How Long to Keep Business Records (and How to Dispose of Them Safely)
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How we wrote this: A summary based on IRS recordkeeping guidance and NIST's media sanitization guideline (linked below). This is general information, not tax or legal advice. Insurers, lenders, states and industry regulators may require longer retention.
A box of old receipts or a cluttered cloud drive raises two questions: how long do I have to keep this, and how do I get rid of it safely? Here's what the IRS says, and how to clean up afterward.
The IRS retention periods
The IRS page How long should I keep records? ties retention to the "period of limitations": the time in which you can amend a return or the IRS can assess more tax. The periods run from when the return was filed (returns filed early count as filed on the due date):
| Situation | Keep records for |
|---|---|
| Most situations | 3 years |
| You file a claim for credit or refund after filing | 3 years from filing, or 2 years from paying the tax, whichever is later |
| You claim a loss from worthless securities or a bad debt deduction | 7 years |
| You fail to report income that's more than 25% of the gross income shown | 6 years |
| You don't file a return, or file a fraudulent one | Indefinitely |
| Employment tax records | At least 4 years after the tax is due or paid, whichever is later |
The IRS also says to keep copies of your filed returns. They help with future returns and with amended ones.
Property records follow different rules
Records for property, such as equipment, vehicles, buildings and a home you use for business, should generally be kept until the period of limitations expires for the year you dispose of the property. You need them to figure depreciation and the gain or loss on sale. If you use the regular method for the home office deduction, that includes home records tied to depreciation.
What to keep
The IRS page What kind of records should I keep lists supporting documents by type:
- Gross receipts: deposit records, invoices, receipt books, Forms 1099-MISC.
- Purchases and expenses: canceled checks or other proof of payment, credit card receipts and statements, invoices, account statements. Documents should show the payee, amount, proof of payment, date and what was bought.
- Assets: when and how you acquired them, purchase price, improvements, depreciation and Section 179 deductions taken, and when and how you disposed of them.
Electronic records count. The IRS says all requirements that apply to paper books and records also apply to electronic ones, and that you can use any recordkeeping system that clearly shows income and expenses. Scanning receipts into an organized folder works, as long as the scans are complete and legible.
Check non-tax requirements before you discard
The IRS adds that when records are no longer needed for tax purposes, you should check whether you must keep them longer for other reasons. Insurance companies and creditors, for example, may require longer retention.
Disposing of records safely
- Paper: shred anything with names, account numbers, Social Security numbers or signatures, rather than recycling it whole.
- Old computers, drives and phones: deleting files doesn't erase them. NIST's media sanitization guideline, SP 800-88 Rev. 2, explains how organizations can choose sanitization methods based on how sensitive the data is, including techniques such as cryptographic erase and secure erase. In practice, follow the device maker's instructions for a full erase or reset (ideally with encryption turned on during use), and consider a disposal service that documents destruction for drives that held sensitive data.
- Cloud accounts: remove old shared links, empty trash folders, and close accounts you no longer use.
Before you delete anything digital, make sure what you do need is backed up. Our 3-2-1 backup guide shows a simple setup.