What Really Matters: The Ultimate HR Record Keeping Checklist

Written by Amanda Bower    |    Published: April 3, 2023

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When it comes to your startup or fast-growing business, some things will likely be accomplished by “winging it.” Trying a new style of social media posts? Sure, let’s throw things at the wall and see what sticks. Ceiling could use painting? Maybe the CEO or founders are getting their hands dirty on some ladders, especially in the earliest days. 

But with your business, there’s definitely one thing that should not be left up to chance: proper HR record keeping.

When you’re at the helm of a business, HR record keeping is crucial for your organization’s health. The fact of the matter is that a majority of startups fail, most within the first year. 

In order to see sustainable success, you need to stay on top of all employee and business records to ensure everything is running like a well-oiled machine and that your business is up to snuff when it comes to compliance. For that, you’ll need a robust HR record keeping checklist to keep you on track.

Managing Employee and Business Records Is Critical

Why should you care about your employee and business records, and what can an HR record keeping checklist do for you? First and foremost, proper HR record keeping helps to ensure compliance with legal regulations. 

Employment laws require startups to keep certain records related to their employees, including personnel files, payroll records, and tax documentation. Unfortunately, failure to maintain accurate and up-to-date records can result in legal penalties and fines—even if accidental. 

Next, record keeping can be crucial when protecting your startup from lawsuits and other legal disputes. If an employee does happen to file a complaint or lawsuit, having accurate and complete records can help exonerate your startup by providing evidence of actions and decisions.

Proper HR record keeping is also critical for making well-informed business decisions. HR data can provide you with crucial insights into how your business is performing and your financial situation, which can help you optimize your decision-making. Lastly, having a well-organized HR record keeping system can help you save time on redundant tasks (such as scouring the office for a key document at a moment’s notice). 

By keeping your HR records and documents in one place and maintaining a clear and consistent record-keeping process, startups can streamline their HR processes and minimize the risk of errors and penalties. 

HR Record Keeping Checklist

In order to stay on top of your record keeping needs, refer to this handy checklist. (Your exact needs might differ depending on your startup’s legal requirements.)

Open Positions

When you’re a fast-growing startup, there are always a lot of moving pieces, and you’re often going to be hiring for new positions. You’ll need to keep records of these roles to ensure efficient hiring processes and clear parameters. These records should include robust job descriptions, hiring specs, and candidate information.

Onboarding New Employees 

When onboarding new employees, keeping accurate and up-to-date records is important. Necessary information and documents might include an employee’s personal information (including their social security number), employment eligibility verification, employment contracts, tax forms (such as a W-4), payroll records, benefits enrollment forms, training and certification records, and performance reviews. 

Offboarding/Exit Interview Process

When employees leave, and it’s time to offboard them, keeping relevant documents and records is also vital. These might include a separation agreement, termination letter, final paycheck, tax forms, records showing company property’s return, performance reviews, and copies of any exit interviews. 

Annual Benefits Enrollment

When employees elect their benefits, copies of these documents should also be kept. These records might include their medical, dental, and vision insurance selection, retirement/benefit plan selection, and records if an employee has waived group benefits.

Workplace Culture Activities 

While there are not typically legal requirements for record keeping related to workplace culture activities, keeping accurate and up-to-date records can help you evaluate the effectiveness of these activities and identify areas for improvement. For example, you can keep records regarding employee participation, feedback and suggestions, metrics and outcomes, and recognition and awards. 

Medical Files

In the US, there are certain legal requirements regarding medical files. For example, the Americans with Disabilities Act (ADA) and the Family and Medical Leave Act (FMLA) require employers to maintain certain medical information about employees in relevant situations. 

Typically, employers must keep copies of medical certifications provided by employees or their healthcare providers when they take leave under FMLA, for example. They also must keep any medical documentation related to disability accommodations and keep records of any workers’ compensation claims. 

Tax Files

Employers are typically required by law to keep certain employee records related to taxes. These requirements might include a copy of Form W-4 (which employees complete to indicate how much federal income tax should be withheld from their pay), copies of annual W-2 forms, payroll records, and copies of Form 941 (which report employee wages and withheld taxes). 

Terminated Employee Files

If you ever need to let employees go, keeping records of several types of documents is essential. You’ll typically need to present that employee with a written termination notice (and keep record of this), final pay records, COBRA records (regarding continuing health coverage), documents about unemployment claims, performance records, and copies of employment agreements. 

Timesheet Setup and Workflows

You might be required to keep certain records regarding timesheets and workflows to ensure payments are accurate and comply with wage and labor laws. For example, employers typically need to keep records of their timesheet setup, including the system used to track time and any configurations made to the system. 

You should also keep records of your attendance policies and procedures. Regarding workflows, you can keep records concerning how time and attendance function at your startup and how approvals work.

Ongoing Training Activities

In order to maximize the effectiveness of employee training efforts, startup leaders can keep certain records regarding training which help them track participation and performance. These might include training attendance records, completion certificates, performance evaluation records, copies of training materials, and expenses. 

Performance Review Processes

When managing employee performance and development, performance reviews are critical, as is keeping detailed records of your reviews. These records can include performance evaluation forms, self-evaluation forms, documentation of feedback and coaching, performance improvement plans, and correspondences related to performance. 

Vacation/PTO/Leave Approval

When it comes to employee time off, there are many records your startup can keep. These might include records including the dates of authorized leave requests, the total number of vacation/PTO/leave hours requested and approved, and the type of leave requested. Your employees also might need to supply supporting documentation for specific leave requests, such as medical certificates.

Travel Reimbursement

If employees travel for work, your startup will likely need to reimburse them. To ensure proper payments and accurate financial information, you likely will need to record the dates/purpose of the trip, the type of transportation used, and the travel expenses incurred (including airfare, lodging, and meals). You also can keep records that include details about the total amount reimbursed and the reimbursement method. 

Annual Salary Increases or Bonuses

You must keep accurate and careful records when employees get a well-deserved pay increase. These might include salary increase/bonus documentation, employee notification records, salary increase/bonus calculation, payroll processing records, and other supporting documentation. 

Employee Handbook in Compliance With State Laws

Every company needs to have an employee handbook, but not just any employee handbook: it needs to comply with all state and local laws, and you’ll need a record of it. First, you should understand your startup’s legal obligations regarding your employee handbook. 

You might need to include notices about minimum wage, overtime pay, and anti-discrimination and harassment policies. You also need policies addressing paid sick leave or family and medical leave and will likely have to update your handbook regularly. 

We Love Helping Organizations Flesh Out Their HR Function

HR record keeping might seem like a full-time job, but it’s crucial for several reasons. Firstly, it helps your startup run smoothly, prepare for unexpected financial situations, and make better-informed decisions. Additionally, HR record keeping keeps you in compliance with local, state, and federal laws and regulations, ensuring that your business is following all legal requirements. 

If this HR record keeping checklist seems like a mouthful, we get it. When you’re focused on your business’s day-to-day, chasing down these records and ensuring they’re up to date can seem like a full-time job on its own. But we’re here to help. 

We offer accounting services for startups, including comprehensive HR and payroll services, and can provide you with state-of-the-art, fully-managed payroll services. This includes payroll processing, deduction setup, expense reimbursement, employee onboarding and offboarding, file audits and record keeping, workers’ comp, contractor management, and much more. 

Interested in partnering with us on your HR and payroll needs? Read more about our services.

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