Quick answer: Keep most records that support a tax return for at least three years after you file it, because that is the general IRS audit window. Keep employment tax records at least four years, and New York payroll records at least six. Keep records for property and equipment until several years after you sell it, and keep tax returns, formation documents, and major contracts permanently.
Every few months someone asks us whether they can finally throw out the boxes in the basement. Sometimes the answer is yes, and sometimes we find the purchase records for a building they sold last year sitting in the box headed for the shredder. Here is a practical guide to what to keep and how long, based on the federal and New York rules.
Why the retention period matters
The IRS generally has three years from the date you file a return to assess additional tax. That window is longer in some situations:
- Six years if you underreported income by more than 25 percent of what you reported.
- Seven years for a claim involving a bad debt deduction or worthless securities.
- No limit if you never filed a return or filed a fraudulent one.
New York's general assessment period is also three years, with similar extensions. If the IRS changes your federal return, you must report that change to New York, which can extend the state's window. The IRS's guidance on how long to keep records lays out the federal rules.
A practical retention schedule
Here is the schedule we recommend to most small businesses in Syracuse and Central New York.
Keep permanently:
- Filed federal and state tax returns
- Formation documents, operating agreements, bylaws, and minutes
- Ownership records, stock or membership ledgers
- Major contracts, deeds, and mortgages
- Year-end financial statements and general ledgers
Keep until at least three years after the property is sold or disposed of:
- Purchase records for real estate, vehicles, and equipment
- Records of improvements to buildings
- Depreciation schedules
These records establish your basis, which determines your depreciation and your gain or loss when you sell. Because you need them for the return covering the year of sale, the clock does not start until then.
Keep at least seven years:
- Bank and credit card statements
- Receipts, invoices, and bills supporting deductions
- Sales records and accounts receivable
- Sales tax returns and supporting detail
Three years is the minimum for many of these, but keeping seven covers the longer assessment periods and is a safe, simple rule.
Payroll and employment records:
- The IRS requires employment tax records to be kept at least four years after the tax is due or paid, whichever is later.
- New York generally requires employers to keep payroll records, including hours, rates, and pay notices, for six years.
- Keep Forms I-9 for three years after hire or one year after employment ends, whichever is later.
Because New York's six-year rule is the longest, many employers simply keep all payroll records for six years.
Paper or digital?
The IRS accepts electronic records as long as they are accurate, complete, readable, and retrievable. Scanning receipts and keeping them in organized folders, or attaching them to transactions in your accounting software, is perfectly acceptable.
A few cautions:
- Back up your files in at least two places, one of them offsite or in the cloud.
- Do not rely on vendors to keep records for you. Bank portals and software providers may only keep a limited history, and accounts can close.
- Export your accounting data at year-end in case you ever change software.
- Keep your files organized by year, so old years can be deleted cleanly when their time comes.
Thermal paper receipts fade within months. Scan them right away.
What about personal and rental records?
The same principles apply to individuals and landlords. Keep personal tax returns permanently, supporting records for at least three years, and records of home purchases, improvements, and investment purchases until several years after you sell. If you own rentals, our article on tracking rental income and expenses covers which property records matter most.
How to dispose of old records safely
When a year's records have aged out, shred them rather than throwing them away. Business records contain taxpayer identification numbers, bank account numbers, and employee information. Many communities hold free shredding events, and commercial shredding services are inexpensive.
Before you shred, make sure there is no open audit, pending claim, lawsuit, or unresolved tax notice involving that year. If there is, keep everything until it is resolved.
If your records are a mix of shoeboxes and folders and you would like a better system, our bookkeeping and payroll services can help set one up.
Frequently asked questions
How long should a small business keep tax records?
Keep the records supporting each return for at least three years after filing, and seven years to be safe. Keep the returns themselves permanently. Records tied to property and equipment should be kept until several years after you sell the asset.
How long do I need to keep payroll records in New York?
New York generally requires employers to keep payroll records for six years. The IRS requires employment tax records for at least four years. Keeping all payroll records for six years satisfies both.
Is it okay to keep only digital copies of receipts?
Yes. The IRS accepts electronic records that are accurate, legible, and retrievable. Scan receipts promptly, organize them by year, and back up your files in more than one place.
Should I keep bank statements for my business?
Yes. Bank and credit card statements support your income and expenses and help reconstruct records if anything is lost. Keep them for at least seven years.
This article is general information for 2026, not tax or legal advice for your situation. Tax rules and figures change; confirm current amounts with the IRS, New York State, or your accountant before acting.
Related service: Bookkeeping & Payroll