What records should a small business keep?

Income records (invoices, receipts of payment, bank deposits), expense records (receipts, statements), legal records (registrations, contracts, insurance), and tax records (filed returns and everything that supports them).

If a document doesn't belong to one of these piles, ask whether you'd need it to prove income, justify an expense, or defend a contract. If not, you probably don't need to keep it.

Common practice in many places is to keep tax-supporting records for several years after filing — often three to seven. Contracts and registrations are usually kept for the life of the business.

Retention rules vary by country, state, and your business structure, so treat these ranges as a starting point and confirm with a professional where you file.

Digital is fine for most records — a clearly named folder per year per pile. Keep originals only where originals matter (signed contracts, registrations).

Whatever you choose, consistency beats sophistication. A simple system you actually use protects you better than an elegant one you abandon.

Set up four folders today — Income, Expenses, Legal, Tax — and move this year's documents in. The free Monthly Bookkeeping Checklist keeps the piles tidy month by month.