Tips from a Paycor Expert: Record Retention
Tips from a Paycor Expert: Record Retention

Tips from a Paycor Expert: Record Retention

Arlene Baker has worked in payroll for 34 years and has been one of Paycor’s leading payroll experts since 1992. Arlene has been a member of the National and Greater Cincinnati and N. Kentucky Chapter of the American Payroll Association for 20 Years. She has served as president-elect, president and a member of the board for the Greater Cincinnati and N. Kentucky chapter.

While working in payroll, I’ve always believed that it is important to have a system to properly manage and retain your records. The IRS and the Federal Department of Labor have requirements for retaining certain records, while state and local agencies often have different requirements. Based on these laws, employers are required to keep certain payroll related records for a specific period of time. Keeping track of information for the mandated period of time is crucial for a payroll or HR manager. Here are some tips on ways I ensure proper record retention.

Life Span of Records – It is important to know the agencies retention requirements for payroll related documents. The defined period includes the life span of each record - from creation to final disposal. Be sure to verify current federal, state and local agencies record maintenance and retention requirements. Being proactive will save you a lot of time and money in the future. Create a master list of all payroll tax and government agencies for which you are required to provide payroll documents. Include the agency name, required records and the length of time you must retain records.

Record Retention Methods - The site and method you select for storing payroll records should be carefully chosen. Several basic ways to retain your records are:

• Paper files, micro film, Microfiche or storage files.
• Back up to a CD or a remote location.
• Integrated Payroll/Human Resources applications.
• Any combination of the above or other method.

When evaluating the best method for you to maintain your records, keep in mind that you will need easy access to provide documentation to answer notices or prepare for an audit. To protect your records from physical damage, include the backup of all payroll documents, paper and electronic in the company’s disaster plan. Labeling all of your records in storage will protect the files from being accidently destroyed or over written. Record the details of how and where the documents are stored on your master list.

Disposal of Records - Records may be disposed of when the retention period stated in your master file has elapsed and the department does not need the records for future administrative, legal, research/historical or fiscal purposes. When selecting a method for disposing of payroll records you will want to protect the company’s liabilities and your employee’s identities. Therefore, be sure to select a method that is secure and will protect the information you are disposing. Record the dates and methods of how records are disposed on your master list.

Records are the evidence of all of your company’s activities; they capture the business transactions, correspondences and personnel files. If you have questions about record retention, contact the governing agency or consult with legal counsel prior to removing or disposing of any records.

Don’t forget, that Paycor can help you with record retention guidelines through our HR Support Center. HR Support Center is a comprehensive, low-cost, online resource that can save you time and money while protecting you and your business from costly HR mistakes. You will have access to valuable facts, forms and advice, developed and updated by experienced HR professionals. Also, one full year of HR Support Center costs less than one hour of legal counsel. If you have any questions about payroll or suggestions for future topics, please email PaycorPayroll@paycor.com.

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