PAYROLL DOCUMENT RETENTION GUIDELINES

By Mark Ward, Payroll Experts, Inc

This time of year prompts many of us to clean out our filing cabinets and organize our documents.   The temptation to have a shredding party sometimes is more than we can resist.  However, BE CAREFUL!   Payroll Experts hasn’t yet been able to convince Federal and State Agencies to adopt our philosophy and commitment to “SIMPLIFYING.”

This article could turn into volumes of information if we were to discuss all the rules regarding the type of records that must be kept, and the length of time you must keep the records.  To further complicate things, every state is different. For example – Utah State has published the following Retention Schedules:

Type of Document Years Type of Document Years
Accident reports, injury claims, settlements 7 Injury frequency charts 10
Applications, changes, terminations 3 Insurance records, group and employee 6
Attendance and time sheet records 5 Medical folders, employee P
Disability and sick benefits records 4 Payroll records after termination P
Earnings records P Pension plan applications, claims and correspondence P
Employee service records P Salary and rate changes 10
Employee contracts 7 Performance records 7
File for individual employee 3 Withholding exemption certificate 3
Garnishments 7 Workers compensation reports 11
Legend: “P” means permanent

“The following retention periods are general rules or guides for determining how long to maintain important business and tax records. The lists are representative of types of records companies may be required to keep. The lists are not all inclusive, and your business needs may require other records such as advertising, manufacturing, sales and marketing, and transportation and shipping. If you have a tax or business advisor, you might want to have the advisor review your records retention practices.”

*Retain for at least four years and preferably seven if space is not critical. Once the period has elapsed, the supporting documents may be discarded, but the returns and W-2s should be retained indefinitely.

We all know how long winded the Internal Revenue Service can be.  The link to their Record Keeping regulations is http://www.irs.gov/businesses/small/article/0,,id=98575,00.html.

In relation to payroll reports and payroll tax reports, the Employment Tax Recordkeeping  guidelines are:

Keep all records of employment taxes for at least four years after filing the 4th quarter for the year. These should be available for IRS review. Records should include:

  • Your employer identification number.
  • Amounts and dates of all wage, annuity, and pension payments.
  • Amounts of tips reported.
  • The fair market value of in-kind wages paid.
  • Names, addresses, social security numbers, and occupations of employees and recipients.
  • Any employee copies of Form W-2 that were returned to you as undeliverable.
  • Dates of employment.
  • Periods for which employees and recipients were paid while absent due to sickness or injury and the amount and weekly rate of payments you or third-party payers made to them.
  • Copies of employees’ and recipients’ income tax withholding allowance certificates (Forms W-4, W-4P, W-4S, and W-4V).
  • Dates and amounts of tax deposits you made.
  • Copies of returns filed.
  • Records of allocated tips.
  • Records of fringe benefits provided, including substantiation.

Employee and Payroll Records are very extensive and are obviously not limited to the payroll reports and tax filing reports we provide to you.  We do have a significant amount of recordkeeping information that you are required to maintain.  Over the course of the year, we have provided you with paper copies of the Payroll Reports and Tax Filings that we have done on your behalf.  A service that has become very popular among our clients is our Annual RePortfolio CD.
Our REPORTFOLIO Service provides you with a CD that is packed with:

  1. All 2013 payroll reports
  2. All 2013 tax filings (940 Filing, 941 Filings, State Withholding Filings, State Unemployment Filings, W-2’s, W-3)
  3. Dozens of additional company and employee reports
  4. All faxed information submitted to Payroll Experts during the year (such as W-4’s, I-9’s, etc)

The information is organized for quick searchable/printable access  in Adobe. The cost is $150 for us to prepare your 2013 information and put it in this electronic format.  If you are interested in receiving the RePortfolio CD please contact us.

Keeping Payroll and Employment Records is an extremely important aspect of our businesses. While it would be nice to clean out our filing cabinets, we must be careful amid the myriad of federal, state, and local laws that govern employment recordkeeping.  If you are not already a Payroll Experts customer, we’d love to help you simplify and save on your payroll processing. Learn more about our Payroll Services.

We appreciate and value working with each and every one of you.  Thank you for your trust.  We are committed to you and your businesses and love seeing the growth and progress of your businesses.  We are excited about 2014 and look forward to continuing our work with you.

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