Disaster Strikes-Still Need Your Records for the IRS
May 1st, 2021 at 9:12 PM
Disasters such as storms, fires, floods, freezes, and hurricanes can damage or destroy vital business records.
You need accounting and tax records not only to file your taxes (including claims for casualty losses), but to file insurance claims, bill clients, pay bills, obtain loans, deal with federal and state audits, determine business cash flow and solvency, and otherwise continue in business.
Record reconstruction after a disaster may not be as hard as you think. It’s likely that much critical tax and financial data is already backed up online in the “cloud.” For example, your accounting software may perform online backups automatically without you even being aware of it.
Of course, not everything you need will be backed up online, particularly older items. Data on damaged or destroyed computer hard drives may be recoverable by experts.
To the extent you lack online backups, you’ll have to get copies of vital records from your bank, clients and customers, landlord, insurer, and government agencies such as the IRS.
After. The IRS recommends you document a disaster loss by taking photographs or videos as soon after the disaster as possible.
Before. Also, check mobile phones or other cameras for pictures and videos before the disaster occurred.
Be prepared for the next disaster. Back up and safely store online in the cloud your most critical data: major contracts and legal documents, tax returns and financial statements, and other critical business and customer documents.
Mark S. Fineberg, CPA