As an employer, you must keep accurate and updated records of your employees’ financial and employment statuses. Doing so can help you reduce your risk of facing unexpected financial and legal liabilities in the event of an audit, disability claim, or employee termination. 

But with so many documents to keep track of, it can be easy to overlook the most vital. And while you can definitely use payroll software like OnPay to help you manage your payroll, you’ll still need to know exactly what kinds of documents you’ll need. But worry not, as this article highlights the six most crucial financial and employment-related documents every employer should file. 

1. Your W2 Forms

The W-2 form is a tax document that provides detailed information about an employee’s income and taxes withheld from their paycheck. Every employee is entitled to receive a W2 form from their employer at the end of the year. 

W-2 forms help ensure your employees are complying with their federal tax obligations. In turn, these documents enable you as an employer to avoid paying penalties and fines for failing to withhold taxes correctly. 

Because preparing W2 forms for tax reporting can be a complex and time-consuming process, you will want to use an online tool to generate error-free W2 forms easily. 

2. I-9 Forms

The I-9 form is the document you use to prove that all your employees have valid work authorization in the United States. It contains an employee’s name, date of birth, nationality, Social Security number, and other vital details. 

The law requires you to provide every new employee with a copy of an I-9 form at the time of hire. You must also keep a copy of each completed I-9 form on file for future use and reference, even if an employee leaves your organization. 

The consequences of violating the I-9 regulations can be severe. Often, violators face stiff fines and potential criminal penalties for knowingly hiring or retaining unauthorized workers. 

3. Employment Contracts

Employment contracts outline the terms of an employee’s relationship with an employer. These agreements include information about a worker’s salary, benefits, and working conditions. 

Most states require employers to provide employees with written employment contracts at the start of each new employment term. You must also safely keep copies of all signed employment contracts for future reference. 

4. Job Performance Reviews

You are in business to make a profit. To ensure you meet your business goals, you need to measure the performance of each team member regularly. This enables you to identify your strengths and weaknesses and set goals that align with your company’s objectives. 

Job performance reviews provide you with all the vital information you need to assess the performance of each employee. Having them at hand enables you to make more informed staffing decisions that could be crucial to future business outcomes. 

5. Employee Handbook

Every organization must have a written handbook outlining the company’s policies and procedures for all employees. This manual often includes information about time off, sick leave, termination, dress code, safety, etc. 

A handbook also establishes clear guidelines in the workplace and helps avoid misunderstandings between employees and management. You should safely keep and update your handbook regularly to ensure it remains consistent with your organization’s goals and values.

6. Pay Stubs

Your file should also contain copies of each employee’s pay stubs. These documents provide detailed information about how much each worker earned, deductions, and taxes withheld. 

You will need to use the information from your pay stubs file to prepare quarterly payroll reports for tax purposes and track your company’s financial performance. Moreover, paystubs help you resolve any disputes that may arise regarding employees’ wages. Therefore, always ensure the accuracy of your payroll records to avoid possible penalties from the authorities.

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This post was contributed by a guest author. Mainvest does not guarantee the accuracy of information in this post and does not provide legal, tax, or accounting advice.