Employment Records Essential for Nonprofits
Employment records are essential for both for-profit businesses and nonprofits. As your nonprofit hires people, you will want to keep accurate and complete records of their employment. Here are some examples of the documents you should keep as records of the employees and vendors of your nonprofit.
Essentially, an employment agreement is a binding contract between an employer and employee signed when an employee comes onboard. Keeping this documentation is crucial because it will give you clear clauses to reference should you ever need to.
Records of Background Checks
Background checks help you avoid legal liability because you can reduce the risks of hiring those who wouldn’t be a good fit for your nonprofit. It’s essential to keep these so that you can legally protect yourself if any incidents were to occur.
You will use this type of tax form to verify a person’s identity and verify that person’s eligibility to work in the United States. According to the United States Citizenship and Immigration Services, you must keep this form for the entire duration of a person’s employment.
Independent Contractor Agreements
This employment record is a written contract between a contractor and a client that sets the working arrangements. It should include a description of the services, the length of time it will take to complete the project or service, and payment details.
Since you are the employer, these are records about an employee’s time working with your nonprofit. The documents in this file should include a job description, an employee’s resume or application, the offer of employment, employee benefits, their emergency contacts, and more.
Keeping timesheets is vital for recording wages due, time-off accruals, and employee absences. Under the Fair Labor Standards Act, the Department of Labor requires you to keep timesheets for at least two years and payroll records for three years.
Wages, Withheld Taxes, and Resolutions Approving Wages
There is a lot of information that must be kept within this type of record. You will want to keep record of the wages You will want to keep a record of the wages you pay to your employees, the taxes that you withheld from their wages, and the resolutions that approved these wages. You’ll also want to keep industry research with this information.
When it comes to employment, substantiation is how you verify business expenses. To substantiate their costs, employees must provide the expense’s amount, time, place, and business purpose. For your nonprofit, you’ll want to keep track of this verification.
A vendor contract is similar to an independent contractor agreement, except that vendors sell products or services, and independent contractors complete a specific task for your nonprofit. Like other contracts, be sure to describe what you are buying and include payment details.
Bids & Proof of Compliance with Conflict of Interest Policies
When looking for vendors or contractors, you may let companies bid on any jobs that you have available. Bidding is a way to look for the best deal. You should keep the bids, as well as the proof of compliance with your nonprofit’s conflict of interest policies.
1099-MISC Tax Forms
You should give the 1099-MISC form to self-employed workers, also called independent contractors. This tax form verifies payment given to people you don’t employ but hired to provide goods or complete services.
The Importance of Employment Records
It is crucial to keep these records with your nonprofit, no matter how small. Maintaining employment records will allow you to reference them throughout the life of your nonprofit. In addition, you will be able to show these records to different agencies or donors, should they request to see them.
Contact us today if you would like help formulating these documents or setting up a system for keeping employment records safe. At Chisholm Law Firm, we have a 100% success rate for our clients. You can rest assured that your nonprofit is in the best hands and that we’ll get everything done right the first time. Call us today or visit us online to schedule your free consultation.
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