Insights
Record Retention Guide
Keep filed returns permanently. Keep the records behind them at least three years, and longer in the cases below.
How long to keep tax records
A record is worth keeping for as long as the return it supports can still be changed, by you or by the IRS. That window is the period of limitations, and it runs from the date the return was filed.
Source: IRS. State periods can run longer than the federal period, so check every state you file in before you set a destruction date.
What to keep
Income and expenses
Bank statements and deposit slips, sales receipts, invoices, paid bills, credit card records, canceled checks, Forms 1099, payroll, inventory, petty cash, purchases and sales. Organized by year and by type.
Proof of purpose
A canceled check proves money left. It does not prove what it bought. Keep the receipt, invoice or contract beside the payment record, because the business purpose is the half that gets challenged.
Employment tax
Payroll and wage records, withholding, employment tax returns and their supporting documentation, held four years after the fourth quarter filing for the year.
Property and assets
How and when you acquired it, purchase price, improvements, Section 179 and depreciation, casualty losses, how it was used, and how and when you disposed of it. Held until the period expires for the year of disposal.
Filed returns
Keep them permanently. They establish what was reported, they carry basis and carryforwards forward, and they are the first thing a lender, a buyer or an examiner asks for.
Electronic records
An electronic record carries the same requirements as paper. It has to stay indexed, legible and retrievable for the whole period, with a secure backup somewhere other than the machine that made it.
Before you destroy anything
Take the later date
The longest of the federal period, every state you file in, and any period a lender, insurer, regulator, contract or attorney imposes. Destroy on that date, not the first one you reach.
Check for open matters
An open examination, an unresolved notice, a claim, a dispute, an unused carryforward or a pending sale of the business suspends the schedule until it closes.
Separate the returns
Supporting records go on a schedule. The filed returns do not. Pull them out before anything is destroyed.
Destroy it properly
Shred paper and wipe media. These records carry Social Security numbers, account numbers and payroll data, and a discarded box is a breach.
Disclaimer
This guide is general information, not tax, legal, accounting or records management advice. Retention requirements vary by taxpayer, record, transaction, jurisdiction and industry, and federal guidance can change. Consult a qualified professional before destroying important business, financial or tax records.