The IRS requires businesses to keep tax records for 3-7 years depending on the type of record. Boxkite automatically backs up your Xero data to Dropbox, ensuring you have the documentation you need for audits and examinations.
| Retention Period | Records | Notes |
|---|---|---|
| 3 years | Income tax returns (standard) | From date filed or due date |
| 6 years | Returns with unreported income >25% | If substantial understatement |
| 7 years | Worthless securities or bad debt | From year of deduction |
| 4 years | Employment tax records | After tax is due or paid |
| Indefinite | Property records | Until sold plus 3-7 years |
| Indefinite | Unfiled returns | No statute of limitations |
The IRS selects your return for examination and requests substantiation of deductions claimed 3 years ago. Without organised records, you may lose deductions you legitimately claimed, resulting in additional tax and interest.
The IRS audits your payroll tax compliance. They need to see employee records, wage payments, and tax deposits going back 4 years. Incomplete records can result in trust fund recovery penalties.
You sell business property and the IRS questions your cost basis calculation. Without records of the original purchase, improvements, and depreciation, you may face a much larger capital gain than actually occurred.
Automatic daily backups accumulate over time, covering the full IRS retention period for all record types.
Electronic records stored in standard formats that meet IRS requirements for digital record-keeping.
All your financial records are preserved and organised, ready for IRS examination requests.
Records backed up to your Dropbox with enterprise-grade security—you control access.
Start protecting your Xero records today. Automatic backups ensure you always have the documentation the IRS requires.
Start Free Trial