An earthquake, hurricane, natural disaster, or other catastrophe can (and probably will) wreck havoc on your life, both personal and business. No one wants to add a financial disaster to the mess, but this happens frequently due to unpreparedness. Preparing ahead can prevent such additional disasters and help you get your life back on track if the worst happens. And besides, let’s face it…. you’ll achieve much more peace of mind knowing you have taken steps to prepare for the unexpected. And if something does happen, you’ll be relieved to know you were ready. Today I would like to share some helpful information from the IRS on the best ways to safeguard your tax records.
1) Backup backup backup
I’m sure you know the importance of backing up your hard drive in case the computer crashes. Chances are you may already remind your employees, co-workers, and your kids by saying “don’t forget to hit control-save!” But have you backed up your tax records? Electronic statements and documents are becoming more and more common, and backups of these records are easily stored to a cloud service or saved onto removable media (CD/DVD, flash drive, external hard drive, etc). If you choose the cloud, select a service with reliable security or find an online service to encrypt your files. If you choose removable media, remember to keep backup records away from the originals, and be wary to avoid heat, dust, moisture, and other conditions that may affect the integrity of your devices. With all the company data we have as a bookkeeping company (both our own and yours), we follow our own regular and secure backup procedures and we and highly recommend you do the same.
2) Document your belongings
Make a list of your valuables, and photograph or videotape these items and other belongings in your home, then store the records with a friend or family member who lives outside your area. If you ever need to make an insurance claim, you will be glad to have these documents to help prove the market value of your items! The IRS provides a disaster loss workbook to help you compile a room-by-room list of belongings: Publication 584.
3) What’s the plan?
Ever made a disaster plan for your business? If so, that’s great. But every year your situation can change, and as your needs change so should your disaster plan. Do an annual review of the plan that includes keeping your employees up to date, and inform/train any new employees as well.
4) Ask the IRS for help
If you have a disaster-related issue, the IRS has trained specialists ready to help. They can be reached at 1-866-562-5227. Alternatively, if you just need copies of filed tax returns, you can request them with Form 4506. Most line items on these returns also appear on transcripts, which you can be obtained by ordering on-line, by calling 1-800-908-9946 or by using Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript or Form 4506-T, Request for Transcript of Tax Return. If a hurricane or earthquake hits your area, I’d imagine the IRS might get very busy helping everyone affected, so be sure to acquire, backup and store what you need beforehand if possible.
We’re all about bringing peace of mind to the businesses we work with, and preparing ahead is the best way to avoid wasted time, money, and frustration once it’s too late. After all, no one expects the unexpected!
