Records
How long should a small business keep invoices and receipts?
Updated · 4 min read
The short answer
For income tax, the IRS says to keep records for 3 years in most cases, 6 years if you left out more than 25% of your income, 7 years for a bad debt deduction, and for good if you did not file or filed a fraudulent return. Employment tax records are kept for at least 4 years [1].
What counts as a record
For money coming in, the IRS lists invoices, receipt books, deposit information and Forms 1099-MISC as supporting documents [2]. For costs, it lists proof of payment such as canceled checks or records of money transferred [2].
The IRS periods, one by one
These are the periods the IRS gives for income tax records [1]:
- 3 years in most cases.
- 3 years from filing, or 2 years from paying the tax, whichever is later, if you claim a credit or refund after filing.
- 6 years if you did not report income that is more than 25% of the gross income on your return.
- 7 years if you claim a loss from worthless securities or a bad debt deduction.
- For good if you do not file a return, or file a fraudulent one.
- At least 4 years for employment tax records.
A simple rule many businesses use
Because a bad debt from an unpaid invoice can need 7 years [1], many service businesses keep every invoice, estimate and receipt for 7 years. It is easier than working out the period for each one.
How to keep them
Keep a copy of each document as it was sent, with the payments recorded against it. A PDF export you can open without the app is a good backup.
Worked example: an invoice that was never paid
| Invoice sent | Mar 03 2026 |
|---|---|
| Written off as a bad debt | Tax year 2026 |
| Keep the invoice and records until at least | 7 years after filing |
An invented sample. Ask a tax professional about your own situation.
Checklist
- Every invoice and estimate is saved as sent
- Payments are recorded against each invoice
- Receipts for costs are kept with proof of payment
- You have a PDF backup outside the app
- Records are kept for 7 years to be safe
Questions
Is 3 years always enough?
No. It is the usual period, but the IRS gives longer ones for some situations, such as 7 years for a bad debt deduction.
Can I keep records only as PDFs?
Keep them in a form you can read and print later. Ask a tax professional if you are unsure about your situation.
Do I need to keep estimates?
The IRS lists invoices and receipts. Keeping the signed estimate with its invoice also shows what was agreed.
Doing this for every job?
InvoiceWren keeps every estimate, invoice and receipt with its job, and you can export everything at any time, on every plan.
See how jobs keep your records togetherSources
- IRS, How long should I keep records. Checked .
- IRS, What kind of records should I keep. Checked .
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