Business Records to Keep

1 Year

• Bank reconciliations
• Correspondence with customers/vendors
• Duplicate deposit slips
• Purchase orders (except those that are part of a longer-term agreement)

3 Years

• Income tax returns and supporting documents
• Employment tax records (e.g., payroll, W-2s, 1099s)
• Invoices
• Travel and entertainment records
• Canceled checks (related to tax-related expenses)
• Employee benefit plan records

The IRS generally has three years to audit a return or claim a refund, so records supporting deductions or income should be retained for at least this long.

6 Years

• Records of underreported income (more than 25% discrepancy)
• General ledger
• Supporting documentation for expenses or income if fraud is suspected
• Credit card statements related to tax deductions

Forever

• Corporate records (e.g., formation documents, bylaws, board minutes)
• Audit reports
• Stock transactions and ownership documents
• Retirement and pension plan documents
• Asset purchase and depreciation schedules

Personal Records to Keep

1 Year

• Utility bills
• Monthly bank statements
• Receipts not related to taxes

These may be discarded unless needed for specific disputes, warranties, or short-term planning.

3 Years

• Personal income tax returns
• Form W-2, 1099, K-1
• Medical expense documentation (if claimed)
• Proof of charitable contributions
• Records of alimony payments (for older divorces before 2019)

Three years is the standard IRS audit window for personal returns.

6 Years

• If income was underreported by more than 25%
• Foreign income and asset records
• Real estate purchase/sale records if there was a large gain and basis needs to be proved

Forever

• Final settlement documents for major assets (e.g., home, stocks)
• Retirement account (IRA, 401(k)) contributions and withdrawals
• Legal documents (wills, divorce decrees, adoption papers)
• Records of paid-off mortgages
• Tax returns and records of tax paid (preferable, especially electronically)

Additional Tips

• Digital Backups: Scan and store critical records in cloud storage or an encrypted drive.
• Destruction Protocol: Use a cross-cut shredder for old records to prevent identity theft.
• State Rules: Check your state’s tax agency—some require longer retention.