payroll record keeping - The Payroll Company

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Having good payroll records is fundamental to business in New Mexico.

Beyond that, and for these reasons retention is legally required, keeping good records keeps your business safe during audits while also navigating employee disputes and providing historical information which can be used in business planning moving forward.

Employers in New Mexico are subject to specific recordkeeping obligations regarding payroll and other records, which must be retained for varying periods of time.

This ultimate and comprehensive guide will cover all the information you need in terms of payroll records retention rules Albuquerque – to keep your business safe and sound from penalties, as well as how to streamline recordkeeping practices.

Understanding the specific requirements for Albuquerque businesses requires attention to multiple layers of regulation. Although there are federal minimum requirements in place, NM state laws can add additional mandated higher retention schedules and/or documentation burden.

Local Albuquerque ordnances may have an additional impact on some businesses. By putting in place the right processes and using advanced tools, organizations can turn this regulatory burden into an opportunity for increased operational efficiency.

Federal Payroll Record Retention Requirements

Payroll record keeping laws for Albuquerque The U.S. Department of Labor controls the federal laws for payroll document retention requirements.

Dozens of state and local laws contain provisions dictating how businesses can pay their workers (e.g., minimum wages, overtime), primarily outlined in the FLSA (which is enforced by the Department of Labor). And then, there are the IRS regulations that create additional obligations. Effective record keeping and documentation ensures compliance with these federal standards.

FLSA Provisions: Employers are required to maintain payroll records, such as timecards, work schedules, and records of wage calculations for a period of at least three years.
IRS Regulations: Requires that all records related to employment taxes be kept on file for a minimum of fours year after the date on which tax becomes due or is paid, whichever applies.
EEOC Rules: Requires that personnel records be kept for 1 year from the date of the making or issuance of documents relative to hiring, reference checking, etc., if any.
FMLA Records: Companies with 50 or more employees must maintain FMLA records for the three years.
ERISA Regulations: Plan benefit records shall be retained for at least six (6) years after the filing of relevant ERISA report.

Federal law sets minimum requirements, and businesses should have compliance mechanisms in place under the labor laws that are mindful of these time frames.

Workflow optimization software can make this process more painless, automatically flagging records for retention as stipulated by regulation.

Essential Payroll Records to Maintain

Whether it’s one worker or hundreds, Albuquerque businesses must keep several types of payroll files in order to be in full conformity with both New Mexico and federal regulations.

The particular records you are required to keep will depend on the industry, the size of your business, and the classification of employees – however, there are key documents that all businesses should maintain.

Records of Employee Information: I-9 forms, W-4 forms, direct deposit authorizations, and personal information.
Time & Attendance Receipts: A detailed breakdown of hours worked, breaks taken, and overtime.
Payment Details: Such as pay rates, salary histories, bonuses, commissions and tips.
Tax Filing: W-2’s, 941 quarterly reports, Annual 940 – FUTA and State Tax filings.
Benefits Records: Health Insurance, Employees pensions and benefits registers, enrollment forms and deduction of payment.

Alternatively, the use of time tracking applications can help in making these records completer and more reliable. Today’s solutions also work seamlessly with payroll software, meaning all of the information can easily be tracked and stored in a compliant manner for the durations it must be.

Organizing and Storing Payroll Records

The way you structure and maintain your payroll records could play a big role in the ease with which you’ll be able to follow retention guidelines and respond promptly when auditors or information-seekers come knocking. Businesses in Albuquerque need complete security systems that take into account accessibility and compliance concerns.

Digital vs. Physical Storage: Electronic is searchable and compact, though it does require reliable backup.
Security Measures: Utilize encryption, access control and data security controls to safe-guard sensitive payroll data with routine security audits.
Disaster Recovery: To protect wreckage from natural disaster, a concern in the desert of New Mexico, keep backup systems.
Well Categorized Vaults: Establish an easy-to-find structure with a convenient naming system.
Regular housekeeping: Make sure that you have regular reviews to keep records available and delete outdated documents in a secure fashion.

By deploying cloud storage, Albuquerque businesses are getting a secure form of redundant storage that prevents data loss and makes sure that it remains accessible.

Today’s employee management software often has built-in document storage solutions targeted at payroll documentation retention.

Retention Time for Various Types of Records

There were different types of payroll records, with different retention lengths depending on who you’re asking. For Albuquerque business owners, it is important to know these timeframes in order to remain compliant and not pay unnecessary storage fees for records that should have already been destroyed. Formulating a retention plan can be an effective approach to these ongoing tasks.

1 Year Retention: Job applications, resumes and promotion/demotion records (EEOC requirement).
Retention for Two years: Employee basic information, working hours and wage rates (New Mexico state requirement).
Three Years: Payroll information, collective bargaining agreements, and FMLA documentation (FLSA requirements).
4 year Retention: Tax Forms such as W-2s, W-4s, 941s and state tax forms (IRS and New Mexico requirements).
Retain for Six Years: Benefit plan records which includes enrollment forms along with payments (ERISA).

Practice is also to keep records as long as the longest applicable restriction when multiple laws overlap.

You can let your team learn how to meet these requirements and build regular retention policies in a digestible form instead of having explicit implemented strategies from modern implementation and training approaches. Albuquerque businesses in certain industries such as retail or hospitality may also be subject to industry-specific retention standards.

Compliance and Audit Preparation

One of the purposes when you keep payroll is to be ready for audits and compliance checks.

As an Albuquerque business you may be subjected to audits by the IRS and/or Department of Labor, New Mexico labor commissioner or New Mexico department of taxation. Good records can minimize the headache and penalties of these audits.

Retention Policy: Create a transparent, written policy that addresses retention timeframes for all types of records.
Routine Internal Audits: Implement regular review periods to ensure records are being accurately recorded and kept on file.
Audit Compliance Plan: Establish a plan to respond effectively and in a timely manner to government audit inquiries.
Training: Train employees who are responsible for recordkeeping on the retention requirements.
Record Keeping: Keep records of your compliance activities, updating company policies and retaining audits.

Leverage compliance training materials to make your team more aware of, and compliant with, record retention processes. Also, if you have automation script documentation in place, this can then be your audit trail of how you were seen to obey the new tax rules.

New-age Solutions for Payroll Record Keeping

Technology has changed the way payroll records are handled, and unsurprisingly Albuquerque companies now have dozens of powerful options to ensure they stay compliant while streamlining operations.

Contemporary solutions can automate retention policies, ensure secure storage and allow for rapid retrieval when needed for audit or information requests.

All-in-one HRIS Platforms: Payroll, time keeping, and document storage are often combined boards saving businesses filing space.
Document Management Systems: The type of software designed to organize retention schedules and secure document storage.
Solutions – Cloud: Simple, Accessible Storage with Security and Automatic Backup – + Disaster Recovery.
Mobile Access: Access payroll records securely from anywhere – ideal in 24/7 city business operations like Albuquerque.
Automatic Retention Rules: Systems that automatically identifies records for retention or secure deletion according to user-defined rules.

Implementing mobile access solutions can be particularly valuable for Albuquerque businesses in industries like hospitality and gaming that operate around the clock.

And the data-driven HR approaches can help uncover trends and possible compliance challenges before they mean all-out trouble.

PAYROLL and SALARY word on binder place on weekly time sheet documents human resources concept

Whether you have few or many employees, maintaining payroll records will be vital to your operation.

But with all the paperwork, documents and behind-the-scenes requirements from regulators, it can quickly become overwhelming for most employers. Even if only to stave off regulatory and legal pressure, it needs to become a priority.

Federal Payroll Record Keeping Requirements

For starters, you need to ensure an employer is at least following the federal Fair Labor Standards Act (FLSA) to show that the company respects laws about minimum wage, overtime, equal pay and child labor.

Staying in compliance with FLSA record-keeping rules is really simple, once you understand what information you need and how long you need to keep it. The following are some of the fundamental records every employer must keep:

Full name and Social Security number of the worker.
Details of the employee’s address, sex and occupation.
Employee’s date of birth if under 19.
The actual number of hours worked each day and week.
The form in which an employee’s wages are paid and (e.g., hourly, weekly, etc.
The normal hourly rate should be paid to the employee.
Full straight-time earnings for the day or week.
Total overtime pay for the work week.
Increments or decrements from the employee’s salary.
Sum of all wages paid per pay period.
Date of payment and period for which the payment is made.

These records must be retained in a safe and accessible place by employers. But, for how long?

Payroll records and collective bargaining agreements, sales and purchase records, must be kept for three years, while wage computation information such as timecards must only be kept for two years. And please note, employers must also keep records for staff that have been terminated.

In case of an audit or controversy, all such records shall be produced within 72 hours upon the request of representatives of the U.S. Department of Labor. It’s much easier to deal with them the next time they come knocking at your door if you can keep these in one place all ready for you.

And remember to keep employment tax records too. Employers must retain records associated with payroll and withholding for at least four years after the tax return is due or when you pay taxes, if that’s later.

State Payroll Record Keeping Requirements

State regulations may also vary from national record-keeping rules. Michigan, for example, requires the same type of information established by FLSA; however, they also require a detailed accounting of fringe benefits and that all records be kept on file for three years.

Employers who operate in multiple states or at the national level should confirm with state, and even local agencies on what they may need.

Keeping Records Organized

Managing these records can be cumbersome. But most of them can easily be accessed online with a few clicks of a mouse, using the right payroll software. Rely on our pros for assistance in staying compliant with your payroll record-keeping responsibilities through our online portal.

What Payroll Retention Records Are Businesses Required to Maintain?