The Internal Revenue Service encourages taxpayers and businesses to safeguard their financial and tax records in case of disaster, and offers these tips:
Store records electronically. Receiving bank statements and documents by e-mail is a good way to secure financial records. Or you can scan important tax records, returns, or paper documents to create an electronic format. Back up electronic files and store them in a separate, safe location. Periodically copy them onto a jump drive or CD-ROM or DVD disc. When choosing a place to store backup records, convenience should not be a primary concern, as a disaster that strikes your office or home is also likely to affect nearby facilities.
Inventory equipment. The IRS has a disaster-loss workbook for businesses to aid owners in compiling a room-by-room list of equipment and belongings. This will help you recall the items you have and prove their market value for insurance and casualty-loss claims. One option is to photograph or videotape the contents of your business and/or home and to store the photos away from your location.
Check fiduciary bonds. Employers who use payroll service providers should ask the provider if they have a fiduciary bond in place. The bond could protect the employer in the event of default by the payroll service provider.
Prepare a strategy. Start planning now to improve the likelihood that your company will survive and recover from a disaster. Just as your business changes over time, so do your preparedness needs. When you hire new employees or when there are changes in company functions, update your plans and inform your staff. The following strategies are relevant to all disasters:
Get informed about emergencies and what to do for specific hazards.
Identify community warning systems and evacuation routes.
Learn where to seek shelter.
Develop an emergency plan, practice and maintain it, and review it annually.
Regularly back up your computer data systems.
Decide how you will communicate with employees and customers in the event of a disaster.
Use cell phones, walkie-talkies, or other devices that do not rely on electricity as a backup to your communications system.
Assemble a disaster supplies kit — including a portable generator.
If your records are destroyed, you can request information from the IRS, including a copy of a tax return and all attachments. Visit www.irs.gov for instructions and more information.