How long to keep business records

Keep most business tax records for 3 years after you file. Some need 6 or 7 years, and records for things you own stay until after you sell them.

Business records are the papers and files that prove the numbers on your tax return. Bank statements, receipts, invoices and contracts are all records.

The IRS can check a return for a set time after you file it. While that time is open, you must be able to show your records. For most returns the time is 3 years. Some cases need longer.

The short version

For most returns, keep the records for 3 years after you file (IRS).
If you left out income of more than 25% of the gross income on your return, keep them for 6 years.
If you claim a bad debt or a loss from worthless securities, keep them for 7 years.
If you did not file, or filed a false return, keep them with no end date.
Keep records for things you own, such as a laptop, until the time for the return of the year you sell or dispose of it is over.
Keep copies of your filed returns.

Words to know

Period of limitations: the time in which the IRS can ask for more tax, or you can ask for a refund. Your records must last at least this long.
Gross income: all the income you got before you take off expenses.
Dispose of: sell, trade in, give away or throw away.

When the clock starts

The clock starts on the day you file. If you file before the due date, the IRS treats the return as filed on the due date (IRS). So a 2025 return filed in February 2026 is treated as filed on the April due date.

All the time limits

The IRS gives these periods for income tax records (IRS):

Situation	Keep records for
Most returns	3 years
You claim a credit or refund after you file	3 years from filing or 2 years from paying the tax, whichever is later
Bad debt or worthless securities loss	7 years
Income you did not report is more than 25% of gross income	6 years
You did not file a return	No end date
You filed a fraudulent return	No end date
Employment tax records, if you have employees	At least 4 years after the tax is due or paid, whichever is later

The 25% rule is not only about fraud. A large client payment that you forgot can be enough. If you are not sure that all your income is in your books, keep 6 years.

Things you still own

A receipt for a laptop you still use does not expire after 3 years. Keep records for property until the period of limitations ends for the year you dispose of it. You need them to work out depreciation and the gain or loss when you sell (IRS).

Others may need them longer

The IRS says your insurance company or creditors may need you to keep records longer than the IRS does (IRS). Your state may also have its own time limits. A lender may ask for some years of returns and bank statements.

Paper or digital

You can keep records on paper or as digital files. The IRS says the rules for paper records also apply to electronic storage (IRS, Publication 583). Make sure scans are easy to read, sorted by year, and backed up.

An example

Nadia is a freelance illustrator. (She is an example, not a real person.) It is October 2026 and she is moving. She has a box of records for each year since 2015. She filed every return on time, reported all her income, and claimed no bad debts.

2015 to 2022: Her 2022 return was filed in April 2023, so its 3 years ended in April 2026. She can shred the records for these years. She keeps the returns.
2023: Filed in April 2024. The time is open until April 2027. She keeps it.
2024 and 2025: She keeps everything.
A 2019 laptop receipt: She still uses the laptop, so she keeps the receipt.

A Righto tip

Good books make old boxes less important. Righto keeps your books on your Mac, on cash basis. You can import bank statements as CSV, OFX or PDF, so each year’s income and expenses are in one place. At year end, print the Profit and Loss report and keep it with that year’s return. See the year-end bookkeeping checklist and what to give your accountant at year end.

Common questions

Do I need to keep bank statements? Yes. Keep them as long as the return they support. They help prove your income and payments.

Does the 3-year clock start on January 1? No. It starts when you file, or on the due date if you file early.

Can I throw away a receipt once I have a scan? Yes, if the scan is complete and easy to read. See do I need to keep receipts.

What to do now

Put each year’s records in one place, with the year on the label.
Move receipts for things you still own into a separate folder.
On each year’s box, write the earliest date it can go: 3 years after that return was filed.
Keep every filed return.
If a year has a problem, such as an IRS letter or missed income, keep it and ask a tax professional.

Righto is free, easy to use and needs no account.

Sources

Righto gives general information, not tax or legal advice. Ask a tax professional about your business.