As an employer, you are required to do many things by law. One of which includes maintaining accurate records for current and past employees for a specified period of time. These requirements are enforced by both the IRS and U.S. Department of Labor. Some local and state agencies may also require additional record keeping.
Generally speaking, records should include the following; names, address, occupation, and Social Security number. Compensation details like; dates paid, tips, non-cash payments, payroll taxes, pay period, and fringe benefits, should also be included in the records. Some other possible data that you may be required to keep on file include; child support, creditor garnishment, unemployment insurance, wages and hours and unclaimed or abandoned wages.
Below you will find a table which outlines some record-retention guidelines.
|Records||Time Required to Keep Records|
|Employee Earnings||In order to meet federal and state guidelines, retain for at least 4 years.|
|Employee Time Cards||If your company is engaged in interstate commerce, you are subject to the Fair Labor Standards Act. Therefore, you must keep employee’s time cards for at least three years. In case inquiries arise, it wouldn’t hurt all companies to keep them on hand for at least a few years, regardless.|
|Personnel Records||After the employee has been terminated, keep on file for three years|
|Employment Tax Records||Maintain for four years from the date the tax was paid, or due- whichever is longer|
In order to ensure you don’t accumulate any back taxes, interest, or penalties in result of an audit, you want to maintain accurate records. This problem is widely solved by outsourcing the payroll function. Compass-i can handle payment preparation, as well as state and federal reporting. We will store your company records and provide you with reports at your convenience. Record keeping is “just another benefit of outsourcing payroll”.