How Long Should a Small Business Keep Records?

By Bill Stilwell · Last reviewed October 17, 2026

The short answer

Keep most tax records at least 3 years after you file the return, employment tax records at least 4 years, and longer in special cases. The Internal Revenue Service (IRS) says 6 years applies if income was underreported by more than 25 percent, 7 years for a bad debt or worthless securities claim, and there’s no limit if a return was never filed or was fraudulent. Payroll, hiring, immigration, and safety records each have their own federal minimums, and your state, contracts, and insurance may require more.

What this means

A retention period is how long you keep a record before you can safely destroy it. The clock usually starts at an event, like the date you filed a return, the end of a calendar year, or the day an employee leaves.

Here are the main federal minimums:

Record	Federal minimum	Source
Tax records, general rule	3 years from filing the return	IRS
Tax records if income underreported by more than 25 percent	6 years	IRS
Records for a bad debt or worthless securities deduction	7 years	IRS
Records when no return was filed, or a fraudulent one	No limit	IRS
Records for a refund claim	Later of 3 years from filing or 2 years from paying the tax	IRS
Employment tax records	At least 4 years	IRS
Payroll records	At least 3 years	DOL
Time cards and wage rate tables	2 years	DOL
Form I-9	3 years after hire or 1 year after employment ends, whichever is later	USCIS
Personnel and hiring records	1 year, or 1 year from the date of an involuntary termination	EEOC
OSHA injury and illness logs and reports	5 years after the end of the year they cover	OSHA

The agencies: the Department of Labor (DOL), U.S. Citizenship and Immigration Services (USCIS), the Equal Employment Opportunity Commission (EEOC), and the Occupational Safety and Health Administration (OSHA).

Records for property, like a building or a truck, follow a different rule. The IRS says to keep them until the period of limitations ends for the year you sell or dispose of the property, since you’ll need them to figure your gain or loss.

Made-up example: Clearwater Pool Service filed its 2025 return in April 2026. Its general receipts for 2025 can’t be destroyed before April 2029 under the basic 3-year rule. Its payroll tax records stay at least until 2030. Its truck purchase papers stay until 3 years after it files the return for the year it sells the truck.

Why it matters

Audits look back. If you shred receipts too early, you can’t prove deductions.
Claims come later. Wage and discrimination claims can arrive after an employee leaves.
Shorter is risky, longer has costs. Keeping everything forever means more data to protect and more exposure if you’re hacked. Keep what you need for as long as you need it.

Who this applies to

Every business. Employee, I-9, and OSHA rules apply once you hire, and OSHA logs apply to many employers with more than 10 workers. States often set longer periods for state tax, payroll, and licensing records. Check with your state tax department, state labor department, and licensing board.

How to do it

Open your records list from 9.8.1 Required Records.
Add a “keep for” column and fill in the federal minimum from the table above.
Check your state rules and use the longer period when they differ.
Read your contracts and insurance policies for record clauses. Use the longest period that applies.
Ask your CPA what your own tax situation calls for. Many owners keep tax records for 7 years to cover most cases.
Add a “keep until” date for each batch, like “2025 receipts: keep until April 2032.”
Mark permanent records. Formation papers, ownership records, and property records you still own stay as long as the business or the asset does.
Set a yearly reminder to review what’s past its date (see 9.8.5 Secure Record Destruction).
Never destroy anything on legal hold, no matter the date (see 9.8.6 Legal Hold).

What proof to keep

Your written retention schedule, dated and signed off by the owner
Notes on where each period came from
A log of what was destroyed and when

Common mistakes

Using one rule for everything. Three years is the general IRS rule, not the rule for every record.
Starting the clock on the wrong date. Most tax periods run from when you filed, not when you made the purchase.
Tossing property records too soon. You need them until the period runs out after you sell the asset.
Throwing out former employees’ files right away. I-9 and personnel rules keep them around after they leave.
Ignoring state rules. Many are longer than federal ones.
Keeping everything forever. That raises storage costs and privacy risk.

When to get help from a pro

CPA: for tax record periods. Employment attorney or payroll professional: for employee records and state rules. Questions to ask:

Are any of my records subject to periods longer than the federal minimum?
Should I keep tax records longer than 3 years given my situation?
What does my state require for payroll and personnel records?

Bill’s note

[Bill: add a short opinion. For example, how long you keep SiteSmarty records and why, or a time an old record settled a client dispute.]

How I did this for SiteSmarty

[Date I did this:]
[What I actually did, step by step: how I set the SiteSmarty retention periods and where the schedule lives]
[What it cost and how long it took:]
[What surprised me or what I’d do differently:]
[Screenshot or photo to add, with private info blurred: the SiteSmarty retention schedule]
[Result so far:]

Questions people ask

How long should I keep tax records? At least 3 years after filing in most cases. Longer for underreported income (6 years), bad debts or worthless securities (7 years), and with no limit if no return or a fraudulent one was filed.

How long do I keep payroll records? At least 3 years for payroll records under federal wage law, and at least 4 years for employment tax records under IRS rules.

How long do I keep a Form I-9? Three years after the hire date or one year after the job ends, whichever is later.

How long do I keep OSHA injury logs? Five years after the end of the calendar year they cover.

When can I throw records away? After the longest period that applies has passed and no legal hold is in place. Then destroy them securely.

Audit check

Question: Does every record type have a written retention period based on federal, state, contract, and insurance rules?
Pass looks like: A dated schedule with a period and source for each record. Longest rule used. Legal holds override dates. Yearly review on the calendar.
Fail looks like: No schedule. One period used for everything. Records destroyed early or never.
Evidence to collect: The retention schedule, the destruction log, and sample records showing dates are followed.

Where this fits

Do this first: 9.8.1 Required Records

Do this next: 9.8.3 Record Storage and Access

Sources

IRS, "How long should I keep records" (checked October 17, 2026)
IRS, Publication 583, "Starting a Business and Keeping Records" (checked October 17, 2026)
IRS, "Common questions about recordkeeping for small businesses" (checked October 17, 2026)
DOL Wage and Hour Division, Fact Sheet 21 (checked October 17, 2026)
USCIS, "Retaining Form I-9" (checked October 17, 2026)
EEOC, "Recordkeeping Requirements" (checked October 17, 2026)
OSHA, 29 CFR 1904.33, "Retention and updating" (checked October 17, 2026)

This page explains general rules and Bill's own experience. It is not legal, tax, or insurance advice. Talk to a qualified professional about your situation.