So, now that you’ve set up your record-keeping systems for your home business, perhaps you’ve wondered exactly HOW LONG you have to store and keep your documents and records. While it will definitely depend on the type of business you are operating, and I would suggest checking with your legal and/or financial advisor regarding your specific situation–here are some general guidelines:
The Internal Revenue Service (the IRS) generally has three years to audit a tax return. This is called the “period of limitations.” It is a good idea to keep all your important and pertaining tax documents for at least three years. You should keep your tax returns for at least six years, but many experts recommend keeping them forever.
If you itemize your tax returns and list all your business expenses as deductions, it is a good idea to save all the receipts and documentation with your tax returns for the minimum six years (or forever, if you keep your tax returns that long.) This goes for any balance sheets, or records of income and expenses that you may be keeping for your business.
Records that document income and expenses–such as check records, deposit receipts, bank statements, etc. should be kept at least three years, but many financial specialists suggest at least seven years to be on the safe side.
If you make investments with your business, you should hold on to any important records or documents until the investment has been sold. For Real estate investments, however, it is suggested that you hold onto any paperwork and documents for seven years AFTER you’ve actually sold or transferred the property.
If you itemize your tax returns and list all your business expenses as deductions, it is a good idea to save all the receipts and documentation with your tax returns for the minimum six years (or forever, if you keep your tax returns that long.)
See Also: How Are You Keeping Your Records?, Keeping Track of Business Expenses and You Can Do a Lot With a Spread Sheet