Be prepared with your payroll records!

by DenverBookkeeper

As a professional bookkeeper, I am warning all of my clients that you MUST be prepared with your payroll records! Look ahead…..and be prepared for a new wave of wage-hour and IRS audits. The Dept of Labor (DOL) is making a major push on wage-hour enforcement audits.

Even if your business has never violated an IRS or DOL rule, substantial penalties may apply for simply not maintaining the required records. Now is the time to gather up the records you are required to keep under federal law. Records may be stored at company offices; for multiple locations, in a central office. This applies to S-Corps too…….one of the requirements of the S-Corp is officer payroll. So even if the only employee on the payroll is the owner, you must keep the same documentation!

Be prepared with your payroll records!

The IRS requires employers to keep for at least 4 years the following:

  • Your Employer Identification Number
  • Names, addresses (including Zip code), social security numbers, occupations of employees and recipients of payments
  • Amounts and dates of wage, annuity and pension payments
  • Pay rate (hourly/regular rate of pay, shift differentials, piecework, etc) for employer or third-party payments
  • Employee tip statements and records
  • Copies of withholding forms (W-4, W-4P, W-4S, and W-4V)
  • Fair market value on in-kind wages paid
  • Returned employee undeliverable W-2 copies (keep envelope unopened!)
  • Paid periods of absence due to sickness or injury
  • Dates of employment for each employee
  • Dates and amounts of company paid payroll tax deposits
  • Copies of the company returns that were filed
  • Records of fringe benefits provided, including value and fair-market value calculations

NOTE: Because the 4 year period begins at different times, I recommend you keep all of the above for 5 years. The DOL or IRS requires that you keep all of this data. However, you don’t have to keep it in hard copy form, as long as it is available to print should that be requested by the auditor.
Keep for at least 3 years:

  • Collective bargaining agreements
  • Employees sex and occupation
  • Time and day of week employees workweek begins
  • Hours worked each day and each workweek
  • Total daily or weekly straight-time/overtime earnings
  • All additions to/deductions from employees wages
  • Total wages paid each pay period
  • Date of payment and the pay period covered by it

Keep for at least 2 years documents that support calculations for:

  • Work tickets
  • Piece work tickets
  • Wage rate tables., work and time schedules
  • Additions to or deductions from wages
  • Time cards

Keep indefinitely:

  • Name, address and TIN of each vendor/non-employee payments
  • Payment dates
  • Completed W9’s
  • Payer 1099-MISC and other information return copies
  • 945’s
  • Purpose of payments
  • Contracts for independent contractors
  • Any notices related to backup withholding

Looking for a GREAT Denver bookkeeping company to help with all of this? Give me a call today and let’s talk about how to work together!

{ 1 comment… read it below or add one }

Brett December 1, 2011 at 1:58 pm

Paperwork, paperwork, paperwork. No wonder so many jobs are going offshore these days :(
Brett´s last [type] ..Payroll Software for Apple Macs

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