Short answer: Keep anything that supports a number on a filed return, and keep it for at least five years — Washington’s Department of Revenue can generally look back further than the IRS typically does, so the state’s window is the one that sets your practical floor.
The categories worth being deliberate about:
Income records. Invoices, sales receipts, merchant processor statements, and deposit records. These support your gross receipts, which is the figure B&O is assessed on, so they matter more in Washington than in an income-tax state.
Expense records. Receipts, bills, and card statements. A card statement showing a $340 charge at a supplier is not by itself proof of a deductible business expense; the receipt showing what was bought is. For meals and travel, note the business purpose at the time — nobody reconstructs that accurately two years later.
Payroll records. Payroll registers, filed quarterly returns, W-2s and 1099s, timesheets, and worker classification documentation. L&I premiums are based on hours, so hour records are not optional here.
Asset records. Purchase documents for equipment and vehicles, and the depreciation schedule. Keep these for as long as you own the asset and then for the retention period after you dispose of it — this is the category people throw away too early, and it costs them on the sale.
Entity and banking records. Formation documents, your business license and UBI, loan agreements, leases, and bank statements.
Digital copies are acceptable, and a clearly organized cloud folder is far more useful than a drawer. The practical standard is that you could produce the document supporting any line on any return you have filed, within a reasonable time, without a search of the garage.
Retention periods vary by record type and situation, and there are circumstances that extend them. Use this as a floor, not a ceiling, and check before you purge anything.
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