Are you wondering how long you need to keep payroll records? If you’re an employer, knowing all you can about payroll can help you keep the internal control of your company.
To learn more about payroll records as well as how to store and organize them, keep reading. Make sure you are taking special care of your payroll records by brushing up on the facts with this simple guide.
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Why Should I Keep My Payroll Records?
Like other forms of data and paperwork, payroll records serve as documentation that can reflect your company’s decisions as well as your actions. They are important proof that you are complying with state and federal regulations while also allowing you to manage your business administration processes. It’s important to keep your payroll records for the correct amount of time for compliance reasons.
Failure to do so can result in fees and fines and you can be penalized if the IRS audit’s your business. By properly managing and storing your payroll records, you can protect your business legally and financially. Having records of your payroll also allows you to monitor the internal workings of your company.
This can help you keep up to date on the financial state of your company. If you’re not tracking your finances you could face dishonest employees, bookkeepers, or payroll processors. Additionally, keeping personal records like payroll up to date can help you navigate company changes.
With employees coming and going, it’s helpful to have accurate records that can help you manage your staff.
How Long Should I Keep Paystubs?
The IRS mandates that pay stubs be kept for three years as does the FMLA, which protects employees that need to take unpaid leave for medical or family-related reasons. Having paystub records can help to show whether an employee took unpaid leave or used paid time off. Businesses are required by the FLSA to keep specific documents that list important employee information such as their name, address, pay rate, and social security number.
This information can be attained by keeping documents such as paychecks, pay stubs, and hiring documentation. This will allow information such as hours worked, pay type, work period, and total net earnings to be available when needed.
Payroll Storage Tips
Many companies choose to digitalize their payroll information, but the paper is still the best option. If you choose to keep your payroll records retention by paper, you should store them in a locked filing cabinet. You may also consider scanning your records to create digital copies and cut down on storage space.
Are you looking for an easier way to create pay stubs? If so, check out this site that will allow you to generate pay stubs without any hassle.
What You Need to Know About Payroll Records
As a business owner, it’s important to know the requirements when it comes to keeping payroll records. You should store and manage these records so that you can protect your business both legally and financially.
For more on finances, head to the “Salaries” section of our site.