Which Invoice Records Should My Business Keep?

By Bill Stilwell · Last reviewed October 17, 2026

The short answer

Keep a record of every invoice you issue, including ones that were paid, unpaid, disputed, voided, or written off. Never delete an invoice. Mark its status instead, and keep notes on what happened. Invoices are part of your income records, so keep them at least as long as the Internal Revenue Service (IRS) can examine the return they support.

What this means

An invoice is a bill you send a customer. It’s also proof of income. The IRS lists invoices among the supporting documents that back up your gross receipts.

Each invoice has a status over its life:

Issued. Sent and waiting for payment.
Paid. Paid in full, with the date and method.
Partly paid. Some money received, some still owed.
Disputed. The customer questions part or all of it.
Voided. Canceled because it was sent in error. The record stays.
Written off. You’ve decided you won’t collect it.

Made-up example: Harbor Point Pest Control sent a $425 invoice that the customer disputed. The tech’s notes and photos showed the work was done, but the customer said the price wasn’t explained. The owner agreed to a $75 credit, recorded it on the invoice, and noted why. A year later, the customer asked about it again. The full history was right there.

Why it matters

Invoices prove income. Gaps or deleted invoices raise questions in an audit.
Deleted invoices break the trail. If numbers skip, it looks like something is hidden.
Disputes need history. You need the original terms, changes, and payments to resolve a complaint (see 14.6.4 Negative Review Escalation).
Write-offs affect taxes. How you handle uncollected invoices depends on your accounting method. Ask your tax pro (see 10.1.4 Accounting Method).

Who this applies to

Any business that bills customers after the sale or for a project. Retail and food businesses paid on the spot keep register and sales records instead, which serve the same purpose.

How to do it

Use your bookkeeping or invoicing software to create every invoice, so each gets an automatic number.
Use numbers in order and never reuse one.
Void, don’t delete. If an invoice was wrong, void it and issue a new one. Note why.
Record every payment against the right invoice, with the date and method.
Mark disputes with a status or tag, and add notes on what the customer said and what you did.
Record credits and discounts as their own line or credit memo, with the reason.
Write off only with approval. Decide who can approve a write-off and record the date and reason (see 10.6.1 Spending and Refund Authority).
Attach supporting files like the signed estimate, change orders, and job photos.
Keep invoice records for the full retention period (see 9.8.2 Record Retention Periods).

What proof to keep

Every invoice, in every status
Payment records tied to each invoice
Credit memos, write-off approvals, and dispute notes
The signed estimate or agreement behind each invoice

Common mistakes

Deleting invoices instead of voiding them.
Creating invoices outside your system, like in a word processor, so they never reach your books.
Applying a payment to the wrong invoice, which makes one look paid and another look overdue.
Giving credits with no note. Later, nobody remembers why.
Writing off invoices too fast without a collections process (see 16.6.5 Late Payments and Collections).

When to get help from a pro

A certified public accountant (CPA) can explain how write-offs and bad debts work for your accounting method. Questions to ask:

How do I handle an unpaid invoice on my taxes under my accounting method?
How long should I keep invoices and their supporting files?
Should credits and discounts be recorded separately from sales?

Bill’s note

[Bill: add a short note. For example, how you track invoice status for SiteSmarty clients, or a time clear invoice notes helped settle a billing question without a fight.]

How I did this for SiteSmarty

[Date I did this:]
[What I actually did, step by step: which invoicing tool I use, how I number invoices, and how I mark status]
[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 invoice list filtered by status]
[Result so far:]

Questions people ask

Should I keep invoices that were never paid? Yes. Mark them unpaid or written off, but keep the record.

Can I delete an invoice I sent by mistake? Void it instead and note why. Deleting leaves a gap in your numbering and your income records.

How do I record a disputed invoice? Mark it disputed, add notes on the issue, and record any credit you give as its own entry.

Do invoices need numbers? Numbers in order make every invoice easy to find and show none are missing. Most invoicing software adds them for you.

Audit check

Question: Does the business keep every invoice it issued, in number order, with a current status, payments, and notes on credits, disputes, and write-offs?
Pass looks like: No gaps in numbering. Voided invoices kept with reasons. Payments applied correctly. Write-offs approved and noted.
Fail looks like: Deleted invoices. Invoices made outside the system. Credits with no reason. Disputes with no notes.
Evidence to collect: An invoice list for the last 12 months sorted by number, plus three sample invoices with payment history and notes.

Where this fits

Do this first: 10.5.4 Receipt Storage

Do this next: 10.5.6 Accounts Receivable

Sources

IRS, "What kind of records should I keep" (checked October 17, 2026)
IRS, "How long should I keep records?" (checked October 17, 2026)
IRS, Publication 583, "Starting a Business and Keeping Records" (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.