Audit-Proofing Your Production: Top Documentation Mistakes to Avoid

A person is holding a folder with papers in it.

Proper documentation is the foundation of a smooth and compliant production. Whether dealing with union audits, benefit fund reviews, or government compliance checks, missing or inaccurate records can result in financial penalties, back payments, and legal issues. Yet, many productions struggle with maintaining the necessary paperwork, leaving them exposed to unnecessary risk.


By understanding the most common documentation mistakes and implementing best practices, productions can avoid costly errors and ensure compliance with union agreements, tax regulations, and payroll laws.


The Pitfalls of Incomplete Start Paperwork

One of the most common mistakes in production payroll is failing to collect and retain complete start paperwork for all employees. Each worker—whether a full-time crew member or a day player—must have a fully executed start packet before beginning work. Missing forms can lead to tax compliance violations, employment verification issues, and penalties for failing to document key employment details.


Start paperwork should always include completed W-4 and state tax withholding forms, I-9 Employment Eligibility Verification with proper documentation, direct deposit authorization, union dues deduction forms, and wage theft prevention notices where required. Productions that rely on paper-based processes often struggle with lost or incomplete documents. Digital onboarding platforms provide a simple solution by ensuring that forms are completed and verified in real-time before an employee is processed for payroll. Implementing strict policies—such as withholding payroll processing until paperwork is complete—can prevent compliance issues before they arise.


Worker Misclassification and Its Consequences

Another major risk in production payroll is misclassifying employees as independent contractors instead of W-2 employees. This issue often arises when productions hire day players or short-term crew members without fully understanding labor classification rules.


The IRS and state labor agencies use strict criteria to determine whether a worker qualifies as an independent contractor. If a production controls the worker’s schedule, provides equipment, and dictates how work is performed, that individual is legally considered an employee. Misclassification can result in back taxes, fines, and disputes with unions and labor regulators.


To prevent these issues, productions should work with an entertainment payroll provider to ensure proper classification. Tracking multi-state work is also essential, as hiring an employee in one state but having them work in another can lead to tax and withholding errors.


Timecard Errors and Payroll Compliance Risks

Timecards are one of the most scrutinized documents in an audit, and errors in timekeeping can lead to unpaid overtime claims, benefit underpayments, and union disputes. Many productions struggle with inconsistencies in tracking start and end times, meal breaks, overtime hours, and forced calls.


Common issues include rounding start and end times improperly, missing documentation for meal penalties and rest violations, and late approvals that lead to payroll errors. Digital timecard systems offer a solution by providing an automated audit trail and eliminating missing or incorrect entries. Department heads should verify timecards before submission, and internal reviews should be conducted regularly to catch discrepancies before they escalate into larger compliance issues.


Union Benefit Contribution Mistakes

Productions working under union agreements must contribute to pension, health, and welfare funds based on specific earnings calculations. Failure to remit contributions accurately or on time can lead to costly assessments from the unions.


One of the most common mistakes is the miscalculation of taxable earnings, particularly for per diems, car allowances, and kit rentals. If these payments are not classified correctly, they can impact benefit fund contributions. Productions should work with payroll providers that specialize in union reporting to ensure accuracy. Regular reconciliation between payroll reports and benefit fund remittance records is also essential to confirm that all payments are accounted for and that no discrepancies exist.


The Importance of Signed Deal Memos

Verbal agreements do not hold up in audits, yet many productions fail to obtain signed deal memos before employees start work. This can lead to disputes over pay rates, guaranteed workdays, and negotiated terms such as kit fees and overscale wages.


Every employee should have a written, signed deal memo that clearly outlines their pay rate, terms, and conditions. Any rate changes or negotiated terms should also be documented in writing. Department heads should verify all rate agreements before submitting them to payroll to ensure consistency and avoid payment disputes.


Tracking Petty Cash and Expenses

Expense tracking is a frequent problem area in audits, as productions often fail to maintain proper documentation for petty cash and credit card purchases. Missing receipts and vague expense descriptions can raise red flags and result in compliance violations.


Productions should enforce a strict policy that requires receipts for all purchases and detailed expense descriptions for every transaction. Petty cash should be reconciled regularly, and productions should track purchases against approved budgets to prevent unauthorized spending.


Payroll Tax Filing and Reporting Issues

Federal and state tax agencies closely monitor payroll tax compliance, and productions must ensure that tax reports are filed on time and that all withholdings are accurate. Late filings, incorrect W-2 reporting, and missing payroll tax records can lead to penalties and increased scrutiny from tax authorities.


Establishing a payroll tax calendar with automated reminders can help prevent missed deadlines. Regular verification of payroll tax withholdings and payments ensures that records remain accurate and compliant with tax regulations. Productions should also maintain payroll tax records for at least four years, in accordance with federal and state requirements.


Retention of Payroll and Compliance Records

Failing to retain payroll and compliance records for the required audit period is a common mistake that can make it difficult for productions to defend their payroll practices. Different agencies have varying retention requirements, and disposing of records too soon can create significant issues during an audit.


Payroll records should generally be kept for at least three to four years, while union contribution records should be retained for five or more years. I-9 forms must be stored for three years from the hire date or one year after termination, whichever is later. Productions should establish clear record retention policies and invest in secure digital storage systems with backup capabilities to prevent data loss.


Preparing for an Audit Before It Happens

Audit-proofing a production requires a proactive approach. Proper documentation should be a priority from day one, with strict internal controls to ensure compliance with union agreements, payroll laws, and tax regulations.


Productions that implement digital onboarding, timekeeping, and payroll processing systems reduce the risk of missing or incomplete records. Establishing clear policies, enforcing strict compliance standards, and conducting regular internal audits can help prevent costly mistakes. When an audit does occur, a well-documented and organized production is far more likely to pass without issues, saving time, money, and stress.


By addressing these common documentation errors, productions can protect themselves from compliance risks and maintain smooth payroll operations throughout the project. Ensuring that paperwork is accurate, complete, and properly stored is the key to audit-proofing any production.

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