What are payroll records?

In bookkeeping and accounting, payroll records refer to a comprehensive set of documents and records that businesses maintain to track and document various aspects of their employees’ compensation and related financial transactions. Properly managing and retaining payroll records is essential for complying with legal requirements, accurately reporting financial information, and resolving any payroll-related issues or disputes. Payroll records typically include the following:

1. Employee Information: This includes basic details about each employee, such as their full name, Social Security number or taxpayer identification number (TIN), address, date of birth, and employment start date.
2. Earnings Records: Documentation of all forms of compensation paid to employees, such as regular wages or salaries, overtime pay, bonuses, commissions, and any other types of income. This should include hours worked, rates of pay, and any special forms of compensation.
3. Deductions: A record of all deductions taken from employees’ gross pay. This includes income tax withholdings, Social Security and Medicare (FICA) withholdings, state and local tax withholdings, and deductions for benefits like health insurance, retirement plans, and any other voluntary deductions.
4. Benefits Records: Details about employee benefits, such as retirement plan contributions, health insurance premiums, and other benefit plans. This includes both employer and employee contributions.
5. Tax Withholding Records: Records of all taxes withheld from employees’ paychecks, including federal income tax, state income tax, and any local income taxes.
6. Payroll Tax Records: Documentation of all payroll taxes paid by the employer, such as employer portions of Social Security and Medicare taxes, federal and state unemployment taxes, and any other payroll-related taxes.
7. Time and Attendance Records: Records of employees’ work hours, including clock-in and clock-out times, time sheets, and attendance records. This is crucial for calculating wages, overtime, and leave balances.
8. Payroll Registers: A summary record that shows each employee’s earnings, deductions, net pay, and employer contributions for each pay period. It provides a detailed breakdown of the payroll.
9. Payroll Reports: Various reports generated for payroll processing, including employee earnings statements (pay stubs), payroll tax reports (e.g., Form 941 for federal taxes), and state and local tax reports, as required by law.
10. Employee Forms and Agreements: Copies of employee forms, agreements, and declarations, such as W-4 forms (for federal tax withholding), state tax withholding forms, direct deposit authorization forms, and any signed employment contracts or agreements.
11. Termination Records: Documentation related to employee terminations, including final paychecks, severance agreements, and records of accrued but unused benefits.
12. Year-End Records: Summaries and reports necessary for year-end payroll processing, including W-2 forms (for employees), W-3 forms (for the Social Security Administration), and other year-end tax reporting.
13. Audit Trail: A detailed record of all changes made to payroll records, including any corrections or adjustments.

Maintaining accurate and complete payroll records is not only essential for compliance with labor laws and tax regulations but also for resolving any disputes or inquiries related to employee compensation. Employers are typically required by law to retain payroll records for a specified period, which can vary by jurisdiction. It is important for businesses to keep payroll records organized, secure, and easily accessible for auditing, reporting, and record-keeping purposes.

Stay in control of your expenses with our precise accounts payable management. Our bookkeeper for small business ensures that your bills are accurately recorded and paid on time.