Record keeping is a fundamental aspect of running a business, especially when employees are present. Their records must be correctly maintained and stored in the right location and format. Below are some additional practices which are highly recommended for maintaining employee payroll records.
Why Records Must Be Kept
Keeping payroll records is organized. When payroll is performed or you’re required to look up information pertaining to it, all the data you’ll need will be in one location. You won’t have to worry about looking through a bunch of unrelated documents just to find it. Also, payroll data is sensitive and should remain confidential. Access to it should be restricted and as such it should be kept separate from other employment data.
Where Payroll Documents Should Be Kept
Payroll documents should be held either at the office of central records or another secure location. Companies that use online tools can hold the majority of their info in them, but again, this should be highly encrypted any only accessible to a few. Printed documents should be kept in a safe that is fire proof and which is only accessible to specific personnel.
What Do Payroll Files Contain?
There are many types of documents which will be stored in the payroll files of employees. Generally speaking, any piece of data that assists you in completing payroll for them is data that should be added to the file. This includes social security numbers, the employee’s complete name, their job position, gender, address and date of birth.
There should also be information related to when they work, how many hours, and their records for time and attendance. Extensive payment data should also be stored, including the rate employees are paid, their W-4 form, their daily earnings, their overtime pay, income withholding, bonuses and paid time off. Data pertaining to direct deposit is also essential, as are payroll deductions and documents related to any raises the employee has received.
How Long Should Payroll Records Be Maintained?
The Fair Labor Standards Act states that companies must maintain payroll records for a minimum of three years. This includes data related to wages, payments, benefits and bonuses. Records which are based on wage computations should be kept for at least two years, such as time schedules or cards, as well as wage deductions. Some states will also have laws related to the retention of payroll records which means that these documents should be kept for a longer period of time. You will need to check your state laws to find out what this means for you.
TRAX payroll can guide you in structuring payment records. This software gives you the ability to view information related to employees as well as their payroll records. When you use human resources software which is online based, you can store and upload documents with ease, sharing them with employees as needed.