Take some time to review (or prepare) your family and business emergency plans.
Many of my articles are triggered by real client experiences, and unfortunately this one is no different. One of my clients was telling me about how his parents’ house was struck by a tree during a thunderstorm. While the structural damage was covered by insurance and quickly repaired, one major possession was lost – the tax records. The tree actually hit the filing cabinets in the upstairs office, and the documents were soaked within minutes. There were no copies.
As you hope for the best this season, prepare for everything else
Atlanta is blessed with much of what Mother Nature has to offer, including rain, wind, lightning, snow, and ice. There are many articles about safeguarding your online data from hackers, but how about safeguarding your equally valuable possessions in your home and business from storms, fires, theft, and even small children?
Take some time to ensure that the second most valuable possessions in your home and office (people are first) are safe, and you have a plan to recover quickly in the event of an emergency. Here are three ideas to consider:
Safeguard important tax and business documentation
Most CPAs, like Bach, James, Mansour & Company, maintain a copy of filed client tax returns, but please confirm with your CPA. You also need to maintain a copy of the supporting documentation for each return. Consider scanning the paper documents and copying electronic files to a CD. One of my clients “hires” his daughter to do this for extra holiday spending money.
Store the CD at another physical location, like at your office, a bank safety deposit box, or electronically using a backup service. You’ll want to store 3-5 years of personal tax return information, and 5-7 years of business tax return information.
Document valuable possessions
Take pictures or video of your belongings, especially those with the highest value, like jewelry, art, expensive furniture, computers, and even those 70 inch flat screen TVs. If you ever experience substantial damage to your home or office, it will be much easier to work with your insurance company to replace those items.
Consider creating a room-by-room inventory of your personal possessions. The Insurance Information Institute offers an online tool called Know Your Stuff that walks you through the process of conducting a home inventory. The tool is free, and there is even an iPhone/Android app that makes it easy to add new possessions.
Update your emergency plan and emergency contacts
When was the last time you made copies of driver’s licenses, passports, credit cards, birth certificates, social security cards, and other critical documents? You can scan these, along with a copy of your will, and save these on CD as well. I don’t like to mention wills, but you’ll want to make sure those are also up to date.
As part of your emergency plan, document how you will communicate with family or employees. Ensure that there is someone other than you who knows where your important documents and other account information are located. It could be a spouse, relative, trusted employee, or CPA, but you need to have some redundancy in place in case you’re incapacitated, or worse.
Have a safe and secure season!
If you would like to read more about emergency planning, the IRS has information on their website to help taxpayers and businesses better prepare for emergencies. And don’t forget to reset all your passwords, change your smoke detector batteries, and keep your storage room items away from open flames.
Neal Bach, CPA