You clear out your inbox. You delete old project files. You generally try to keep things tidy. But when it comes to old invoices, most freelancers and small business owners do one of two things: keep absolutely everything forever, or delete things far too soon and quietly panic about it later.
Neither approach is ideal.
The truth is, there are actual rules about how long you need to hold onto your financial records, and they differ depending on whether you're filing with the IRS or the CRA, what kind of business you run, and whether you're registered for sales tax or GST/HST.
This guide covers the rules clearly, for both the United States and Canada, so you know exactly what to keep, for how long, and why it matters.
Why keeping invoices matters in the first place
Before we get into timelines, it's worth understanding why this matters beyond just "the tax office says so."
Invoices are your proof. If the IRS or the CRA ever audits your business, your invoices are the evidence that your income figures and expenses are accurate. Without them, you're essentially asking the tax authority to take your word for it, and they won't.
They protect you legally. A client claims they never received your work? An invoice with a date and a description is evidence. A supplier overcharges you and disputes your complaint? Your original invoice is proof of what was agreed.
They help your accountant. Come tax season, having well-organised records saves you money. Accountants charge by the hour. Handing them a shoebox of scraps versus a tidy folder of records is the difference of potentially hundreds of dollars.
Simply put: invoices are not just admin. They are your financial safety net.
US rules: how long to keep invoices
In the United States, the IRS sets the standard, and the rules are tied to the statute of limitations for tax audits, rather than a fixed calendar deadline.
The general rule: 3 years
For most individuals and businesses, the IRS has 3 years from the date you filed your return to audit you. That means you should keep your invoices and supporting records for at least 3 years from the filing date (or the due date of the return, whichever is later).
For example, if you filed your 2023 tax return on 15 April 2024, keep those records until at least April 2027.
When it's 6 years
The 3-year window extends to 6 years if the IRS believes you underreported your income by more than 25%. That's not a comfortable threshold to be close to, and since you can't always know in advance whether a discrepancy might be flagged, many accountants recommend keeping records for 6 years as the safe default.
When it's forever (or close to it)
If you never filed a return for a given year, or if the IRS suspects fraud, there is no statute of limitations at all. The IRS can go back indefinitely. This is a good reason to file your returns on time, every time, even if you can't pay the full amount owed right away.
State taxes
Don't forget that states have their own tax rules. Some states have their own audit statutes that differ from the federal timeline. A handful of states can look back 4 or even 10 years in certain circumstances. If you operate in a state with income tax, it's worth checking the specific rules, or asking your accountant.
What about employment records?
If you have employees and issue invoices or pay contractors, different timelines apply to payroll records. The IRS generally requires employment tax records to be kept for at least 4 years after the tax is due or paid. This is worth flagging if you have a growing team.
Canada rules: how long to keep invoices
In Canada, the Canada Revenue Agency (CRA) sets the standard, and unlike the IRS's sliding scale, the rule is refreshingly consistent: six years, in almost every situation.
The general rule: 6 years
Under the Income Tax Act, you must keep your business records, including invoices, receipts, and supporting documents, for six years from the end of the last tax year they relate to.
So if you file your 2023 tax return covering the 2023 tax year, you need to keep those supporting records until at least the end of 2029.
This applies whether you're a sole proprietor, a partnership, or an incorporated business. Unlike the UK/US split some guides describe, the CRA doesn't set a shorter window for unincorporated freelancers: six years is the standard across the board.
GST/HST registrants
If you're registered to collect GST/HST, the same six-year rule applies to those records under the Excise Tax Act. In practice this means most Canadian small businesses only need to remember one number (six years) rather than juggling separate timelines for income tax and sales tax, which simplifies things considerably compared to some other countries.
When it's longer than six years
A few situations extend the retention period beyond the standard six years:
- You filed late. The six-year clock starts from the end of the tax year the records relate to, not from when you actually filed, so filing late doesn't shorten your obligation, but it's worth tracking carefully if your filing history is inconsistent.
- You're under audit, objection, or appeal. If the CRA is actively reviewing a return, or you've filed a formal objection or appeal, you must keep the related records until the matter is fully resolved, even if that pushes well past six years.
- You wound down a business. If you closed a sole proprietorship or dissolved a corporation, keep the records for six years from the end of the tax year in which the business ceased operating.
Can you destroy records earlier?
Technically, yes, with permission. Businesses can apply to the CRA (using Form T137, Request for Destruction of Records) for authorization to destroy records before the six-year period is up. In practice, most small businesses and freelancers don't bother; digital storage is cheap, and the paperwork involved in requesting early destruction usually isn't worth the hassle for the space it saves.
What counts as a record?
The CRA isn't prescriptive about format, similar to the IRS. Your records can be:
- Paper invoices in a filing cabinet
- Digital scans of paper documents
- Invoices stored in accounting software like QuickBooks or Wave
- PDFs in a cloud storage folder
The key is that they must be legible, retrievable, and organized in a way that a CRA auditor could actually make sense of them. A blurry photo of an invoice on your phone that you can't open six years from now doesn't count.
US vs Canada: a quick comparison
| US (General) | Canada (General) | |
|---|---|---|
| Minimum time | 3 years from filing date | 6 years from end of the tax year |
| Extended period | 6 years if income underreported by 25%+ | Until resolved, if under audit/objection/appeal |
| Sales tax / GST-HST records | Varies by state | 6 years (same as income tax) |
| No limit | If return not filed or fraud suspected | N/A, though CRA can go back further in fraud cases |
| Employment records | 4 years | 6 years (aligned with general rule) |
Practical tips for managing your invoice records
Knowing the rules is one thing. Actually organising six years' worth of invoices is another. Here's how to do it without losing your mind.
Go digital from day one. Paper invoices get lost, fade, flood, or burn. A digital system, whether that's accounting software, a simple cloud folder, or an invoice generator that stores your history, is far more reliable. If you do receive paper invoices, scan them immediately and store the digital copy.
Use a consistent folder structure. Something as simple as organising by tax year works well: /Invoices/2024/Clients/ and /Invoices/2024/Expenses/. The easier it is to find things, the less painful an audit becomes.
Back up regularly. Cloud storage like Google Drive or Dropbox is fine, but have at least one other backup. Hard drives fail. Account access can be lost. Treat your financial records like you'd treat your most important passwords: protected, backed up, and accessible to your accountant if needed.
Don't delete anything mid-year. Set a reminder once a year, after you've filed your return, to clear out records that are now genuinely past the retention period. Deleting mid-year when you're not sure what's been filed is how things go wrong.
Keep sent invoices too. It's not just supplier invoices and receipts you need to keep. Your own outgoing invoices, the ones you send to clients, are income records. They're equally important to retain, on both sides of the border.
What happens if you don't keep records?
In Canada, if the CRA audits you and you can't produce adequate records, they can disallow expenses and GST/HST input tax credits you've claimed, and reassess your income based on their own estimate. That estimate is almost never in your favour. Failing to keep adequate books and records is also, on its own, a compliance failure under the Income Tax Act that can lead to penalties.
In the US, inadequate records won't automatically trigger a penalty, but they can make an audit significantly worse. If the IRS audits you and you can't substantiate your income or expenses, they can disallow deductions and estimate your tax liability. That estimate is almost always in their favour too, not yours.
In both countries, poor records tend to cost businesses far more in professional fees, disallowed deductions, and stress than good record-keeping ever would.
The bottom line
The honest answer to "how long should I keep invoices?" is: longer than you think, and more carefully than you probably do right now.
For US businesses: at least 3 years, and ideally 6 if there's any chance of a reporting discrepancy. For Canadian businesses: six years, full stop, covering both income tax and GST/HST records.
If you do business on both sides of the border, or just want one rule to remember instead of two, the simplest approach is to keep everything for seven years. That comfortably covers both the US and Canadian minimums, including extended periods and state-level variations, without having to remember different timelines for different document types.
And if you're not already creating invoices in a way that makes them easy to store and retrieve, now is the time to fix that. A proper invoice, with a unique number, clear date, description, and your business details, is much easier to file and find when you need it than a hastily thrown-together document.
Your future self, sitting across from an auditor years from now, will thank you.