The IRS generally does not require that records be kept in a specific way, but all documents that may affect a tax return should be retained.

Small business owners must keep all employment tax records for at least 4 years after the later of when a tax is due or paid.

Your company or client is also advised to retain:

• Gross receipts. Cash register tapes, bank deposit slips, receipt books, invoices, credit card-charge slips and Forms 1099-MISC.
• Proofs of purchase. Canceled checks, cash register tape receipts, credit-card sales slips and invoices.
• Expense documents. Canceled checks, cash register tapes, credit-card sales slips, account statements, invoices and petty cash slips for small cash payments.
• Documents verifying assets. Purchase and sales invoices, real-estate closing statements, and canceled checks.