How Long Should You Keep Business Records and Receipts?

"Do I really need to keep this receipt?" Here's a practical guide to how long to keep common business records and how to store them without drowning in paper.

What the IRS expects

The IRS generally can audit a return for three years after it's filed. But there are important exceptions:

• Six years if you underreported income by more than 25%
• Seven years if you claim a loss from worthless securities or bad debt
• No limit if a return was never filed or was fraudulent

That's why many professionals recommend keeping most tax records for at least seven years.

Washington State

The Washington Department of Revenue generally can review the current year plus four prior years. Keep the records that support your B&O and sales tax returns (sales records, exemption and resale certificates, invoices) for at least five years.

Quick reference guide

Record	Recommended retention
Tax returns	Permanently
Receipts and invoices supporting deductions	7 years
Bank and credit card statements	7 years
Sales records and sales tax documentation	At least 5 years (7 recommended)
Payroll records and employment tax returns	At least 4 years after the tax is due or paid
Form W-9s and 1099s	4 to 7 years
Mileage logs	7 years
Asset purchase records	As long as you own the asset, plus 7 years
Formation documents, operating agreement, EIN letter	Permanently
Contracts and leases	Life of the contract, plus 7 years
Annual financial statements	Permanently

Digital records are fine

The IRS accepts digital copies of receipts, as long as they're legible and complete. A clear photo or scan stored securely is as good as the paper original.

Good options:

• Attach receipt images to transactions in your accounting software
• Use a receipt app that syncs with your bookkeeping
• Keep a cloud folder organized by year and month

A simple folder structure

• Year (e.g., 2026)
  • Bank statements
  • Credit card statements
  • Receipts
  • Sales and invoices
  • Payroll
  • Tax filings (federal, Washington DOR, city)
  • Contractors (W-9s, 1099s)

What to do with old records

When records pass their retention period, shred paper copies containing personal or financial information. Don't throw them in regular recycling.

The bottom line

Keep most business records for seven years, keep tax returns and formation documents permanently, and go digital to make it manageable.

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Need help getting this right? TRIG Bookkeeping & Tax Services helps new business owners in Washington with company registration, monthly and annual bookkeeping, and government compliance. Contact us to talk about your business.

This article is general information, not legal or tax advice for your situation. Tax rules and fees change, so confirm current details with the IRS, the Washington Department of Revenue, or a qualified professional.