What to Do When Disaster Strikes
While your business may be inland or free from drought, that doesn’t mean that your business is immune from the effects of a natural disaster. Even if you are a girl scout and have a well-thought out plan for disasters, what happens after a disaster may not follow your guide book and emergency response plan. What do you do then? How does your business recover from such a tragedy?
There are several logical and necessary steps to take in order to help yourself and your business recover from a disaster.
Before and during the event, take whatever steps necessary to ensure the physical safety for you, your family and employees within your workplace. This includes shutting off the facility’s power, gas and water maintains and potentially evacuating the facility. If you are ordered by local authorities to shelter-in-place, then prepare the facility as best as you can against floods, high winds and any other results of the storm or disaster. Gather food sources in one high, dry location and plan meal times to keep those employees on site nourished. Make separate sleeping arrangements for male and female staff and set up a facility watch team to ensure security and watch for surprise weather events like flash flooding.
If you have left the building, reach out to local authorities for a timeline of safe return to your business. Often there will be set hours when business owners and residents are allowed to return and a curfew when everyone must leave the area and be off the streets.
After the storm has passed, report any damage or loss to your insurance company as soon as possible. This call will trigger a reporting claim number associated with your claim. Add this information to a water safe travel document box. You will need this information countless times over the coming weeks and possibly months. Make lists of all damaged or destroyed items. Be sure to include the brand name of the item description, model, year, ID number and price. Keep ALL receipts as you begin to replace items. You will need these for both insurance claims and your coming year’s tax return.
Try to keep any damaged equipment, materials or items until the insurance adjustor has visited and documented the losses. If it is not possible to keep the items due to health or safety concerns, photograph or videotape them yourself prior to disposal.
Look for your area to be declared a national disaster area either by the federal government or your state. Declarations can be found by state on their respective websites. Drought Disasters are declared by the U.S. Secretary of Agriculture and information can be found on the Disaster and Drought Assistance page.
Even if you have lost your important legal documents in the disaster, the SBA can assist you with resources to help you complete your SBA loan applications.
Talk with your creditors immediately. The fastest way to reduce expenses is to shut off utilities that aren’t being used due to the disaster. Once you have stopped all nonessential utilities and deliveries, it’s time to sit down and take a hard look at your budget. Review all current cash on hand, emergency savings and then begin the task of prioritizing your bills. Paying employees, insurance premiums, rent and/or mortgage payments should be your first priority. If you need to lay off employees while you rebuild, there are certain steps you must take with the Department of Labor with regard to notification and preparation to handle unemployment claims and other necessary paperwork. These steps will help expedite employee’s claims. Many creditors will work with you to establish forbearance or some other type of reduced payment arrangement. Once you have talked with each creditor, you can begin to work out a new budget and payment schedule.
Negotiating a settlement. What are your options if the insurance adjustor’s totals aren’t agreeable? You have the right to bring in your own personal adjustor to provide you with another damage estimate. Just remember that any additional consultants or estimates will further delay your payout and add to your out-of-pocket costs.
Disaster Assistance Loans
The SBA offers homeowners, renters, businesses and private non-profit organizations loans to repair or replace “real estate, personal property, equipment, and business assets that have been lost or damaged in a natural disaster.” Renters and homeowners are eligible for up to $40,000 to repair or replace personal property such as furniture, appliances or other items, and up to $200,000 to repair or replace a residence. Applying for these loans can usually be done online or at a temporary SBA Disaster Recovery Office in your town.
Where to Go for Help
Disaster Recovery Center – These are mobile facilities or offices where applicants may go for information about FEMA or other disaster assistance programs.
Disaster Assistance – These programs provide money or direct assistance to individuals, families and businesses in affected national disaster locations whose property was destroyed and losses were not covered by insurance. These resources can be applied for online via a computer or mobile device. You can also receive assistance in completing the applications at a Disaster Recovery Center or by calling 800-621-3362.
Disaster Legal Services – Provides free legal services to disaster victims. Access the Fact Sheet.
Disaster Unemployment Assistance Program – Provides unemployment benefits and re-employment services to individuals who have become unemployed as the result of a disaster. This program applies to individuals who are not eligible under their individual state unemployment insurance program. See the Fact Sheet.
No business can ever be 100 percent prepared for a disaster, but having a comprehensive plan in place can mean a faster recovery for you and your employees. Remember that it’s not just about writing a plan and leaving it in a drawer, but actually testing, drilling and refining it on a regular basis that will make your business’s recovery successful.
PASBA member accountants bring the collective resources of a nationwide network of Certified Public Accountants, Public Accountants, Enrolled Agents and other practitioners available to answer your tax and financial questions and streamline your business accounting, bookkeeping, and payroll operations.
To find a trusted accountant in your area, visit www.SmallBizAccountants.com.
Please be advised that, based on current IRS rules and standards, any advice contained herein is not intended to be used, nor can it be used, for the avoidance of any tax penalty that the IRS may assess related to this matter. Any information contained in this article, whether viewed or subsequently printed, cannot be relied upon as qualified tax and accounting advice. Any information contained in this article does not fall under the guidelines of IRS Circular 230.