How long to keep business records

Record retention sounds dull until the IRS or a state asks for something from four years ago. The rules turn on how long each authority can review a return. This guide sets out the periods and what to keep for each.

By Hamza Fida, Chartered Accountant. Reviewed by Muhammad Bilal, Chartered Accountant. Checked against official sources on . 2 minute read.

Short answer

Keep business records for at least 3 years after filing the return they support. Keep employment tax records for at least 4 years, records for 6 years if income may have been underreported by more than 25%, and 7 years for bad debt or worthless securities claims. Asset records last until 3 years after the year you dispose of the asset.

At a glance

General rule
3 years after filing
Employment tax records
At least 4 years
Income underreported by over 25%
6 years
Bad debt or worthless securities
7 years
No return filed, or fraud
Keep indefinitely
Assets
Until 3 years after the year you dispose of them
How long to keep business recordsSteps: 1. Go digital; 2. Attach documents to transactions; 3. Back up; 4. Review each year.THE PROCESS AT A GLANCEHow long to keep business records1Go digitalScanned or electronic recordsare acceptable if they arecomplete, legible andretrievable2Attach documents totransactionsMost accounting softwarelinks receipts to the entriesthey support3Back upKeep a second copy in aseparate location or service4Review each yearSecurely dispose of recordswhose periods have passedChecked against official sourcesTax BakersHow long to keep business recordsSteps: 1. Go digital; 2. Attach documents to transactions; 3. Back up; 4. Review each year.THE PROCESS AT A GLANCEHow long to keep business records1Go digitalScanned or electronic records are acceptableif they are complete, legible andretrievable2Attach documents to transactionsMost accounting software links receipts tothe entries they support3Back upKeep a second copy in a separate location orservice4Review each yearSecurely dispose of records whose periodshave passedChecked against official sourcesTax Bakers
The process at a glance: 1. Go digital; 2. Attach documents to transactions; 3. Back up; 4. Review each year.

How long does the IRS say to keep records?

SituationKeep records for
Most records supporting a return3 years from filing, or 2 years from paying the tax if later
A claim for a loss from worthless securities or a bad debt deduction7 years
Income not reported that is more than 25% of the gross income shown6 years
No return filed, or a fraudulent returnIndefinitely
Employment tax recordsAt least 4 years after the tax is due or paid, whichever is later
Property and equipmentUntil the period ends for the year you dispose of it

A return filed early is treated as filed on its due date for these periods.

Which records should you keep?

  • Income: invoices, platform reports, bank deposit records, Forms 1099 received.
  • Expenses: receipts, bills, bank and card statements, mileage logs.
  • Assets: purchase invoices, depreciation schedules, sale records.
  • Payroll: pay records, withholding certificates, filed Forms 941, 940, W-2 and W-3, and tax deposit records.
  • Contractors: Forms W-9 and W-8 collected, and Forms 1099 filed.
  • Company records: formation documents, operating agreement, EIN confirmation and elections. Keep these permanently.

What counts as acceptable proof is covered in IRS receipt requirements.

Do other rules require longer?

Often. State tax authorities can have longer review periods than the IRS, sales tax records may need keeping for their own audit periods, and lenders, insurers and contracts may require more. Where rules differ, keep records for the longest period that applies.

How should records be stored?

  1. Go digital

    Scanned or electronic records are acceptable if they are complete, legible and retrievable.

  2. Attach documents to transactions

    Most accounting software links receipts to the entries they support.

  3. Back up

    Keep a second copy in a separate location or service.

  4. Review each year

    Securely dispose of records whose periods have passed.

See bookkeeping basics and the year-end checklist.

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Questions people ask

How long should a small business keep tax records?

At least 3 years after filing the return, longer for payroll, underreported income, bad debts and assets.

How long should I keep payroll records?

At least 4 years after the tax is due or paid, whichever is later.

Can I keep business records digitally?

Yes, if they are complete, legible and can be retrieved when needed.

Which business records should I keep permanently?

Formation documents, operating agreements, EIN confirmations, tax elections, and records for returns never filed.

Sources

Every fee, date and rule on this page was taken from these official and primary sources.

  1. IRS: How long should I keep records?
  2. IRS Publication 583: Starting a Business and Keeping Records
  3. IRS Publication 15 (Circular E): Employer's Tax Guide

Rules and fees change. If you are reading this long after September 30, 2026, confirm the figures with the source before you rely on them.

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This guide is general information. It is not tax or legal advice for your situation.