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Small-business recordkeeping and retention
Good records connect the bank transaction with the reason it happened. Retention is a separate decision: a document that no longer helps today’s bookkeeping may still support a return, payroll history or an unresolved question.
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General information, not legal or tax advice.
Store evidence with the transaction
IRS Publication 583 lists sales slips, bills, invoices, receipts, deposit slips and canceled checks as supporting documents. Use consistent names or attachments so a reviewer can retrieve the evidence without asking the owner to search through email for every purchase.
Sources: IRS Publication 583, Starting a Business and Keeping Records
Choose a system the business can maintain
The IRS permits a recordkeeping system suited to the business that clearly shows income and expenses. Build your filing routine around the way documents arrive. Separate missing evidence from completed records so unresolved items remain visible during reconciliation.
Sources: IRS Recordkeeping
Use the general retention period with its exceptions
The IRS generally says to retain records for three years when its listed exceptions do not apply. Refund claims use three years from filing or two years from payment, whichever is later. These are conditional rules, so ask your CPA to review the retention schedule before discarding files.
Sources: IRS, How long should I keep records?
Flag situations needing longer retention
IRS guidance calls for seven years for a worthless-securities or bad-debt loss claim and six years when omitted income exceeds 25% of reported gross income. It calls for indefinite retention when no return is filed or a fraudulent return is filed. Keep disputed or uncertain records out of routine destruction.
Sources: IRS, How long should I keep records?
Maintain a separate payroll archive
The IRS requires employment tax records for at least four years after the tax becomes due or is paid, whichever is later. EDD’s employer guide also calls for at least four years of payroll records and at least eight years of service-provider payment records when claiming non-subject or exempt status. Review payroll retention independently of ordinary receipt storage.
Sources: IRS, How long should I keep records?; EDD DE 44 California Employer's Guide 2026 (Rev. 52 (4-26))
Sources: business record retention
Make supporting documents easier to retrieve
Tidwell organizes transaction records and recurring bookkeeping. We work with your CPA on the records needed for year-end review.