Hiring employees to support your small business’s operations can be a tremendous help. However, paying others to work for you also involves obtaining and keeping certain documentation. One important area that should not be overlooked is employee payroll. Here is more on why your small business payroll records matter.
What are Employee Payroll Records?
Employee payroll records are essentially all documentation that pertains to how employees are hired and paid. The term generally means all electronic and physical records pertaining to employee wages and hours. These documents can include records such as paystubs, accounting documents, benefit details, tax records, direct deposit forms, and other related information.
Why do Employee Payroll Records Matter?
Aside from creating a way for employers to pay employees, employee payroll records are required under the law. The Fair Labor Standards Act (FLSA) (which establishes minimum wage and overtime requirements), the Age Discrimination in Employment Act of 1967 (ADEA), and The Equal Employment Opportunity Commission (EEOC) require that employers keep accurate payroll records. The FLSA and ADEA require that employers keep employee payroll records for at least three years. The EEOC requires one year. These and other applicable laws apply to exempt and non-exempt employees. These records are also necessary for assessing state and federal tax liability.
What Should my Employee Payroll Records Include?
According to the FLSA, employee payroll records should account for the hours an employee worked during a seven-day period. In practical terms, this would include documentation such as employee tax records, timecards and timesheets, direct deposit records, and paystubs that include details about the time frame for which the employee is being paid. This documentation would also include all state and federally required forms.
What Can Happen if an Employer Fails to Keep Adequate Payroll Records?
As previously mentioned, maintaining employee payroll records complies with FLSA, EEOC, and ADEA laws. Further, keeping these records can also help protect an employer from unfounded wage claims. Employees who claim they have been unfairly compensated could file legal actions. Without accurate payroll records, an employer could be at risk of losing in court and having to pay additional employee wages. Moreover, under these circumstances, an employer could be held liable under the FLSA.
In addition, payroll records matter when it comes to taxation. In Florida, employers are required to pay state and federal payroll taxes. Therefore, an employer’s payroll records are also important in establishing their tax liability. In addition, if you are audited, you will want accurate and detailed records to show that you reported and paid the correct taxes.
Having accurate payment and hiring records is not optional for Florida small businesses. The failure to keep this type of documentation could result in wage disputes and other legal consequences for you and your enterprise. In addition, payroll records are part of state and federal compliance.
If you have a small business, it is in your best interest to review your payroll recordkeeping practices with an experienced Florida small business attorney. Your lawyer can help you evaluate your practices and recordkeeping system and identify the best ways to protect your enterprise and ensure you are in compliance.
Contact an Experienced Florida Business Lawyer
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with commercial leasing, business, and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.