Tuesday, August 23, 2011

Prepared for Disaster

We do a lot of planning for our businesses. We plan for labor and personnel requirements, we plan for capital needs, we plan for taxes, licensing and environmental compliance.  We even go out and get insurance for those unforeseen instances when we think we might want financial protection. Nonetheless, it’s not enough. We have to plan for disasters too! It’s enough to give you anxiety. You know worrying about something you can’t possibly predict as to what will happen or the extent of disruption.  But don’t loose sleep. Just think of what is essential to run your company and keep it going should something happen. Every company no matter how small should have a formal disaster recovery plan. And as I sit and watch the news of an approaching hurricane here are a few tips, that although no substitute for formal plan, can help get your head around the issue.

(1)   Perform a complete system back up of your network. Make two copies and keep both in separate locations from your office. You can FEDEX one to a trusted family member to get it away from a hurricane zone. (do this the day before the airports shut down.) Remember, files on computers on a network typically do not get backed up, so get it on the network drive.

(2)   Before you leave the office unplug servers, computers, faxes, telephone systems. Not just from the electricity but from telephone lines as well. This is to prevent power surges and lightning strikes that may fry essential electronics. Wrap essential computers and equipment in plastic bags, and move them to a secure place in your office if you think windows may break and equipment may be subject to water damage. Mold, mildew and high heat and humidity may damage equipment too.

(3)   Have your employees put away and lock up all files, paperwork and loose documents. Great time for office clean up. You might want to empty out that office refrigerator too!

(4)   Update all employee contact list with their address, telephone numbers, email addresses. Make sure you know where they will be staying. Divide that list among top level management and assign them each the task of staying in touch with a set group of employees so they can advise them when they can return to work. Remember some employees may not be staying at home either because of an evacuation area or because they will be staying with other family members. Make sure your employees know they are expected to call in and return to work when it’s safe.

(5)    Pick the management team that will be responsible for making the first attempt to get back into the office after the storm passes to make any potential damage assessments. Make sure your employees know who these people are. You might want to develop emergency management badges and give a list of the management team to the local police department so they will allow these employees back into the area after the storm in the event the area is secured by police to prevent looting.

(6)   Make sure to secure all insurance policy documents and a list of essential passwords to accounts etc. Critical documents can me scanned and placed on the internet into a private account. Google Docs is a great way to have these handy should you need these from any place on the planet and best of all it’s free!

(7)   Order extra water, gloves, first aid supplies, garbage bags, food and have these handy for your staff since its possible you may not have electricity for a few days time, there will be no air conditioning, potable water and clean up may be required. You should also be prepared to assist your employees if they have suffered a major disaster.

(8)   You may want to consider buying a generator or two, and heavy duty power cords to run basic office equipment if your business must be up and running after a storm.

Many insurance company’s now require that you have a formal disaster plan in order for them to insure you. But your priority should be to be up and running as soon as possible. If your business potentially may gain new or increased business after a major storm, be prepared to respond to your market as soon as possible. Roofers, contractors, plumbers, electricians, landscapers, arborists, hardware stores, real estate agents, hotels, doctors, vets, gas stations, food retailers and other like professions and businesses need to be ready to respond to a surge in demand.

This list of items to consider is not all inclusive. Each company has its own needs and operating requirements. Even if you have a formal plan it should be revised at least yearly. If you need an operations oriented professional to assist you prepare a plan, then please give us a call.

Tax Identity Theft Is Rising

In 2008, there were approximately 52,000 incidents of reported identity theft at the IRS. According to the General Accountability Office (GAO) there were 245,000 cases in 2010. (Wall Street Journal, May 25th, 2011)  That 371% increase in two years would suggest there is an epidemic of identity theft in tax related matters that involve the IRS. That should be alarming to the public at large as well as to tax practitioners.

But what is identity theft that involves the IRS? There are various scenarios that are used to bait the IRS as well as would be taxpayers. Here are some examples:

(1)   You receive an email with the IRS logo asking that you provide personal information regarding your return. That information is later used to commit some kind of fraud or identity theft. You should note the IRS will never contact you or a practitioner via email.
(2)   Various cases of prison inmates have been found to steel identities in order to obtain fraudulent refunds.
(3)   In some cases children’s and taxpayer’s social security numbers are used in order to secure employment. Those individuals then do not file returns for that income and the real individuals who’s identity was stolen suddenly receives a letter from the IRS saying they have either failed to file a return or omitted earnings from their properly filed income tax return resulting in additional taxes that may be due.

Sen. Bill Nelson (D., Fla.) has been addressing the issue before the Senate Finance Committee.
This is yet another issue that taxpayers must now be aware of in order to protect their identity. The security of your information is very important and has to be addressed by both the IRS as well as individual taxpayers. In particular taxpayers should question when any information regarding your identity is requested. What information is really needed and what security measures are taken by any organization that has access to that information. All too often I deny providing information requested online if it is not vital. In particular my social security number. In addition, I never use my real birth date even online even when it is required for non official business. Instead I have adopted a second birth date used exclusively for non important registrations. I rather get called on this than volunteer more information than needed.

Now that children are literally born with a social security numbers, parents need to exercise more care in who has that information. For children, parents should truly question providing children’s social security numbers to clubs, athletic leagues, tutors and other events and registrations that request personal information about your children. As a parent, my observation is that many organizations do not employ the same safeguards towards children social security numbers and other personal information as they would with the same information about adults. There is a general disconnect between the fact that the children themselves are not financially responsible so their information is not as important. This isn’t true at all. A name and a social security number is gold. Throw in that birth date on FaceBook and it’s a dream come true for someone wanting to steal your child’s identity.  I have seen various registration settings and environments that are completely stacked against a child’s financial identity. 
For example FaceBook doesn’t really need your “real” birth date. What’s more, don’t publish it at all. Does your subscription to the New Yorker really need your birth date? Probably not. At a recent chamber of commerce registration they requested I provide a birth date, so a birthday card can be sent out. Wonderful, I received my birthday card a whole month later. I celebrated twice. Of course that doesn’t work for say a credit card application or filing your tax return.