The US coastline is about to face the worst of the 2022 hurricane season, and many businesses within a day’s drive are taking steps to prepare. While weatherproofing buildings and fueling generators is important, for tax professionals, there are a few more simple steps to be sure your business is ready to weather the storm.
What steps should you take before a storm?
The first step is to protect your data. Back up your electronic files to flash drives or DVDs. Once complete, store the backup media in a waterproof container in a secure area. It is reasonable to make a second copy of your data and store in a safe, secondary location, just in case of catastrophic damage to your physical office.
Despite the electronic revolution, income tax preparation businesses generate a lot of paper documents and these, too, need to be stored in the waterproof containers – both on-site and offsite.
Keep in mind, though, that paper documents do not always have to remain on paper; you can scan them and keep those digital images in a lot less physical space than their paper equivalents. (Tools like Drake Documents, Drake Portals, and GruntWorx can help you smoothly make the transition to a practically paperless office.)
Other than client tax returns, what else should you save?
Property-specific documents such as deeds, titles, and insurance policies are a good choice, as are receipts for computers and other major office machine purchases that could be expensive to replace if they are damaged in a storm.
You’ll want to build a detailed inventory of the furniture and office machines in your office, detailing the various items, along with their model and serial numbers.
Remember, if your tax preparation office or its contents are damaged by a hurricane or other natural disaster, you’ll need these numbers to prove there has been a loss and pave the way for getting replacements.
If you’d like some help building your inventory, check out the IRS’s disaster preparation workbook: Publication 584-B.
What should you do after a storm?
The ability to access documents after a natural disaster is an essential part of the rebuilding process, highlighting the importance of reliable data backups. Depending on the level of damage to your business, rebuilding records could be your first and biggest job.
Your records will also be valuable when applying for federal assistance or insurance claims; some may come from companies or vendors you’ve dealt with. To check out what the process involves, review Reconstructing Records from the IRS.
More information is available!
For more information on disaster preparation and recovery for your income tax prep business, see these resources courtesy of the IRS:
- Publication 3067, IRS Disaster Assistance – Federally Declared Disaster Area
- Publication 584-B, Business Casualty, Disaster, and Theft Loss Workbook
- Publication 5307, Tax Reform: Basics for Individuals and Families
- Publication 583, Starting a Business and Keeping Records
- Publication 547, Casualties, Disasters, and Thefts
- Tax Relief in Disaster Situations
- Federal Emergency Management Agency
- Small Business Administration
September is National Preparedness Month. To learn more, visit Ready.gov.
Source: September is National Preparedness Month; IRS urges everyone to update and secure their records to prepare now for natural disasters