There are 30.7 million small businesses in the United States. Learning how to keep employee records properly will help you avoid legal penalties in the future.
Small businesses employ 47.3% of the workforce. That means a lot of bosses better be keeping a close eye on their records.
Your business is your pride and joy. Keeping good employee records ensures that your business will stay that way instead of becoming mired in legal trouble and fines.
Here’s what you should know about maintaining employee records:
What Records Do You Need?
Accurate employee records retention requires you to know which records you need to keep and why. Remember that any failure to do this properly could result in legal complications.
Maintaining an employee earnings record helps both you and your employer remain informed about their financial situation. Hold onto all background checks, credit reports, and financial records. You’ll also need to store all medical records, insurance documentation, and performance appraisals safely.
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How Long to Keep Records for
You must keep contract details, personal records, and records pertaining to appraisal and review for at least five years. You should keep payroll records, W-4s, and time cards anywhere from 4 to 7 years.
Keep financial records and payment records for at least three years. That way, if they’re ever required by the HMRC, you’ll have them readily available.
Other documents don’t require such a long holding period. For instance, you only need to hold onto federal employee personnel records for one year. If you fire an employee, you only keep their personnel records for a year.
Take the Safe Route
Play it safe instead: Keep all employee records for six years before getting rid of them. A good rule of thumb to keep in mind is that if a document seems important, hang onto it until you know for sure it’s safe to dispose of.
Also, keeping a copy of your employee record template handy is always a good move.
Be Prepared to Provide Information as Requested
Due to The Data Protection Act, it’s illegal to withhold information from employees about themselves. Because of this, be prepared to hand over any documents you’ve stored as long as you’re storing them.
When it’s time to dispose of a document, use a shredder to destroy it. This ensures no one will try to steal the information contained in the record for nefarious purposes.
Keep Immaculate Employee Records Like a Boss
Small businesses account for 99.9% of U.S. companies. Let’s face it: You’ll be maintaining employee records for as long as your business is operating.
Fewer than 80% of businesses make it past their first year. Just think of accurate employee records as one of the hallmarks of a healthy business.
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