How Long Should You Keep Invoices and Receipts? Record-Keeping Rules for Small Businesses

The number that actually matters

Most people assume the answer is "seven years" and stop thinking about it. That's a myth borrowed from old accounting habits, and following it blindly means you either shred documents too early or drown in paper you never needed to keep.

The real answer depends on where you file, what kind of record it is, and whether your return is ordinary or messy. The retention clock is tied to how long your tax authority can come back and question a return, plus a buffer for edge cases like unreported income or losses carried forward. Get that framing right and the country-specific rules fall into place quickly.

Here's what each of the four major English-speaking tax authorities expects, followed by the practical stuff: what counts as a "record," how to store it digitally, and when the standard period stretches.

The baseline periods by country

These are the general rules for a self-employed person or small business. Thresholds and rules can change, so confirm the current position with your tax authority or an accountant before you bin anything.

United States (IRS)

The default is three years from the date you filed the return (or the due date, whichever is later). That's the standard window in which the IRS can audit a straightforward return and you can amend one.

The window widens in specific situations:

• Six years if you underreported gross income by more than 25%.
• Seven years if you're claiming a loss from worthless securities or a bad-debt deduction.
• At least four years for employment tax records (if you have contractors or staff), counted from the date the tax was due or paid.
• Indefinitely if you never filed a return, or if a return was fraudulent. There's no statute of limitations on those.

Records tied to property (equipment, a vehicle, a home office) should be kept until the limitations period runs out for the year you dispose of that property, because you need the purchase records to calculate depreciation and gain or loss.

United Kingdom (HMRC)

If you're a sole trader or in a partnership filing Self Assessment, keep records for at least five years after the 31 January submission deadline of the relevant tax year. So for the 2024/25 tax year (deadline 31 January 2026), you'd keep records until roughly 31 January 2031.

Limited companies work on a different clock: six years from the end of the accounting period.

VAT records get their own rule: six years (or 10 years if you use certain VAT accounting schemes for digital services). If VAT registration is on your radar, the VAT registration guide and the UK VAT invoices explainer cover what those invoices need to contain in the first place.

HMRC can extend its assessment window to 6 years for carelessness and up to 20 years where deliberate behaviour is involved, so the five-year floor is a minimum, not a ceiling.

Canada (CRA)

The general rule is six years from the end of the last tax year the records relate to. For a calendar-year sole proprietor, records for the 2025 tax year should be kept until the end of 2031.

Some nuances:

• If you file a return late, the six years run from the date you actually filed.
• If you file a notice of objection or appeal, keep the relevant records until the matter is resolved and the appeal period ends.
• To destroy records before the six years are up, you technically need written permission from the CRA (Form T137).

Australia (ATO)

Keep most records for five years, generally counted from when you prepared or obtained the record, or completed the transaction, whichever is later. If a record is used in a later return (for example, an asset you depreciate over several years), the five years start from the later filing.

The five-year period restarts on records connected to a dispute or amendment until that's settled. Capital gains tax records for an asset should be kept for five years after you sell it. Australia's tax invoice rules also dictate what a compliant invoice must show, which matters because an incomplete invoice can undermine a GST credit claim years later.

What "records" actually means

"Invoices and receipts" is shorthand. Tax authorities expect a complete enough trail that someone could reconstruct your income and expenses from scratch. Keep:

• Sales invoices you issued, in sequence. Good invoice numbering makes gaps obvious, which is exactly what an auditor looks for.
• Purchase invoices and expense receipts you received, including small cash receipts.
• Bank and credit card statements for business accounts.
• Proof of payment: remittance advice, payment processor reports, transfer confirmations.
• Mileage or vehicle logs, and records supporting home-office claims.
• Payroll and contractor records (in the US, that includes filed 1099-NEC forms and the W-9s you collected).
• Credit notes and refunds, since a credit note changes the amount actually owed on an earlier invoice.

An invoice and a receipt are not interchangeable. One requests payment; the other proves it was made. If you're fuzzy on the distinction, the invoice vs receipt breakdown is worth a look, because an auditor may want both halves of a transaction.

A worked example of the clock

Say you're a UK freelance designer. In August 2025 you buy a £1,400 laptop and expense it. That purchase belongs to the 2025/26 tax year, deadline 31 January 2027. Your five-year floor runs to roughly 31 January 2032. If you'd instead treated the laptop as a capital asset used over several years, you'd want the receipt for as long as it affects your figures, plus the retention period after that. The takeaway: the item doesn't leave your file when you stop using it, it leaves when the tax window for its last relevant year closes.

Digital storage: what's allowed

Every one of these four authorities accepts electronic records. None of them require the original paper, provided the digital version is a true, complete, and legible copy that you can produce on request. A photo of a receipt taken the day you got it is generally fine, and often better than a faded thermal-paper original that will be blank in two years.

Practical standards to meet:

• Legibility and completeness. The whole document must be readable, including totals, dates, tax amounts, and the supplier's details.
• Accessibility. You must be able to retrieve and produce records reasonably quickly if asked. A drive you can't find the password for doesn't count.
• Integrity. Records shouldn't be easily altered after the fact. Cloud accounting software with an audit trail satisfies this better than a folder of loose JPEGs.

Country-specific notes:

• UK: Making Tax Digital rules require many businesses to keep digital records and file using compatible software, so digital isn't just permitted, it's increasingly mandatory.
• Canada: Electronic records must be kept in an electronically readable format even if you also have paper. If your records are stored on servers outside Canada, the CRA may require access or that copies be kept in Canada.
• Australia and the US: Both accept scanned or born-digital records as long as they're accurate and retrievable for the full retention period.

A workable system for a solo operator: one accounting app connected to the business bank account, receipt capture by phone photo at the point of purchase, and an annual export (PDF plus CSV) backed up to a second location. That redundancy matters, because "my laptop died" is not a defence a tax authority accepts.

Keeping records longer than required

There are good reasons to hold some documents beyond the minimum:

• Contracts and warranties outlive the tax window and can matter in a dispute. Notes on what to do when a client won't pay become far stronger with the original invoice, terms, and payment reminders on file.
• Asset records for anything you might sell later (equipment, property, goodwill) support the eventual gain or loss calculation.
• Loss carryforwards mean the "year" a record supports can be well in the future. If you're carrying a loss forward five years, the records that created it stay relevant that whole time.

When in doubt, storage is cheap and reconstruction is expensive. A well-organised digital archive costs almost nothing to keep for a couple of extra years.

A simple retention policy you can adopt

1. Default to your country's longest common period: 6 years (US safe side, UK companies/VAT, Canada) or 5 years (UK sole traders, Australia). Holding everything for 6–7 years covers almost every ordinary case across all four jurisdictions.
2. Never delete records tied to an open audit, objection, or dispute.
3. Keep asset and property records until the retention period after you dispose of the item.
4. Store digitally with a backup, capture receipts at the moment of purchase, and export your books once a year.
5. Confirm the current rules with your tax authority or accountant before destroying anything, since periods and thresholds do change.

Set a recurring reminder each year to purge the batch that has genuinely aged out, and only that batch. That single habit keeps you compliant without turning your files into a landfill.