Did you know that September is National Preparedness Month? The IRS is wrapping up their campaign ”urging everyone to update and secure their records to prepare now for natural disasters.”
Along with grabbing the essentials like toilet paper, water, and food, there are three key areas the IRS recommends for businesses ( and individuals) to focus on that will help in the aftermath of a disaster:
1. Compile, secure, and duplicate essential tax and financial documents.
These items include:
- birth certificates
- tax returns
- passports
- insurance policies
- titles
- deeds
- marriage certificates
- other essential documents
- Keep paper copies in a secure waterproof space and digital copies in secured cloud storage “application.”
2. Create lists of property.
Start by maintaining a detailed inventory of your business and personal property. Photos or videos are great ways to record possessions but don’t forget to write down descriptions, including make and model numbers, year, and other identifying information where appropriate.
Having well-documented lists can help support claims for insurance or tax benefits after a disaster. For more detailed information, The IRS disaster-loss workbooks can help individuals and businesses compile lists of belongings or business equipment.
3. Know where to find information once a disaster occurs.
Finding and putting together records after a disaster may be required for tax purposes, federal assistance, or insurance reimbursement. Most financial institutions can provide statements and documents electronically, an option that can aid the reconstruction process.
Here are a few tips:
Tax records: Free return transcripts are immediately available by visiting the Get Transcript tool on IRS.gov.
For personal residence and real property:
- Take photographs or videos as soon after the disaster as possible. This helps establish the extent of the damage.
- Contact the title company, escrow company, or bank that handled the home purchase to get copies of the appropriate documents. Real estate brokers may also be able to help.
For business records:
- To create a list of lost inventories, get copies of invoices from suppliers. Whenever possible, the invoices should date back at least one calendar year.
- Check mobile phones or other cameras for pictures and videos of buildings, equipment, and inventory. For income information, get copies of bank statements. The deposits should closely reflect what the sales were for any given time period.
- Get copies of last year’s federal, state, and local tax returns. This includes sales tax reports, payroll tax returns, and business licenses from the city or county. These will reflect gross sales for a given time period.
- If no photographs or videos are available, sketch an outline of the inside and outside of the business location. Then start to fill in the details of the sketches, for example, for the inside of the building, record where equipment and inventory was located.
- For the outside of the building, map out the locations of items such as shrubs, parking, signs, and awnings.
If the business was pre-existing, go back to the broker for a copy of the purchase agreement. This should detail what was acquired. - If the building was newly constructed, contact the contractor or a planning commission for building plans.
Also, following a federal disaster declaration, the IRS may postpone various tax filing and payment deadlines or provide other relief. For a list of localities qualifying for relief and details on the relief available, visit IRS Tax Relief in Disaster Situations or Around the Nation on IRS.gov.
Following these tips today will help you and your business be better prepared for the impact of an emergency you may face in the future. If you have any questions, we would love to help! Email us at [email protected].