Accounting for disaster recovery (Protect your records and hunt close with the IRS)

In the U.S. at this moment – with springtime and severe thunderstorm season underway – some people are digging through the post-tornado rubble of what were their businesses.

In seconds, a lifetime’s work is gone, literally, with the wind.

As business owners comb through what had been their livelihoods and that of their employees, they’re thinking about the fact that insurance may cover their costs, but how can they reproduce their critical accounting information they were betting would never be lost or destroyed, or were sure it would be safe because they backed it up using computers and stored it away – on a server in their building.

Banks and credit card companies can help you reconstruct those records. Vendors can supply you with past invoices. But that, and more, is only part of what you need, and it takes time. With every hour of every day costing you money in what you’re having to do to resurrect your business as well as lost revenue from customers or clients you’re unable to bill, time is more expensive than it has ever been.

There is a seemingly endless array of “how to protect yourself from disaster” sites on the internet, but whatever they say, and whatever else you do, there are two absolutely, positively, critical steps to take to protect yourself:

1. Back up all your financial data, any tax records – everything – electronically, every day.

2. Store it off-site in the most secure place you can find.

There are data centers located throughout the country that make it their job to protect sensitive information, either through backup or storage. If this isn’t an option for you, do the best you can. It hardly does you any good to have your valuable data backed up on the same site as the place that has just been leveled by a disaster.

If your business is in a shambles, and you don’t know how you’re going to take care of your customers and employees are wondering when, or if, they’ll be able to go back to work. While that’s occurring, out there, waiting and watching, awaiting their cut, their piece of your action, is the Internal Revenue Service.

How do you satisfy the IRS as you’re trying to rebuild your business’s life? Work with them. Hunt close, as the southern saying goes. Let the IRS be one of your first contacts.

If your tax records are gone, the IRS has a mechanism for supplying past returns. It’s Form 4506, “Request for Copy of Tax Return”. By the way, there’s a $50 fee for copies of each requested return.

Among other IRS (typically federally-declared) disaster-related services are:

  • The potential to get money back quickly from the IRS.
  • An extension in filing deadlines.
  • An option to choose in which year disaster losses can be claimed.

The IRS has publications to walk people through its processes.

Please, don’t wait around until you have the time to plan for your accounting recovery as an essential part of your disaster recovery. Disaster denial (that will never happen to me; it can’t happen to me; it won’t happen to me; I have time to deal with this before it happens to me), can be described in one word. Disastrous. 

Tagged Accounting, Accounting Disaster, Disaster Recovery, Featured, IRS, IT