Hurricane season’s drawing near, and IRS is reminding businesses that they need to have natural disaster preparedness protocols in place for their key financial records and assets should the worst happen.
Besides hurricanes, several other natural disasters impacted companies last year, including winds, flooding, tropical storms, wildfires and winter storms.
With that in mind, if you haven’t looked at your disaster plan in a while, now’s the perfect time to update it so you aren’t caught off guard – and to minimize disruptions to your business.
Natural disaster planning
For starters, your important business documents, such as tax records and employment forms, should be stored in waterproof containers if you’re keeping paper copies.
As an alternative, you can have backup copies stored offsite in a secure, weather-proofed location. Or you can the documents and save the electronic copies securely on the cloud or on an off-site server.
Along with documents and files, it’s an excellent idea to keep records of your business’s content and all your equipment/assets in case disaster strikes. Photos of your equipment, including computer hardware, are helpful to have on hand if you need to make claims for tax credits or insurance benefits.
Restoring lost records
Despite your best efforts, you may end up losing key records if the natural disaster is severe enough. If this happens, IRS offers instructions for employers to reconstruct their records for tax purposes.
Speak to suppliers to get copies of invoices to create a list of any inventory you’ve lost. Invoices should date back at least one calendar year. You should also obtain copies of bank statements and tax returns to prove income.
If you don’t have photos of the business and its equipment, look for purchasing agreements or building plans. Try and sketch a map of the interior and exterior, and fill in where equipment and inventory were located.
Payroll preparations
For an added safeguard, if you use a payroll service provider, have Payroll ask the vendor if it has a fiduciary bond in place.
That way, if a natural disaster causes the provider to have issues depositing your payroll taxes on time, you’re protected from federal scrutiny. Payroll service providers should make your options in case of natural disaster clear in your contracts with them.
Tax relief available
Once a natural disaster’s been declared by FEMA, IRS reminds business taxpayers that they may be eligible for various forms of relief related to tax filing. The agency may extend deadlines for filing and payments.
If your business is located in the disaster area, the IRS will automatically apply this relief. Relief may also be available to taxpayers outside the disaster area who were impacted by the disaster. For more info, call 866-562-5227.
