Cheapest payroll for construction in 2026
Construction payroll is harder than office payroll: W-2 crew members alongside 1099 subcontractors, multi-state crews on out-of-state jobs, Davis-Bacon prevailing wage on federal projects, certified payroll reports, and workers compensation by job class. The cheapest legitimate option that handles all of this is OnPay; Patriot is cheaper on sticker but lacks the certified payroll and multi-state depth construction needs.
Cheap payroll for construction, ranked
| Provider | 5 EE / mo | 10 EE / mo | Davis-Bacon support |
|---|---|---|---|
| OnPay | $70 | $100 | No. Manual certified payroll. |
| Patriot Full Service | $57 | $77 | No. Limited multi-state config. |
| Square Payroll | $65 | $95 | No. |
| Gusto Plus | $140 | $200 | Manual export to specialist tool. |
| QuickBooks Payroll Premium | $120 | $160 | Workaround via QB Time job costing. |
| eBacon | $50 | $75 | Native: certified payroll automated. |
| Foundation Software Payroll | Custom | Custom | Native: industry-leading certified payroll. |
| ADP Run Essential | $99 | $119 | Available as add-on. |
How construction payroll providers handle W-2 + 1099 on the same bill
Construction businesses commonly carry a core crew of W-2 employees plus 1099 subcontractors hired job-by-job. The cheap payroll providers that handle this cleanly are OnPay, Square, Gusto, and QuickBooks Payroll. Each pays W-2 employees at the standard per-employee fee and 1099 subcontractors at the same per-head fee on the same monthly bill.
The non-obvious risk is misclassification. The IRS pays attention to construction because misclassification of workers as 1099 instead of W-2 is common in the industry. The control test (who sets hours, who provides tools, who directs the work) usually classifies regular crew as W-2 employees regardless of how the business labels them. A misclassification audit triggers back payroll taxes (employer FICA + employee FICA + federal income tax withholding) plus penalties at 1.5 to 4 percent of the misclassified wages.
The cheap payroll provider does not protect you from this. Misclassification is a legal-strategy question, not a payroll-software question. Have a labor lawyer review your subcontractor agreements before scaling 1099 usage.
When you need a construction-specialist payroll provider
If any of your work is on federal construction projects over $2,000, Davis-Bacon Act applies and you must pay prevailing wages set by the US Department of Labor for the job classification and locality. The prevailing wage rates are published at sam.gov/wage-determinations and updated semi-annually.
On top of paying the prevailing rate, you file Form WH-347 (or equivalent state form on federally assisted projects) weekly for each project. The form lists each worker, their classification, hours worked, gross wages, deductions, and fringe benefits. The sign-off statement carries personal liability for false certification.
General SMB payroll providers do not generate Form WH-347 automatically. You either export the data weekly and re-key into the federal form (error-prone and slow), or you use a construction-specialist provider that generates WH-347 natively. eBacon at $25 + $5 per employee is the cheapest specialist option. Foundation Software, Sage 100 Contractor, and Viewpoint Spectrum are the enterprise-tier construction tools, all custom-quoted and meaningfully more expensive.
The single biggest payroll-adjacent cost for construction
Workers compensation insurance is calculated as a percentage of payroll, with the percentage set by NCCI (or state equivalent) for the specific job classification. Construction job classes are expensive: a typical residential framing class is roughly 8 to 14 percent of payroll. Roofing, demolition, and excavation can be 15 to 25 percent.
The annual workers comp audit reconciles the actual payroll against the estimated payroll the policy was priced on, with a true-up cost or refund. The audit is a major cash-flow event if you underestimated payroll growth.
Pay-as-you-go workers comp integration eliminates the audit-and-true-up cycle. Each payroll run sends actual wages to the carrier and the premium is collected proportionally. OnPay's integration is via NEXT Insurance. Gusto and Square use similar partners. The cheap payroll software does not change the workers comp rate; it changes the payment timing and removes the audit surprise.
For a 5-person framing crew at $50,000 average wages, the workers comp premium is roughly $20,000 to $35,000 a year. The payroll software fee at $70 per month is $840 a year. The workers comp cost dwarfs the payroll software cost. The cheap payroll question is downstream of the workers comp class question.
The crews-cross-state-lines complexity
A construction business based in one state regularly takes jobs in neighbouring states. Each state requires payroll-tax registration for any employee performing work in that state, regardless of where they live. A New Jersey-based contractor with a job site in Pennsylvania needs Pennsylvania withholding and unemployment registration the moment the crew steps onto the site.
OnPay handles multi-state registration and filing at no extra cost. Patriot Full Service supports multi-state but the registration mechanics are less polished. Gusto Simple does not support multi-state at all; Gusto Plus does but at double the price. For multi-state construction, OnPay is the cheap-payroll answer.
The state-specific registrations are a one-time setup cost: $0 in most states, $50 to $200 in a few. The payroll provider does not pay these for you; you pay the state directly. The provider configures the payroll deductions and filings correctly once registration is complete.
Other cohort and vendor pages
Common questions
What is the cheapest payroll service for a small construction company?
OnPay at $40 + $6 per employee with multi-state included and mixed W-2 + 1099 rosters at the same per-head fee is the cheapest legitimate option for non-Davis-Bacon work. For federal prevailing-wage projects, a construction-specialist like eBacon ($25 + $5 per employee) or Foundation Software handles certified payroll natively.
Can I pay subcontractors through my payroll service?
Yes. Most cheap payroll providers (OnPay, Gusto, Square, QuickBooks) support 1099 contractor payments alongside W-2 employees on the same bill. The 1099-NEC is generated at year-end automatically. The per-head fee is usually the same for W-2 and 1099, though Square and Gusto have separate contractor-only plans at $6 per contractor with no base fee for businesses with no W-2 employees.
What is Davis-Bacon and why does it matter?
Davis-Bacon Act requires contractors on federally funded construction projects over $2,000 to pay workers prevailing wages set by the US Department of Labor for the job classification and locality. Certified payroll (Form WH-347) must be submitted weekly. General SMB payroll providers do not handle WH-347 natively; construction-specialist providers do.
Does OnPay handle Davis-Bacon certified payroll?
OnPay handles standard payroll, multi-state, mixed W-2/1099 rosters, and workers comp pay-as-you-go. It does not natively generate Form WH-347 certified payroll for Davis-Bacon projects. If your construction company does federal prevailing-wage work, you need a specialist tool layered on or a construction-specific payroll provider.
What is the cheapest way to handle workers comp for construction?
Pay-as-you-go workers comp integration is offered by OnPay, Gusto, Square, QuickBooks Payroll, and most cheap providers. The integration syncs actual payroll wages to the workers comp carrier weekly or per pay period, eliminating the annual audit-and-true-up cycle. Construction job classes are expensive (often 5 to 20 percent of payroll) so the workers comp cost typically dwarfs the payroll-software cost.
Do I need a construction-specific payroll provider?
Yes if you do Davis-Bacon work, certified payroll reports, or have complex multi-trade rate-by-job-class needs. No for general residential construction with stable crews and no prevailing-wage projects. The cheapest path for general construction is OnPay; the cheapest path for prevailing-wage work is eBacon or Foundation Software.