Payroll Recordkeeping for Your Seasonal Small Business

Payroll Recordkeeping for Your Seasonal Business

As a seasonal small business owner, you probably have a lot of employee turnover. Employees leave at the end of your busy season, and they might not return next year.

You have payroll recordkeeping obligations for both current employees and former employees. Below are your payroll record retention requirements.

Payroll recordkeeping

There are different payroll recordkeeping requirements for every form.

Employment tax records

Employment taxes include FICA (Social Security and Medicare) payroll taxes, federal unemployment tax (FUTA), and federal income tax withholding (FITW). You should keep the following information:

  • Your EIN
  • Dates and amounts of wage, annuity, and pension payments
  • Amounts of reported tips
  • Amounts of allocated tips
  • The fair market value of in-kind wages
  • Names, addresses, Social Security numbers, and occupations of employees
  • Employee copies of Forms W-2 and W-2c returned as undeliverable
  • Dates of employment for each employee
  • Periods when employees were paid while absent due to sickness or injury, and the amount and weekly rate of payments you or a third party made to them
  • Copies of employees’ Forms W-4
  • Dates and amounts of tax deposits, and acknowledgment numbers for deposits made using EFTPS
  • Copies of returns you filed and confirmation numbers
  • Records of fringe benefits and expense reimbursements given to employees

You must keep all records of employment taxes for at least four years from when the tax was either due or paid.

Payroll records

For workers nonexempt from overtime, employee payroll records include:

  • Names, addresses, Social Security numbers, and occupations of employees
  • Birth date, if younger than 19
  • Sex
  • Time and day of the week when the employee’s workweek begins
  • Hours worked each day
  • Hours worked each workweek
  • How the employee’s wages are paid (e.g., per hour, per week, piecework)
  • Regular rate of pay
  • Total daily or weekly straight-time earnings
  • Total overtime earning for each workweek
  • Total wages for each pay period
  • Dates of pay periods and payments

For exempt employees, payroll records include:

  • How the employee’s wages are paid (e.g., per week, biweekly)
  • Regular rate of pay
  • Total compensation (including fringe benefits)

You must keep payroll records for at least three years.

Wage calculation records

Wage calculation records help you determine each employee’s earnings. These records include:

  • Applications
  • Time cards
  • Piecework tickets
  • Wage rate tables
  • Work and time schedules
  • Records of additions to or deductions from wages
  • Job evaluations

Keep wage calculation records for two years.

Form I-9

You use Form I-9 to verify the identity and work authorization of each employee. You must keep each employee’s Form I-9 on file for three years after the date of hire or one year after the employee leaves, whichever is later.

Tips for payroll recordkeeping

When you are a seasonal employer, payroll recordkeeping can be difficult. If you have a permanent business location, you might be able to keep records there. Or, you might need to rent a storage unit. You can also digitally store records.

You should keep records in a convenient location. If you or an employee needs information, you should not have to drive to the next city to get the documents.

No matter where you keep your payroll records, make sure to keep your records secure. Only authorized people should have access to the records.

Your payroll records should be easily searchable. If you store records online, you might have a search option. You should also store records in organized digital folders. If you keep paper copies of payroll records, organize them by employee, type of record, and year.

When you add on HR software to Patriot’s online payroll software, you have access to paperless recordkeeping. You can even share documents with employees. Try the HR software now.

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