Seven years is the safe default. If you keep all receipts, invoices, and financial records for seven years from the date you filed the related tax return, you’re covered for nearly every situation the IRS or Virginia Department of Taxation might raise.

The IRS generally has three years from when you file to audit a return. That extends to six years if they believe you underreported income by more than 25%. Seven years covers you if you claimed a bad debt deduction or loss from worthless securities. Beyond that, there’s no time limit if fraud is involved, but at that point you have bigger problems than document retention.

Different records have different requirements. General business receipts and invoices should be kept seven years from the tax year they apply to. This includes everyday expenses, vendor payments, and sales records. Bank statements and canceled checks also fall into the seven-year category since they often serve as backup documentation when receipts go missing.

Employment records need to stay on file for at least four years after an employee leaves. This includes payroll records, W-4s, I-9s, time sheets, and benefit records. Asset and property records require a longer view. Keep these for as long as you own the asset plus seven years after you sell or dispose of it. You’ll need the original purchase documentation to calculate depreciation and prove your cost basis when you eventually sell.

Some documents you should never throw away. Corporate formation documents, articles of organization, meeting minutes, and amendments to your business structure fall into this permanent category. Major contracts and partnership agreements belong here too.

For practical storage, digital is fine. The IRS accepts electronic records as long as they’re legible and you can produce them if asked. Scan paper receipts when they come in. Thermal paper receipts fade within a few years, so don’t rely on the originals lasting. A Tri-Cities bookkeeper can help you set up a system that captures documentation as transactions happen rather than scrambling to find things later.

Good monthly bookkeeping handles most of this naturally. Receipts get attached to transactions, invoices get filed with payments, and the underlying documentation stays organized alongside your books. When you need to find something three years later for an audit or a vendor dispute, it’s there.

If your records are a mess going back years, don’t panic. Focus on getting the current year organized first. The past can be sorted out, but getting current operations clean matters more.