How Long Must I Keep Business Records?

In the time I have been writing this Blog and GuideSite, I can't believe I have never addressed this question.  And it is certainly one of the most common questions asked by business people.  Today, I will attempt to give you some guidelines:

What Does the IRS Say?

With questions like this, I always start with the definitive source of information: The IRS. Here is what the IRS says in answer to this question, as it relates to various business taxes:

For Business Income Taxes:

You must keep records as long as they may be needed for the administration of any provision of the Internal Revenue Code. Generally, this means you must keep records that support your deduction (or an item of income) for 3 years from the date you file the income tax return on which the deduction is claimed. A return filed early is considered filed on the due date.

For Employment Taxes: You must keep all employment tax records for at least 4 years after the date the tax becomes due or is paid, whichever is later.

For Business Assets:

Keep records relating to property until the period of limitations expires for the year in which you dispose of the property in a taxable disposition. You must keep these records to figure any depreciation, amortization, or depletion deduction, and to figure your basis for computing gain or loss when you sell or otherwise dispose of the property.   Generally, if you received property in a nontaxable exchange, your basis in that property is the same as the basis of the property you gave up, increased by any money you paid. You must keep the records on the old property, as well as on the new property, until the period of limitations expires for the year in which you dispose of the new property in a taxable disposition.