What records to keep, and for how long

Most people running a small business keep either everything in a shoebox or nothing at all, and both feel fine right up until somebody asks a question about a transaction from three years ago.

The actual requirement is narrower than the shoebox and wider than the nothing. Here is what to keep, roughly how long, and — the part that matters more — how to keep it so that finding one document later takes a minute rather than an afternoon.

What counts as a record

Anything that explains a number on your tax return. In practice, for a freelancer or a small operator, that is six piles:

• Sales. Every invoice you issued, in a sequence with no gaps, plus every credit note that reduced one.
• Money in. Bank statements, payment processor reports, and receipts you issued for anything paid in cash.
• Money out. Supplier invoices and till receipts for anything you claimed as an expense. A card statement line is not a receipt — it shows an amount, not what was bought.
• Assets. What you bought, when, for how much, and what you sold it for. Cameras, computers, vehicles.
• People. Anything you paid a contractor or an employee, and the forms that went with it.
• The paper around the money. Contracts, signed quotes, purchase orders, and the email where the scope changed.

How long

The common answer in Canada is six years from the end of the tax year the record relates to. In the US it is generally three years, longer in several situations — seven if you claim a bad debt, and indefinitely if you never filed. The UK is five years after the filing deadline for the self-employed.

Check your own authority’s current page rather than trusting any of those numbers including these; this is not tax advice, and the periods change. But notice that the answer is always years, and that the clock usually starts at the end of the tax year rather than on the date of the document — a receipt from January 2026 may need keeping until well into 2033.

A few things are worth keeping longer than required, because they are small and they answer questions the tax rules do not: asset purchase records for as long as you own the thing, and anything relating to a dispute for as long as the dispute could plausibly come back.

Digital is fine. Disorganised is not

Nearly every tax authority now accepts scans and PDFs, provided they are legible, complete, and available when asked for. Photograph the till receipt and throw the paper away — thermal paper fades to blank within a couple of years anyway, which is a real way to lose a deduction you legitimately had.

The rules that actually get tested are boring ones:

• It has to be readable — the whole receipt, not a corner of it at an angle.
• It has to still exist — which means backed up somewhere that is not the laptop, and not only in a browser.
• You have to be able to find it — a folder of 4,000 files named IMG_2841.jpg is technically compliant and practically useless.

A filing scheme that survives

One folder per year, four subfolders inside: Sales, Expenses, Bank, Contracts. That is the whole system, and it beats any elaborate one because you will still be doing it in March.

Name files so they sort themselves: date first, in YYYY-MM-DD form, then who, then what. 2026-08-14 Northwind — INV-0042.pdf sorts chronologically, searches by client, and tells you what it is without opening it. Bindery names your downloads this way already.

Do it weekly, for ten minutes. The reason shoeboxes exist is not laziness; it is that filing eleven months of receipts in one sitting is genuinely awful, so it gets postponed again.

The sequence is the part people break

Invoice numbers should run without gaps, and should not restart at 1 every January unless the year is in the number. A gap invites the question of what used to be there, and a duplicate number is the one error that makes two documents impossible to tell apart later. Invoice numbering that survives an audit covers the formats that hold up.

And when something was billed wrong, correct it with a credit note rather than by editing the original. An amended invoice leaves your copy and the client’s copy disagreeing, with no record of which is current — which is exactly the situation records exist to prevent.