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Small Business
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Employee Recordkeeping RequirementsAs though Monday mornings could be any worse: imagine rushing to the office in the rain and cold, running late, once again. The voice mail light is flashing and you fear there are at least 15 messages from Friday night to Monday morning marked “urgent”. You take your first sip of coffee as you start to listen. You think you are home free by the time you get to the 15th and you hear
A cold shiver may go down your spine at that point, as nobody really wants a call from the federal government.
Are you ready for this call on your voicemail some Monday morning in the near future? “My files are perfect, come anytime... Or “ What files! What paperwork! They can’t just come in here and inspect my files…or can they?” It is true. You may find yourself with just 3 days to prepare for an inspection. Read on to be better prepared for that phone call or letter giving you such short notice and to make sure your records and your company shine under the microscope of the federal government. When hiring a new employee you should consider what information is vital to maintain on your employees. The table below is an example of the kind of information you should consider retaining in your employee files. Much of this information and certain documents are required by the Internal Revenue service (IRS), Department of Labor (DOL) and State agencies. Employee Master File
Federal payroll record keeping requirements (other than those dealing with federal income or employment taxes), are controlled by the Wage and Hour Division of the Department of Labor under the Fair Labor Standards Act (FLSA). These records need to be kept for at least 3 years. The Internal Revenue Code requires all employers that withhold and pay federal taxes to also maintain the information above for at least 4 years after the due date of the tax for which the records relate. You must ensure you can easily and orderly access your employee files. If the records are required by the FLSA they must be available for inspection by the Wage and Hour division within 72 hours of a notice of inspection. Now that you know how to stay in compliance with the DOL and IRS, you may have just avoided costly penalties. If you were to willfully violate these recordkeeping requirements, you could receive a criminal penalty of up to $10,000 and/or imprisonment for up to 6 months (although a jail sentence can only be imposed for second and subsequent convictions). So remember, you must keep accurate files on current or past employees for up to 4 years, AND you may be inspected at any time. This article was provided by E-chx Payroll Service.
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Disclaimer
The information compiled on this site is Copyright 1999-2012 by Attard Communications, Inc. and by the individual authors. |
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