Business records to keep, and how long to keep them
The IRS says to keep most tax-related business records for 3 years from the date you filed the return. That period stretches to 7 years if you claimed a loss from worthless securities or a bad-debt deduction, to 6 years if you underreported income by more than 25%, and to indefinitely if you never filed a return or filed a fraudulent one. Employment tax records must be kept at least 4 years. Separately, your entity's formation documents (Articles of Organization, EIN letter, operating agreement) should be kept permanently. They are not tax records and the 3-year clock never applies to them.
What documents do I need to keep for my business?
The IRS groups business records into a few categories, each backed by specific supporting documents: gross receipts (cash register tapes, deposit records, receipt books, invoices, Forms 1099), purchases (canceled checks, credit card receipts, invoices for anything bought for resale or as raw materials), expenses (account statements, credit card statements, receipts for anything else the business spent money on), assets (purchase invoices, closing statements, and canceled checks showing what you paid, when you bought it, and any improvements, since these numbers drive depreciation and the gain or loss when you sell), travel, gift, and transportation costs (substantiated per IRS Publication 463), and employment tax records (timesheets, wage payments, tax deposits, and copies of filed employment tax forms). Mileage records fall under the transportation category: the IRS expects a log of business miles, dates, and purpose if you deduct vehicle use.
How long should I keep business records?
The IRS does not give one number. It gives a set of rules keyed to what could still happen with that return, and the retention period is the length of time the IRS (or you) could still act on it.
| Situation | How long to keep records |
|---|---|
| Standard rule (none of the situations below apply) | 3 years from when you filed the return |
| You filed a claim for credit or refund after filing your original return | 3 years from filing, or 2 years from when you paid the tax, whichever is later |
| You claimed a loss from worthless securities or a bad-debt deduction | 7 years |
| You did not report income that should have been reported, and it is more than 25% of the gross income shown on the return | 6 years |
| You did not file a return | Indefinitely (no clock starts) |
| You filed a fraudulent return | Indefinitely |
| Employment tax records | At least 4 years after the tax becomes due or is paid, whichever is later |
| Records tied to business property or equipment (for depreciation, and gain or loss on sale) | Until the period of limitations expires for the year you dispose of the property, which usually means keeping them for as long as you own it plus the standard 3 to 7 years after |
Source: IRS, "How long should I keep records?"
One practical note buried in that IRS guidance: these are the IRS's own rules for tax purposes. Insurers, lenders, landlords, or state agencies can require you to keep some records longer, so check those obligations before you shred anything the IRS clock has cleared.
What paperwork do I need after forming an LLC?
Formation paperwork is not a tax record and none of the IRS retention periods above apply to it. These documents prove your business legally exists and keep proving it for as long as the business does, so the practical rule is to keep them permanently: the Articles of Organization (or Articles of Incorporation) filed with your state, your EIN confirmation letter (the IRS's CP 575 or 147C), your operating agreement or corporate bylaws, meeting minutes and resolutions, business licenses and permits, and any contracts, deeds, or leases still in effect. If you registered an LLC or applied for an EIN as part of formation, see our guides on how to get an EIN for free from the IRS and the full business startup checklist for where these documents fit in the sequence.
Essential business documents checklist
- Formation documents: Articles of Organization or Incorporation, and any amendments (keep permanently)
- EIN confirmation letter: the IRS CP 575 (or a 147C if you lost the original) (keep permanently)
- Operating agreement or bylaws (keep permanently)
- Meeting minutes and ownership resolutions (keep permanently)
- Business licenses and permits (keep permanently, and while active)
- Gross receipts records: deposit slips, receipt books, invoices, 1099s (3 years, longer if a bad-debt, worthless-security, or underreporting situation applies)
- Purchase and expense records: canceled checks, credit card statements, invoices (3 years, same exceptions)
- Asset and depreciation records: purchase price, improvements, sale documents (as long as you own the asset, plus 3 to 7 years after disposal)
- Mileage and travel logs (3 years, same exceptions)
- Payroll and employment tax records (at least 4 years)
- Filed tax returns themselves (the IRS recommends keeping the return forever even after supporting records can be discarded, since it is your only proof you filed)
Does the IRS accept digital or scanned records?
Yes. The IRS says electronic records are acceptable as long as the system you use, whether accounting software or a scanning and storage system, captures the same information a paper record would and can produce it if the IRS asks. Electronic records have to follow the same basic recordkeeping principles as paper: they need to be accurate, complete, and accessible for the full retention period. In practice that means keeping legible scans or exports, backing them up somewhere other than the one device that could fail, and being able to pull up any single record without a hunt. There is no requirement to keep the paper original once you have a compliant electronic copy.
What is the difference between tax records and legal or entity records?
Tax records document a transaction or a tax position, income, an expense, a mile driven, a paycheck, and they exist to support a specific return. Once the IRS's window to question that return closes, the record has done its job and the retention table above tells you when that is. Entity or legal records document that the business itself exists and how it is governed: the Articles of Organization, the EIN letter, the operating agreement, minutes. Nothing about them expires. You will need the operating agreement to open a bank account five years from now just as much as you needed it on day one, and you will need the Articles if you ever sell the business, add an owner, or get audited on whether the LLC was validly formed. Treat the two categories differently: tax records get filed by year and eventually purged on schedule, entity records get filed once, in one place, and never purged.
The flat truth: keep tax records 3 years, entity records forever
Default to 3 years for ordinary income, expense, and mileage records. Stretch that to 7 years if you have ever claimed a bad debt or worthless-security loss, and treat "did not file" or "filed fraudulently" as no expiration at all. Payroll records get a floor of 4 years no matter what. None of that clock applies to the paperwork that proves your business exists: the formation documents, the EIN letter, and the operating agreement stay in the file permanently, in whatever format (paper or digital) you can actually find again when you need it.
Sources
- Retention periods for the standard rule, refund claims, bad debt/worthless securities (7 years), underreported income (6 years), no return filed, and fraudulent returns (indefinitely): IRS, "How long should I keep records?".
- Record categories (gross receipts, purchases, expenses, assets, travel/gift/transportation), supporting documents, employment tax records (at least 4 years), and electronic recordkeeping: IRS, "What kind of records should I keep?" (from IRS Publication 583, "Starting a Business and Keeping Records").