One critical aspect of your business is tending to payroll compliance responsibilities to protect your employees' privacy and your organization. One area that can prove complex for some payroll teams is determining how long to keep payroll records.
Here’s what you should know.
Why Keep Payroll Records?
You need to maintain sterling payroll records for multiple reasons, such as ensuring accountability in case of audits; creating better budgets and managing labor expenses; or effectively defending against potential employee lawsuits or false accusations regarding compensation.
Payroll records can also help current or former employees who might need payroll documentation to verify proof of employment and income if they want to apply for a mortgage or auto loan or rent an apartment.
Tips for Navigating Payroll Records Compliance Matters
Per the Fair Labor Standards Act (FLSA), there are certain records you must keep for every non-exempt worker. Those vital employee payroll records include:
- Full legal name and address with zip code
- Social security number
- Sex and date of birth if younger than 19
- Occupation, position held in the company and job description
- Time and day of the week that the workweek begins for each employee
- Hours worked each day and each workweek
- Basis on which wages are paid, such as per hour, per week, monthly, etc.
- Regular hourly pay rate or annual salary
- Total daily or weekly regularly scheduled earnings
- Total overtime for the workweek, when applicable
- Total wages paid each pay period
- Additions or deductions from wages
- Date of payment and the covered pay period
Now that you know what types of employee information to keep on file with your payroll department, the next step is getting a clear idea of how long to retain employee records.
Entities such as the Small Business Association (SBA) recommend keeping payroll records for six years. They have determined this length of time because states and local municipalities may have different requirements than the federal government. Keeping these documents for six years ensures compliance to protect your employees and company.
What Is the Best Way to Maintain So Many Payroll Records for So Long?
You might look at the amount and variety of employee information and the length of time you need to keep it and wonder how it's possible. Without some support, it might seem overwhelming. With so many variables, something might fall through the cracks, resulting in prematurely discarded files or giving unauthorized access to confidential files.
It's crucial that you have a foolproof system, especially since errors could result in an array of problems for your business and employees.
Minute7 offers the solution that takes out the guesswork, struggle and confusion of payroll recordkeeping. Your payroll team has a busy schedule, tending to daily matters important to your employees. With our solution, your timesheets, reports, expenses and data can all be stored digitally, so you don't need paper storage of documents. You can save physical space in your office or warehouse while facilitating more efficient search-and-file endeavors via a PC or mobile timesheet app. Plus, our system integrates with QuickBooks and is easy to use.
If you're ready to streamline your payroll records-keeping process, explore all the benefits with our Minute7 Free Trial. You can sign up and set up safely and securely without any fees or providing credit card information.
Contact us if you have any additional questions about our online payroll management solutions.