Working Out The Payroll Kinks In The Home Services Space

Work-from-home and social distancing requirements have impacted different industries in myriad, sometimes unexpected, ways. In the home services space, the effects of the pandemic have been complicated.

On one hand, some independent professionals like electricians or carpet cleaners may have decided to temporarily work in another field rather than enter into close-knit spaces. Yet on the other hand, explains Adi (Didi) Azaria, CEO of home service management software provider Workiz, demand for home services is actually on the rise, with some businesses in the field thriving.

“When you work from home, you break more stuff,” he recently told PYMNTS about the ability for some industry players to “thrive” amid the pandemic.

But the home services industry largely continues to rely on pen and paper, excel spreadsheets and manual workflows, creating friction in all areas of the back office. Among the most complex is payroll, with a changing workforce, compliance pressures and a lack of automation creating plenty of headaches for business owners and administrators.

Payroll Pains

There are several factors behind the home service industry’s payroll headaches, according to Azaria.

Among them are a variety of ways that compensation is actually calculated. While some professionals may be hourly workers, others are paid per job, creating complex calculations for rates and commission. Add into the mix the challenge of accounting for overtime if professionals conduct a job in the evening or on weekends, and the opportunity for mistakes and friction grows even larger.

Azaria also pointed to the complexities and risks of tax compliance, noting that some businesses in this space may operate in multiple states.

Further, the home services arena is a prime candidate to participate in the gig economy. Whether a company is hiring gig workers, independent contractors or employees, there are nuances to how paychecks and taxes are calculated.

Last, but certainly not least, in the long list of factors that create friction in the payroll process, professionals who work in the field are often tasked with clocking in and clocking out manually, a critical but oft-forgotten task.

“When you’re on the run from one job to another, you don’t have time to clock in,” said Azaria.

When the payroll workflow continues to rely on paper or spreadsheets, compensating workers becomes riddled with errors, delays and wasted time.

An Automation Drive

With a focus on addressing these pains, Workiz recently launched a partnership with payroll and time-tracking solution provider Gusto. The integration is not only part of Workiz’s efforts to ease payroll pains for this sector, but to move the digitization needle for an industry that Azaria said is in desperate need of automation — in payroll, and beyond.

Whether it’s automatically calculating accurate tax deductions, or automatically reminding professionals on location to track their time on the job, cutting out manual workflows will be paramount for the ongoing success of an industry that has operated on pen and paper for so long.

“We see a huge revolution,” said Azaria. “Digital payments are killing cash and checks, and if you’re a home service business not accepting electronic payments, you need to start changing — because very soon, you’ll be out of options.”

Not only should these companies embrace digital payments in a variety of workflows like accounts payable, accounts receivable and payroll, but these firms need to also be diligent about how they embrace technology. Azaria emphasized the importance of adopting platforms that can not only automate and digitize, but integrate with each other so as to not create unnecessary friction in other areas like accounting.

Accelerating modernization efforts won’t only be important for the survival of current operations, either. Azaria said he predicts a surge in demand for home services in commercial setting as hotels, restaurants, and office spaces reopen.

“Companies that were not in the office will get back to the office,” he said, “and they will need a lot of services, including deep cleaning, to get back.”