Payroll records are all documentation about payroll that businesses must keep for each individual they employ. This includes anything that documents pay rates, tax deductions, hours worked, benefit contributions, and more.
How long and why do you keep payroll records?
The Canada Revenue Agency (CRA) recommends keeping all payroll records for six years from the end of the last tax year they relate to. Well-maintained records make it easier for employers to prepare and file tax returns with government agencies. Those who use payroll software with self-service features improve the employee experience. They can access their tax and pay information and download forms independently through the system.
Payroll records contain valuable data about wages and taxes that can help businesses create better budgets and manage labour expenses. They’re also helpful to employees who may need payroll documents to verify proof of employment for various reasons, such as to rent an apartment or apply for a loan.
What documents make up payroll records?
If something helps you run payroll for an employee, put it in their payroll file. Payroll records are made up of any documentation that includes but is not limited to the following information:
- Employee personal information
Includes names, addresses, phone numbers, e-mail addresses, direct deposit information, emergency contact information, date of birth, occupation, Social Insurance numbers and benefit plan enrollment information - Employment information
Includes offer letters, employment eligibility data, full-time or part-time status, background checks, references, signed company policies, evaluations, and termination information - Timesheets
Includes regular hours, overtime hours and hours worked per day, week, and pay period - Pay information
Includes rate of pay, work week beginning and ending dates, total hours worked, payment agreement or the employee’s pay basis (e.g., hourly, salary, commission, etc.), and the employee’s classification (e.g., exempt or nonexempt) - Tax documents
Includes federal, provincial and local jurisdiction tax forms and tax return copies - Deduction information
Includes benefit deductions, wage garnishment orders, union dues and deferred compensation information - Paid and unpaid leave records
Includes vacation time balances and associated payment amounts, as well as records for other types of leave, such as paid sick leave - Direct deposit information
Includes financial institution names, account numbers and routing numbers - Reimbursement forms
Includes expense reports for work travel, office supplies, etc. - Pay records
Includes payroll registers and other documentation with payroll details, such as pay period beginning and ending dates, payment date, and type of wage payments (i.e., regular, overtime, tip credit, bonuses, commission, paid leave time, etc.)
Employee payroll records checklist
A checklist can help ensure that payroll records are complete. Here is some of the information generally found in payroll files:
- Employee’s full name
- Address
- Start date
- Date of birth
- Social Insurance Number (SIN)
- Occupation
- Offer letter
- Pay rates
- Paystubs
- Federal and provincial jurisdiction tax withholding forms
- GST/HST registrants, rebates, refund
- Payroll deductions
- Direct deposit authorization form
- Hourly or salaried
- Total overtime earnings
- Total hours worked each day and week
- Timecards
- Vacation time and pay records
- Information related to leaves
- Expense reimbursement information
- Any authorization for the release of private information
- Documentation and justification for pay raises
- Benefit and deduction information
- Employer contributions
- Bonus pay and commissions
- Final paycheck information if terminated
Where should payroll documents be kept?
Most organizations store their payroll documents digitally in the cloud or using external hard drives. Cloud storage is generally the more secure of the two, which is why many payroll service providers use it. However, recordkeeping is ultimately the responsibility of employers. They must download the appropriate reports and documents from the service provider and retain them for the required time.
How to keep payroll
Paper records are an option for small businesses, though employers may quickly run out of space and need a customized storage solution. Those who prefer to keep hard copies also need a physical safe storage means.
Midsized and large businesses, on the other hand, generally require automated or semi-automated digital recordkeeping. They use payroll software, which provides the payroll-related reports and documentation necessary to support compliance and updates records each time payroll is run.
Frequently asked questions
What is meant by payroll records?
Payroll records are the combined documents about payroll that employers must maintain for each employee at their workplace.
What information is included on a payroll record?
For each employee, payroll records commonly consist of :
- Personal information (name, address, etc.)
- Employment information (start date, offer letters, etc.)
- Pay rate
- Timesheets
- Payment records
- Tax withholding and benefit deductions
- Vacation, paid sick or other leave balances
- Banking information
- Work-related expense reports
How do I create a payroll record?
Payroll records can be created manually. However, it’s usually more efficient and accurate to use payroll management software with built-in standard reports that employers can use for recordkeeping purposes.
Do I need payroll for one employee?
Yes, even employers with only one employee must complete payroll and retain the records needed for compliance.
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This guide is intended to be used as a starting point in analyzing an employer’s payroll obligations and is not a comprehensive resource of requirements. It offers practical information concerning the subject matter and is provided with the understanding that ADP is not rendering legal or tax advice or other professional services.