Keeping invoices how long

HMRC has the legal right to check your business records at any time to ensure that the correct amount of tax has been paid. Keeping records of invoices will also mean you can collect any unpaid customer invoices.

An invoice entitles you to payment from the customer. Keeping records of these documents will allow you to begin legal proceedings to collect overdue payments , if necessary. This will usually take around two hours. During the inspection, the HMRC officer will ask you to explain how you run your business, note how you keep your business records, check a sample of your business records, and assess whether or not your business records are adequate.

If your records are deemed inadequate, HMRC will give you the chance to rectify any issues and tell you what improvements need to be made. To avoid fines from HMRC, always keep invoices for at least 6 years from the end of the fiscal year it relates to. Normally, you should then try to recreate the documents as best as you can. With SumUp Invoices , you can keep your invoices stored in order and always have easy access.

Archiving your old invoices can also help you organise your invoice list so it only includes invoices from the current financial year. It can also aid in tax preparation and tax audit defense, if necessary. When a supplier, vendor, contractor or service provider sends you an invoice, record the transaction in a hard copy or electronic accounting ledger or program. Attach a copy of the purchase order request and the check or electronic transmission documentation. If the invoice is billed to a certain individual or department, note this on the invoice for tracking and record-keeping purposes.

This process will help with budgeting and will provide proof of payment, should you need it. When you send an invoice to a client or customer, record the transaction and attach a copy of the check or electronic payment when received. If you have to send multiple follow-up invoices before getting paid, attach each subsequent document to the original to establish a paper trail.

Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return.

Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction. Keep records indefinitely if you do not file a return. Keep records indefinitely if you file a fraudulent return. Keep employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.

Are the records connected to property? What should I do with my records for nontax purposes? While you need to present tax filings and supporting documents if you are audited or you wish to amend a previous tax return, there are many reasons for retaining other types of documents and records. Here are a few of them:. The records and documents that businesses should have if they need to address most situations include:. Keep business income tax returns and supporting documents for at least seven years from the tax year of the return.

The IRS can audit your return and you can amend your return to claim additional credits for a period that varies from three to seven years from the date you first filed.

These time frames are known as "periods of limitations. The IRS suggests retaining employment tax records for a minimum of four years after the tax becomes due or has been paid, whichever is later.

Employment tax records include:. Business owners typically deduct costs for property and equipment that are used for the business, which reduces their tax bills. Owners might also claim deductions for the depreciation of property or equipment, or they might amortize costs like franchise fees. Depreciation is a calculation of the declining value of a tangible asset over time.

Amortization refers to a similar calculation when the asset is not tangible. Because these types of records are usually part of your tax return, you should follow the same rules for tax records, counting the year that you disposed of the property as the start of the period of limitations. Keep deeds for property and titles to vehicles among these records. When you sell one business property and buy another in an exchange such as a Exchange, you will want to retain the records on the property you sold as well as the property you acquired until the period of limitations runs out on the new property.

Depending on your business and the state where you are located, you might have many types of HR records that fall under the jurisdiction of different government agencies. Generally, you will need to keep the most common types of forms and documents, like employment and job application records, family leave documents, performance reviews, and benefit election documents, for three to five years, depending on the record and the state where your business is located.

Workers' compensation records. Requirements and laws for retaining records on employees who are injured in the workplace vary by state, and you should check with the responsible state agency for guidelines on keeping these records.