Short answer
The IRS says to keep records that support an item on a tax return until the period of limitations for that return runs out. For most business records that is 3 years from when you filed. Keep employment tax records for at least 4 years, records for property until 3 years after the year you sell or dispose of it, and some records 6 years, 7 years or indefinitely in the special cases listed below.
Every receipt, invoice and bank statement does a job at tax time: it backs up a number on your return. The question is how long you need to hold on to them. The IRS answer depends on the record and on what happened with the return, so a single rule like "keep everything seven years" either keeps too much or, in a few cases, not enough.
The time limits below come from the IRS page "How long should I keep records?" and IRS Publication 583, linked at the end.
How long should you keep business records? The IRS periods
| Situation | Keep the records for |
|---|---|
| Most returns (none of the cases below apply) | 3 years from the date you filed |
| You file a claim for credit or refund after filing | 3 years from the date you filed the original return or 2 years from the date you paid the tax, whichever is later |
| You claim a loss from worthless securities or a bad debt deduction | 7 years |
| You don't report income you should have, and it is more than 25% of the gross income shown on the return | 6 years |
| You don't file a return | Indefinitely |
| You file a fraudulent return | Indefinitely |
| Employment tax records | At least 4 years after the tax becomes due or is paid, whichever is later |
A return filed early is treated as filed on the due date for these periods, so the clock for a return filed in February still starts on the April deadline.
Records for property and equipment
Records for business property, such as vehicles, equipment and buildings, follow a different clock. Keep them until the period of limitations expires for the year in which you dispose of the property. You need them to work out depreciation and the gain or loss when you sell.
For example, if you buy a work van in 2026, depreciate it for several years and sell it in 2031, keep the purchase records until the period of limitations for your 2031 return runs out.
If you receive property in a nontaxable exchange, keep the records for both the old property and the new property until the period of limitations for the new property expires.
Car records have one more rule from IRS Publication 463: keep records of the business use of a car for each year of its recovery (depreciation) period. Our guide to the 2026 IRS mileage rate covers what the mileage log should show.
What records should a small business keep?
IRS Publication 583 lists the supporting documents a business should keep:
- Gross receipts: cash register tapes, bank deposit slips, receipt books, invoices, credit card charge slips and Forms 1099-NEC and 1099-MISC.
- Inventory purchases: canceled checks, cash register tape receipts, credit card sales slips and invoices.
- Expenses: canceled checks, cash register tapes, account statements, credit card sales slips, invoices and petty cash slips.
- Travel, transportation and gifts: these have their own recordkeeping rules in Publication 463.
- Assets: when and how you acquired each asset, the purchase price, improvements, section 179 and depreciation deductions, how you used it, and when and how you disposed of it, with the selling price and costs of sale.
- Employment taxes: the records listed in Publication 15.
- Copies of your filed tax returns. The IRS suggests keeping them; they help with future returns and with amending a return.
Can you keep records electronically?
Yes. Electronic records must meet the same requirements as paper ones. The IRS says an electronic storage system has to give a complete and accurate record of your data that is accessible to the IRS. You can destroy the paper originals only after the electronic system has been tested and meets IRS requirements.
Scanned receipts attached to transactions in QuickBooks or Xero, with regular backups, are a practical way to do this. Monthly bookkeeping keeps the attachments matched to the right entries.
Check other rules before you shred
The IRS periods only cover taxes. Before you throw anything away, check whether someone else needs it longer. The IRS mentions insurance companies and creditors as examples. Your state tax agency, your lender or your industry may also have their own retention rules.
How long to keep records after closing a business
The same periods apply after you close. They run from the date you file each return, so your final return starts its own 3-year clock, and payroll records from your last quarter need at least 4 years. Keep the books and the final returns somewhere you can still reach them.
A simple retention routine
- Keep the current year and the last 3 filed years together. That covers most IRS questions.
- Keep payroll in its own folder and hold it for at least 4 years.
- Keep an asset folder for every vehicle and piece of equipment until the period of limitations for the year you sell it has passed.
- Keep every filed return. They take little space and answer a lot of questions later.
- Once a year, clear out what is past every limit, after checking non-tax needs.
How Top Accounting Firm can help
Our bookkeeping service records every transaction with its receipt and reconciles your accounts each month (see our bank reconciliation guide), so your records are complete if the IRS ever asks. Book a free consultation to get your records in order.
Frequently asked questions
How long should a small business keep tax records?
How long do I keep payroll records?
When do I need to keep records for 7 years?
Should I keep records longer than the IRS requires?
Can I keep business records digitally?
How long do I keep records after closing my business?
Sources
- IRS: How long should I keep records?
- IRS: Publication 583, Starting a Business and Keeping Records
- IRS: Recordkeeping
- IRS: Publication 463, Travel, Gift, and Car Expenses
Checked against these sources on October 26, 2026. This article is general information, not tax or legal advice. Rules, fees and deadlines change, so confirm with the official source or a tax professional before you file.
