How long do I need to keep my business records?

The IRS recommends the following retention periods:

1. General Rule:

• Keep records for at least 3 years from the date you file your return (or 2 years from the date you pay the tax, whichever is later).

2. If You Underreport Income:

• Retain records for 6 years if you underreport income by more than 25%.

3. Employment Tax Records:

• Keep all payroll/employment tax records (W-2s, 941s, payroll registers) for at least 4 years after the tax is due or paid.

4. Business Assets (Property, Equipment, Vehicles):

• Retain records for as long as you own the asset PLUS 7 years after disposal (for depreciation and sale reporting).

5. Records Involving Fraud or Unfiled Returns:

• Keep indefinitely if no return was filed or in cases of suspected fraud.