have been using it for a while, but we’re also launching on integration with Buildertrend to where we’re actually going to be able to send information out of our system into Gusto. So, we’re going to get into that a little bit later, but we wanted to talk about the theme of the podcast, which is mitigating risk for this season.

And we wanted to kind of dial in on something that could be a little intimidating, the payroll process. And what are the risks that come with running payroll and what comes along with just running a business and trying to make sure you’re compliant within the laws that go along with such processes. So, let’s just start at the top of the page. When we talk about payroll immediately, what are people kind of doing today prior to Gusto? What does that look like for a lot of businesses?

Will Lopez:

Yeah. I think a lot of this, when you think about running a business, it can be a really rewarding experience. But it also often comes with a lot of additional work to make sure everything is taken care of properly. And so, when I think of the payroll moments and what it means to support a team and their family, or a team member and their family, the approach many times with payroll is to kind of stay fast and loose about it. But it really is an important milestone for a team member. And so, for Gusto, we see a few things in that moment, making it easy for onboarding, paying, insuring and taking care of a team member. And so, for business owners, they may look at that moment and say, I could pull this off on a spreadsheet. I can pull this off in a Google doc. I can pull this off in very uncorralled ways.

And a lot of that leads into a lot of common issues in that moment for businesses. And so, with fewer employees, it means that … let’s say you have fewer employees. It means that staff and owners often wear multiple hats and sometimes mistakes can happen. And even while minor mistakes don’t always result in costly issues, simple mistakes in payroll can lead to major problems. So, treating it loosely is not a great experience, but it’s generally the one that standard.

Zach Wojtowicz:

That’s what you have observed in your own background. I know you did a lot of consulting with businesses and things like that. And in my travel across the United States, it does kind of seem like a hectic moment in the business life of, I got to pay my employees. A lot of times people are spending hours to get their payroll run, making sure it’s accurate and mistakes can happen. And I love that you pointed out a lot of these businesses that are Buildertrend people are smaller teams, are needing an additional system to make sure they’re doing it right. So, with a software like Gusto, are there companies that are too small to use something like a payroll processing system?

Will Lopez:

Absolutely not. In fact, if this were 20 years ago when software hit a desktop, I think pricing would have been very different and almost been a blocker for any small team to consider something like automation around payroll. But I mean, 2021, affording reliable and boosting your confidence in that payroll moment using software, and software that can be accessed anywhere in the world, so long as you have an internet connection, is an easy thing to do. And so, it’s a great way to curb the natural stress that happens around paying team members, or to your point, spending hours in front of payroll, trying to make sure that the team is taken care of. So, this is something that can be achieved. It’s been dispersed to the masses and the benefits …

Zach Wojtowicz:

It’s out there.

Will Lopez:

It’s out there. The benefits that Fortune 500 and Fortune 1000 companies had, which were people, platform, stuff, whereas this integrated experience of payroll benefits and HR, is now available to everyone. And so that is a great thing.

Zach Wojtowicz:

Yeah, absolutely. And Buildertrend has a very similar story where we get contracting companies with five, 10 employees, and they feel like there’s too much that it’s offering. And a lot of the same benefits come in where there’s always a better way to be more efficient. And ultimately your goal as a company is to scale, to take on more business, to hire more employees. So, having systems and processes, something like Gusto makes a ton of sense to future-proof yourself as well.

Will Lopez:

Yeah, absolutely. I mean, that’s why even our lowest plan, which anybody can pick up, it’s really an option for smart and streamlined payroll and benefits built for smaller teams. And the price is super reasonable. You get full service payroll across all 50 states in the U.S. You even create portals for your team members to see their paycheck stubs and do all that incredible work, two-day direct deposit, worker’s comp, best in class support, all these things. And you can even run your payroll on autopilot. So, let’s say a lot of your team members are salary oriented. You don’t even have to go in and click buttons. It just runs the payroll for you accurately. And so, in that plan even includes financial wellness stuff, like access to Gusto Wallet on our side. So, it’s an incredible solution at such an affordable price and takes so much of the edge off.

Zach Wojtowicz:

Yeah. So, we started talking about the risks, and we kind of danced around it a little bit. Let’s get back to that. We see the value now why you want to have a system, a payroll processing company like Gusto. What mistakes are people making when they’re running their business and running their payroll?

Will Lopez:

Yeah. So, the common mistakes that we see, or at least I saw when I was in public practice because I’m an accountant by trade and been one for close to 20 years. The main theme for many companies is improper employee classification stuff. So, basically incorrectly saying that your team member is either a contractor versus an employee. And so, when classifying team members, they kind fall into two main categories. They’re either employees or they’re independent contractors, one or the other.

Zach Wojtowicz:

It’s simple, easy.

Will Lopez:

It’s simple, but they’re both completely different when it comes to paying taxes and offering benefits. An employee of a company will often be allowed to access certain benefits, be able to collect overtime wages and have their own payroll taxes deducted from their paycheck versus an independent contractor is expected to report and pay their own taxes and are not subjected to minimum wage and overtime laws. And this is why the IRS, the Department of Labor, is always so keen and always all about making sure that the workforce is properly represented in that moment. And that is a common mistake in owning a business and more so in the construction and GM trade.

Zach Wojtowicz:

Really? So, even just the classification employees, I mean, that seems like 101, that’s the first thing you would do when trying to outline it. But it’s still kind of that gray line of where they fall? People mistake that frequently then.

Will Lopez:

Well, yeah. I mean, think about it. The way a company saves money is to treat a team member as a contractor. So, if a contractor has a responsibility to file their own taxes, pay their own taxes and do all the reporting, what are the two incentives there for a company? Well, that means less administrative work for me and less cost for me because I don’t have to match their social security or income tax or the Medicare taxes. So it’s a temptation for a lot of companies to say, I’m going to treat you like an employee. You’re going to clock in 40 hours a week. I’m going to tell you when lunch is and your two breaks are. And I’m going to assign all this work, but I’m going to treat you like a contractor.

So, the IRS has a lot of rules and the Department of Labor has a lot of rules around designation and understanding, making sure that you’re treating team members with dignity around those moments. Do you have control over their behavior? Do you have control over their financial stuff? And what’s the relationship look like? That will drive whether or not that that person should be an employee versus a contractor. But that is a common mistake is improperly classifying them.

Zach Wojtowicz:

And I’m sure it varies from state to state as well, too, with your state and local regulations, as far as labor requirements. I mean, it gets to that level of minutia that you have to be aware of.

Will Lopez:

Oh, totally. I mean, well, I used to tell my clients all the time and even accounting partners here at Gusto is living in the U.S. is like living in 50 different countries.

Zach Wojtowicz:

Yeah. And then you get to the county level. It could change there.

Will Lopez:

Yeah. So, every state has their labor laws. There are guiding principles federally that have mandates over the workforce. There’s no doubt that there’s nuances, not only federally, but at the state level.

Zach Wojtowicz:

Yeah. It can be really hard to navigate. It’s intimidating really.

Will Lopez:

Yep. And obviously, the fallout from that is if you just improperly classify employees as contractors, if you get caught you will be required to pay back taxes on their work, along with accrued penalties and interest. And so, you may also owe even the back wages to that employee.

Zach Wojtowicz:

Yeah. And surprise cost is our killer. I mean you have budgets you’re trying to hit.

Will Lopez:

Nobody likes surprises, especially around this.

Zach Wojtowicz:

Yeah, for sure. Nothing like the IRS come knocking. So, are there any other risks that we should also be aware of when getting started with payroll or common mistakes that people are making?

Will Lopez:

Yeah. There are a few others. And I think a lot of it stems from our initial talk about how people run payroll. And so, the common mistakes that are seen around not using a solution that creates the bowling lane guardrails for you is things like processing payroll late, not filing the proper forms around payroll, not keeping proper records. And so, a lot of that stems from manual activity around the payroll moment. And so, those themes right there are interwoven into the way you think about payroll, the way you approach payroll and the way you work with payroll. If you don’t have systems in place that keep the guardrails up for you, like Gusto does it for all its users and business owners and accounting professionals, you will fall into the trap of just filing things late. And when you file things late, there are penalties and fines flying all over the place. And there’s real stakes to that moment.

Zach Wojtowicz:

Yeah. Yeah. And so, a lot of it, it sounds like Gusto, kind of what you’re painting the picture of, is Gusto does a lot of this for you. You don’t necessarily need to be an accountant to be able to use your payroll with compliance in mind because of the software doing so much of it for you on the automation side.

Will Lopez:

Exactly. Gusto’s mission is to create a world where work empowers a better life. And there’s no other moment that advances or detracts from the relationship between an employer and employee than payroll.

Zach Wojtowicz:

That’s why I’m here, right? I’m here to get paid.

Will Lopez:

Yeah, exactly. Exactly. But for example, processing payroll late is a common mistake. And payroll needs to be run on time for the team member to support themselves and their families. So, not only will failing to pay your employees on time erode their trust with you, it will also make you just noncompliant with the state pay frequency requirements. And so team members and team owners and business leaders need to make sure that payroll is processed at the set schedules as well as enough time for it to be completed by the pay date.

And so, there’s a lot of relational aspects to that. It ruins trust. The team member doesn’t feel valued. They think that they are seen as just numbers or moments in time, rather than someone who has talent and skill. And so, the payroll moment, if it’s late or on time really speaks to this relational trust thing. And it’s a way to prove out a company’s trust that it does trust that team member’s and appreciates that team member’s time. And with that, you get paid on time. You have all the benefits that you need. And so it’s a pretty milestone moment.

Zach Wojtowicz:

Yeah. And I’m sure, I’m just postulating here, that if you aren’t hitting your payroll cycles as agreed upon in the employer/employee contract, I mean, you’re inviting potential litigation as well, or back pay or any sort of disgruntled employee, which it just speaks to the importance of having processes, making sure things are outlined clearly and following through on them.

Will Lopez:

Yeah. Yeah, exactly. And so, like I said, the payroll moment, the way I look at it, has a lot of carrots and it has a lot of sticks. The tax agencies …

Zach Wojtowicz:

Hopefully, it’s more carrots, not so much like the stick.

Will Lopez:

Yeah, exactly. Tax agencies are all about the stick. And so, they love the stick. I mean, that’s how the bills are paid federally and the state with penalties and interest and back taxes. The carrot here really is just the business owners, let’s say, that use Buildertrend and Gusto, is to really lean into helping themselves and their team members build a resilient and great place to work. And so, the payroll moment helps you achieve that work. And not looking at payroll as merely a thing to be done, but more of a thing to be done plus a moment to build trust really goes really far. There’s some incredible stats out there. Happy employees are very productive employees. And no one is less happier than when they’re not paid.

Zach Wojtowicz:

Probably because they’re hungry.

Will Lopez:

Exactly. There’s an amazing stat that says companies with happy employees outperform the competition by 20%.

Zach Wojtowicz:

Wow.

Will Lopez:

20%. And here’s another mind-blowing stat. Employees who report being happy at work take 10 times fewer sick days than unhappy employees. So, the payroll moment, the benefits and all that kind of stuff, treating that as a moment to get things right, to show that the team can trust you with their life and their livelihood. And to prove the point that you are here for their happiness and their wellness goes a long way and amps up business performance.

Zach Wojtowicz:

Yeah. That’s fantastic. So, just as we get closer to the end here, I wanted to speak a little bit on the actual integration with our software and how that’s going to look and work. The integration is coming along well. It should be out here not too much longer. I can’t give exact dates. For people who are already using Gusto, then you are in anticipation of waiting. And how it’ll work is our Time Clock in Buildertrend will be able to send time shifts over to Gusto. And so, you would set up your employees in Gusto following the onboarding procedures that Will Lopez just laid out for us. And then we’re just feeding the data. So, if you’re already using Buildertrend’s time clock, it’s a great time to explore Gusto in the meantime, learn that software and figure out how it really operates. And then as soon as the integration is live, we’ll be able to link those accounts up very similar to our QuickBooks integration and start funneling data over for people to get paid and have that happy payroll moment as Will outlined for us.

Will, is there any other thoughts on the integration and that you’d like to add?

Will Lopez:

I mean, I’m just super excited because I think the integration is super important. So, being a user of Buildertrend, being a business owner that’s trying to run a business and take care of a team, this is a great moment where both collide with seamless effort, with a lot of functionality and meets you at whatever moment in business life you’re in. Whether you’re running a small team, your team is growing, or you have a large team, both Buildertrend and Gusto connected together will meet that moment of scale with you and continue this compliance work and administrative task of running payroll, running a business. But then above and beyond that, taking care of a team and building trust with them in those moments.

Zach Wojtowicz:

Well said, Will. One thing also worth pointing out is people who get referred to Gusto through Buildertrend receive a three month free trial to give it a try. And I think it’s important to ask this one last question, if you don’t mind. Is there ever a bad time to switch payroll processors if you’re already using one or you’re looking to get started? And is there a right time to do it?

Will Lopez:

Yeah, so, I love that question and I definitely have my thoughts on it. So, in my opinion, if once again, if it were 15, 20 years ago, then I would have said, maybe at the end of the year is a great time because it’s a great time to transition, perhaps even at the end of a quarter. But nowadays, because of Gusto’s assistance in helping you bring over teams, you can switch at any time and not skip a beat and not skip anything and pay that team on time and make it totally seamless. So, there isn’t a bad time.

But I know people are busy, so if people are busy and business owners are busy, then the conventional approach is to find quarter end, year ends and treat that as your milestone moment to make the cut. If you have a little time and not not a lot of time, really, if you have a little time to commit to it, any time of the year is a great time. And obviously, anytime of the year to really support your team and lean into their satisfaction with working with you, then the faster you get to Gusto, the better.

Zach Wojtowicz:

Absolutely. I couldn’t agree more. Change is hard, but it’s time to start exploring what’s out there and seeing how we can improve. Buildertrend’s slogan is a better way. We believe Gusto is a better way to run your payroll processing. So, we’re really excited about this partnership. Will, I’m going to call it for today on this episode. Everybody out there, thanks for joining us, Will.

Will Lopez:

Thanks for having me.

Zach Wojtowicz:

It was really great having you on “The Better Way.” Stay tuned for more episodes coming to you. Thank you for your time.

Will Lopez:

Hey, thanks for having me here. Thanks to Buildertrend.

Outro:

Thanks for listening to “The Better Way.” If you’re a Buildertrend customer, schedule a training to learn more. All listeners, be sure to rate, review and subscribe to “The Better Way” wherever you get your podcasts. Also, visit buildertrend.com/podcast to sign up for the email notifications when the next season drops and explore our other podcast, “The Building Code.”


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