How long do I need to keep invoices?
Best practices for keeping a record of your invoices.
Businesses need to store different documents and records for different amounts of time, and it’s important to follow the guidelines. But you may be asking yourself, “How long do I need to keep invoices? And, how should those invoices be stored to keep businesses in compliance with federal law?”
Why is it important to keep invoices?
It’s a wise idea to keep all of your business documents — receipts, statements, payroll records, and invoices. Keeping your invoices, in particular, can help balance your budget and manage your accounts payable and receivable functions, as it gives you a clear picture of how much you’ve billed. These tips can help you best manage your records so that you don’t feel overwhelmed by too much paperwork on file.
How long does a business need to keep invoices?
It’s not just a good idea to keep solid records — the IRS also requires it from you as a business owner. So, how long does a business need to keep invoices? The general rule is to keep your invoices for at least three years. This is the case with most supporting documents as well, including receipts, bank statements, payroll records, and any other documentation that relates to income, deductions, or credits on your tax return.
The burden of proof is on you as a business owner to back up every item you report on your tax return with documentation. When you’re unsure whether to keep a certain document, always err on the side of caution and keep it.
How long does a business need to keep invoices for customers?
It’s one thing to store your own invoices, but how long do you have to keep invoices sent to clients? It’s important to save client invoices in case they lose the copy you shared with them or request additional copies for their own records or business needs. Like other essential business documents, the IRS recommends keeping client invoices for a minimum of three years.
Can I only keep digital versions of invoices?
As long as the digital version of a document is legible, the IRS will accept them. In fact, when the IRS requests documents, it recommends scanning, taking photos, or creating digital versions of those documents so you can easily upload them to the IRS website.
It’s key to have a plan to keep important documents safe in a disaster, which is where digitizing invoices is a benefit. Plus, digital documents save on storage space and are easy to share and organize. You can use a document scanner if you have physical invoices you want to store digitally for safekeeping.
Go paperless to keep invoice records safe.
Recordkeeping is a whole lot less daunting when you can do it online. Electronic invoices and documents save you the burden of keeping paper records safe, secure, and organized. Create digital invoices, store them on your computer, and explore what else you can do with Adobe Acrobat..
