For the Record: Records and Information Management #StressAwarenessMonth
Apr 17, 2018
First, let’s talk about how long you have to retain these records. Every entity, including the IRS, EEOC and Department of Labor, has regulations on what you must keep and for how long. One way I remember what Federal regulations are, think “F in Federal = F in Four”. As in you must keep records for FOUR years.
*When your tax records are no longer needed, do not discard them until you check if you need them longer for other purposes (i.e. some insurance companies and creditors may require you to keep them longer.
These records can be your saving grace when it comes to tax audits, Worker’s Compensation audits, unemployment claims and even employment claims of discrimination or wrongful termination. The keeping of these records is for both you and other entities to be able to look back at various areas of your business to track how your company is doing, that everything is accounted for and even if you have to go back and adjust previous tax periods. Remember, it is the responsibility of the employer to keep these records– not your payroll provider, accountant, or tax filer. However, they can help you!
You could be a small company of >5 employees to a multi-million dollar company with over 500 employees, either way four years of records is going to be mountainous. Considering the cost of real estate in most areas, who wants to spend more money just to have boxes upon filing cabinets upon storage totes, to store all these records? How safe is that really when you consider all the personal information you are storing? Like everything else, let’s get digital, digital. The amount of information you can now store in such a small file is amazing. Going digital also means going green and cutting back on the use of paper. Sure, you can still use paper forms and scan them into a digital form for saving, but let’s get one step better.
Optimize your information management through automation.
HCM (Human Capital Management) software programs can help. The ability to have all your payroll documents, payroll tax documents and Human Resource forms (W-4, employee information, employment records, etc) all in ONE place and easily accessible. At any time you can have them copied over to a CD or jump drive to store, but they are all backed up continuously on the provider’s server for as long as you want! No more wasted space storing boxes full of papers that can deteriorate over time and, more importantly, take forever to search through when needed. Plus, and this is the big one–SECURITY! The documents are secured off site, digitally, with access via a login and password only to those you give access to. You can have one access for your accountant, one for your payroll department, one for your HR—as few or as many as you need. They will only see what you allow them to see.
Did you know even employees can help lighten the load? With employee self-service capabilities, employees can enter their information straight to the software (NO PAPER!) and update it in real time. Employers and managers can input records of awards, disciplinary actions, raises, etc. HR can enter documents such as I-9 forms and W-4s. Your accountant can pull tax documents at anytime from anywhere. All in one single sign on software, readily accessible and secure.
It sucks to maintain and store documents you “think” you are done with once the tax year is over and the employee is no longer with your company. Having to keep records for four years for compliance opens up the problems of where and how you are going to meet these requirements. Let your HCM team help with this! Then, in the event that something happens (audits, claims, or law suits), you have a quick go to access for whatever may come up. More importantly, you are in compliance. All in a record amount of time.