QuickBooks does a great job at allowing you to track employee time to specific jobs, issue payroll and even produce your quarterly and year-end payroll tax forms and W-2′s. But the data that is stored in QuickBooks only provides pieces of the information that you need to keep on file to comply with the Fair Labor Standards Act.
In Tuesday’s article, Payroll Recordkeeping – More Than Just Getting Employee’s Paid on Time, we mentioned that in order to be well prepared for a Wage & Hour audit that you need to keep your payroll records for the duration of EACH worker’s employment with your company PLUS 5 to 10 years! Most Human Resources and legal experts are suggesting this to ensure these records are available in the event a claim is filed, according to a recent article I read published by Personnel Policy Service, Inc. in their HR Matters E-Tips newsletter.
From a previous post, Fair Labor Standards Act – Employee Record Keeping Requirements, we learned that the following is a listing of the basic records that an employer must maintain in order to comply with the Fair Labor Standards Act:
- Employee’s full name and social security number.
- Address, including zip code.
- Birth date, if younger than 19.
- Sex and occupation.
- Time and day of week when employee’s workweek begins.
- Hours worked each day.
- Total hours worked each workweek.
- Basis on which employee’s wages are paid (e.g., “$9 per hour”, “$440 a week”, “piecework”)
- Regular hourly pay rate.
- Total daily or weekly straight-time earnings.
- Total overtime earnings for the workweek.
- All additions to or deductions from the employee’s wages.
- Total wages paid each pay period.
- Date of payment and the pay period covered by the payment.
Now, most of this information is held in your QuickBooks file and can easily be obtained – BUT – after 5 or 10 years how many of you will still be working in the same QuickBooks company data file that you started in (now) 2003? Not only that – how many of you will have all of the hard copy paper documentation that was used to generate payroll from 10 years ago! Unless you have a room (or two) full of metal file cabinets to store this data – you could be in for trouble in the event of a Wage & Hour Audit. Telling an auditor – oh, we started a new QuickBooks file in 2010 and I don’t know what happened to the original one is not going to make the audit process any smoother or easier!
Organizing & Storing your Payroll Record Keeping Information:
Perhaps the most efficient means of storing payroll record keeping information is done through the use of your computer and storing all the backup documentation in pdf or Excel format. This eliminates the need for a room or two full of metal file cabinets. As a business owner you can limit employee access to that folder BUT you absolutely MUST have a backup plan in place to make sure that the information is safe!
Back when I was an active bookkeeper, I created a main folder on my computer called “Clients”, within that folder each client had their own folder, within each client folder there were folders for each year, within each year there were folders for each quarter, and within each quarter their was a folder for each month. Everything was stored by month. I’ve carried that practice over into our own business.
So let’s get creative, get yourself organized, and be in compliance! Remember you need the last 5 to 10 years of information
- Get a scanner if you don’t currently have one
- Download a free pdf creator – I’ve used CutePDF
- Create a folder on your computer or your server – name the folder “Your Company Name”
- Start scanning and organizing your information.
Other articles about the Fair Labor Standards Act:
- Using Account Numbers in Your QuickBooks Chart of Accounts
- Straight from the IRS - Social Security Tax Reduced to 4.2%
- QuickBooks 2012 - Frequently Asked Questions About Upgrading
- QuickBooks 2013 Upgrade Do's, Don'ts & Frequent Questions
- Calculating & Displaying Fringe Benefits on a Certified Payroll Report
- QuickBooks Payroll Tip - Tracking Employee Advances or Loans
- QuickBooks Tip - Job Costing Starts With A Simple Item
- QuickBooks Tip-Handling Employee Reimbursements for Expenses
- QuickBooks Tip - Determing Cost of Goods Sold
- QuickBooks for Contractors Tip – Advanced Progress Invoicing
- QuickBooks 2012 Announced
- QuickBooks Creating a More Meaningful Payroll Expenses Section
- New FHWA-1391 & 1392 Annual EEO Forms For Highway Contractors
- Frequently Asked Questions - California Prevailing Wage
- QuickBooks 2012 - Best Practices & Tips for Installing an Upgrade
- QuickBooks for Contractors Tip – Basics of Progress Invoicing
- QuickBooks 2011 - New Balance Sheet by Class Report - Part 1
- QuickBooks Tip - Child Support Garnishments
- QuickBooks 2011 - Computer Requirements & Office Compatibility
- Create a QuickBooks Job Cost Report With Hours & Payroll Costs