# Keeping the records

> Records are kept until the period they support can no longer be examined: three years in general, at least four for employment tax, longer for assets.

Source: https://lopifi.com/learn/how-long-to-keep-business-records
Part of: Lopifi — US GAAP books on autopilot, checked by a CPA (https://lopifi.com)

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**How long should a business keep its records and receipts?** Records are kept until the period they support can no longer be examined: three years in general, at least four for employment tax, longer for assets.

A record is kept for as long as someone may need to check what it supports. For tax, that's the period in which the IRS can assess more tax or the company can claim a refund. That period has a length, and it starts on a date you can work out.

> “You must keep your records as long as they may be needed for the administration of any provision of the Internal Revenue Code.”

— [IRS Pub. 583 (12/2024), How Long To Keep Records](https://www.irs.gov/publications/p583), Records are kept as long as the Code may need them

| Keep records for | When |
| --- | --- |
| 3 years | In general, from the date the return was filed |
| 3 years from filing, or 2 years from paying the tax, whichever is later | When the company files a claim for a credit or refund after filing |
| 7 years | When the company claims a loss from worthless securities or a bad debt deduction |
| 6 years | When income that should have been reported wasn't, and it's more than 25% of the gross income shown |
| Indefinitely | When no return was filed, or a fraudulent one was |
| At least 4 years | Employment tax records, after the tax is due or paid, whichever is later |
| Until the period ends for the year the asset is sold | Records of property: what it cost and how it was depreciated |

The IRS's retention periods, from the IRS's own guidance.

> “Keep records for 3 years if situations (4), (5), and (6) below do not apply to you. … Keep employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.”

— [IRS, How long should I keep records?](https://www.irs.gov/businesses/small-businesses-self-employed/how-long-should-i-keep-records), How long the IRS expects records to be kept

## On Northwind's dates

If Northwind files its 2026 return on its due date, April 15, 2027, the records behind it are kept at least until April 15, 2030. The third quarter's payroll records count from the later of the deposit and the return, November 2, 2026, so they stay until at least November 2, 2030. The van's purchase invoice is kept for as long as the van is depreciated and until the period runs out for the year it's sold, which is likely to be the longest-kept record in the first month's book.

**Use case — The diligence request.** A diligence team asks for the support behind three expenses from the first quarter. With receipts attached to transactions in the books, that's three clicks. With receipts in inboxes, it's an afternoon, and a missing one is a finding.

> **Payroll keeps its own list.** Pub. 15 lists what employment tax records include: the EIN, the amounts and dates of every wage payment, each employee's name, address, SSN and dates of employment, copies of returns filed, and the dates and amounts of deposits.

> “The federal income tax and employees’ share of social security and Medicare taxes that you withhold from your employees’ paychecks are part of their wages that you pay to the U.S. Treasury instead of to your employees. Your employees trust that you pay the withheld taxes to the U.S. Treasury by making federal tax deposits. This is the reason that these withheld taxes are called trust fund taxes.”

— [IRS Publication 15 (2026), Circular E — Introduction](https://www.irs.gov/publications/p15), Withheld payroll taxes are the government's money, held in trust

Keeping a record means being able to find it. A receipt attached to the transaction in the books is a record. A receipt somewhere in a founder's email is not. The [audit trail](https://lopifi.com/md/glossary/audit-trail) is the books plus the [Evidence](https://lopifi.com/md/glossary/evidence) behind each entry, kept together for the whole [Period](https://lopifi.com/md/glossary/period) someone may ask.

*[Figure: audit trail]*

Why posted entries are reversed, never edited: each event is a link in the chain. Illustrative events.

| Kind | Examples at Northwind |
| --- | --- |
| Gross receipts | Invoices issued, bank deposits, the payment processor's reports |
| Purchases and inventory | Supplier bills, delivery notes, the stock count |
| Expenses | Receipts for every card charge, the lease, the insurance policy |
| Employment taxes | Payroll registers, W-4s, deposits, 941s, W-2s |
| Assets | The van's invoice, its depreciation schedule, and its sale when it's sold |
| The company itself | The certificate of incorporation, the EIN notice, board minutes, the cap table |

What to keep, filed where the books can reach it.

**Wrong:** Receipts live in inboxes, and the old bank exports are deleted once the return is filed.

**Right:** Every receipt is attached to its transaction when it's coded. Each closed year is archived with its return, and nothing is deleted before its period ends.

Most companies keep records longer than the IRS minimum, for lenders, acquirers and states, whose periods can differ. Deleting early saves nothing.

> **Keep each record until the period it supports can no longer be examined, and keep it where the books point to it.**

Where this goes next: [Closing the month](https://lopifi.com/md/learn/closing-the-month) shows the evidence behind each balance, [the R&D credit's records](https://lopifi.com/md/learn/rd-credit-documentation-and-refund-claims) are the strictest a startup keeps, and [fixed assets and depreciation](https://lopifi.com/md/learn/fixed-assets-and-depreciation) is where the van's records come from.

## Where this lesson's rules come from

- [IRS Pub. 583 (12/2024), How Long To Keep Records](https://www.irs.gov/publications/p583) — Records are kept as long as the Code may need them (irs)
- [IRS, How long should I keep records?](https://www.irs.gov/businesses/small-businesses-self-employed/how-long-should-i-keep-records) — How long the IRS expects records to be kept (irs)
- [IRS Publication 15 (2026), Circular E — Introduction](https://www.irs.gov/publications/p15) — Withheld payroll taxes are the government's money, held in trust (tax)

## Read further

- https://lopifi.com/md/startups/audit-ready-books-before-series-a
- https://lopifi.com/md/accounting/audit-trail
- https://lopifi.com/md/docs/domain/08-controls-and-audit

- **Track:** [Back office core](https://lopifi.com/md/learn/core)
- **Lesson:** Lesson 8 of 9 — 7 min
- **Terms taught:** [Audit trail](https://lopifi.com/md/glossary/audit-trail), [Evidence](https://lopifi.com/md/glossary/evidence), [Period](https://lopifi.com/md/glossary/period)
- **Previous:** [The founder's annual calendar, Core · Lesson 7](https://lopifi.com/md/learn/startup-back-office-calendar)
- **Next:** [Set up your back office in a week, Core · Lesson 9](https://lopifi.com/md/learn/set-up-a-startup-back-office)
- **The course:** https://lopifi.com/md/learn