I am working with a client that recently closed their business. This client started with us after they had the business up and running. We offered to work with them at various levels, but in an effort to contain costs they because an annual client only. We were to prepare the year-end tax returns.
For payroll they were using Intuit’s full payroll service. The employees clocked in onto the Square POS system and the paychecks and reports were mailed to the client. Knowing that they were using a service I thought the records were being maintained.
Since the business shut down in late 2017, they have since cancelled their payroll subscription.
But then they received a letter from the Illinois Department of Labor, one of the past employees reported them for underpayment of overtime and for the state minimum wage.
Now the client is scrambling to make sure that they can provide me all of the information necessary for the audit. They are having some troubles. They were unaware of the time frame for maintaining employee records, even if the business closes. Personnel files need to be maintained 7 years, applications and I-9’s for 3 years.
On our website we have a record retention guideline for businesses.
So make sure you know what you need to maintain and for how long and maintain the records. You never know when you will have to produce a record for a reporting body or a former employee.