The general IRS rule
The IRS generally recommends keeping records for three years from the date you file a return. It extends to six years if you left out more than 25% of your income, and indefinitely if you did not file or filed a fraudulent return. Records of bad debt deductions are typically kept for seven years.
Employment tax records
Keep employment tax records for at least four years after the tax is due or paid, whichever is later. This includes payroll reports, deposits, W-4s and W-9s.
Keep long-term
Formation documents, operating agreement, EIN letter, tax returns, annual financial statements, asset purchase records, loan documents and lease agreements. Keep property and equipment records until the limitations period ends for the year you dispose of them.
Keep digitally
Scanned records are generally acceptable. Store them in a folder that is backed up, with consistent names like year, vendor and date. Photos of receipts attached to the transaction in your software work well.
Do not forget state rules
New Jersey has its own retention expectations for tax records. Check the Division of Taxation guidance, and keep sales tax and payroll records longer when in doubt.
Worked example with numbers
Think in groups. A receipt supporting the 2026 return should be kept at least as long as the IRS can review that return, and longer for employment tax records and records of property you still own, which can support later depreciation or sale calculations. Check the exact periods in the IRS recordkeeping guidance, and your state's rules for payroll and sales tax records.
A simple system: a folder per tax year, a separate 'keep long-term' folder for formation documents, property and loan records, and a yearly purge date.
Mistakes that cost money
Shredding before the period ends. Keeping everything forever so nothing can be found. Scanning without backing up. Forgetting records held by software vendors you may stop paying.
Check your work
Every January, move the prior year to archive and confirm the backup opens.
Common questions
Can I shred paper receipts after scanning?
Generally yes if the scan is clear and complete, but ask your tax professional, especially for large purchases.
Where should I keep digital records?
In a secure, backed-up cloud folder that you own, not only on one computer.
This guide is general information, not tax, legal or accounting advice. Rules, fees and due dates change; check with the IRS, the NJ Division of Taxation or a licensed professional for your situation.