What are Payroll Records?

Explanation

Payroll Records constitute anything and everything related to the information about the company’s employees. It depicts the amount for which the employees are paid during each period. Naturally, the period differs from company to company. It can be daily, weekly, bi-weekly, semi-monthly, monthly, or any period which suits the company’s pay period.

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What Information is Included on Payroll Record?

  • The foremost information is gross pay, which is the main in-hand amount shown first before making any deduction from it. Gross pay is calculated by multiplying the hourly pay rate by the number of days worked.The next information would be deductions, which are of two types: mandatory deductions and voluntary deductions. Several taxes include professional tax, provident fund contribution from the employee’s portion, etc.The last is the net payNet PayEmployees’ net pay, often known as take-home pay, is their salary after all deductions.read more, the final amount after making all the deductions credited to the employee’s account.

How to Obtain your Payroll Record?

An employee can always obtain their payroll record by requesting his employer, either in writing/orally, to provide him with the payroll data. The employer must respond to the personnel’s request, and he should give him the details within the prescribed time limit from the date of receiving the request. However, the employer must generally respond to the employee’s payroll record request within 21 days.

How Long to Keep Certified Payroll Records?

The employer should preserve the certified payroll record for at least three years according to the Fair Labor Standards Act (FLSA) with other documentation like sales and purchase records, etc. In addition, the records on which the wage computation is recorded should be retained for two years, i.e., time cardsTime CardsManagers and owners can use an excel time card template to keep track of their employees’ and workers’ attendance, leaves, and efficiency.read more, tables of wage rate, work, time schedules, and other records of addition and subtraction from the wages and salaries.

These records should be open for inspection by the division’s in-charge, who may ask the employer to make necessary changes. These records should be kept in the Central Record Office/at employment.

Advantages

  • The system provides us with easy calculations, making the entire pay mechanism very lucid.This facilitates accuracy so that the correct amount can be paid out, and it won’t raise any further discrepancies.The computerized payroll system reduces the chances of errors and makes an easy flow of data and information that can be trusted and re-used.This system has an appropriate structure for deductions and payments that are automatically set in the record to be used to calculate salaries/wages.This can be treated as a safe backup option, and any information demanded retrospectively; the records can be useful then.The record-keeping of the payrollPayrollPayroll refers to the overall compensation payable by any organization to its employees on a certain date for a specific period of services they have provided in the entity. This total net pay comprises salary, wages, bonus, commission, deduction, perquisites, and other benefits.read more system reinstates the faith in the employees that a properly organized and documented form is maintained for their earnings. Whatever deduction will be made, proper proof will be shown. In the future, if an employee demands a payroll record, the company would be in a position to present them with proper backup available to them.This system is a cost-effective mechanism through which every penny paid/deducted to the employee can be tracked. The system gives back to the organization to maintain the data correctly and prevent the organization from any future hassles.As the system is very cost-effective from the previous point, it saves time greatly because it does not allow any discrepancies and prevents any duplicity of work. For every fixed period of the interval, the correct data allows the organization for an error-free future of work.In case of any inspection/audit/background check, if any authority demands any personnel records, this can be proof of evidence. It will not only be a savior for a well-maintained system but also will make a difference in the goodwill of the company.This can be a major tool for forecasting the company. A company’s major part of profits pays salaries and wages to its employees. If an estimated budget can be predicted for a future period, it can be a great tool for forecasting future costs and budgets for the company.The organization can well plan its costs and then make out the reserves/investments accordingly.

Disadvantages

  • A payroll record holds data, and information can be at risk for data security, theft, or data leak. The sensitive information can be made open if it is not well protected.The second disadvantage can be cyber fraud, which is almost very common. The rivalry amongst companies can be a root source of this problem.The information access/control cannot be given to all. Only the person in charge of the payroll record should be familiar with the information. The person should be trustworthy enough not to leak out the company’s sensitive data.The last but not the least disadvantage can be the cost involved. The software, skilled operators, and the infrastructure required to set up the payroll record system are huge, which can be a barrier for a few organizations to meet up.

This has been a guide to What is Payroll Records & its Definition. Here we discuss what information is included on payroll records, how to obtain it, and its advantages and disadvantages. You can learn more about it from the following articles –

  • Payroll AccountingPayroll TaxIncome Tax vs Payroll TaxPayroll Formula