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September is National Disaster Preparedness Month. While being ready to face an unforeseen event is a year-round endeavor, take this time to be sure your business has its tax and financial records secure and that other measures are taken to be prepared.

Create an emergency plan

If you don’t have a written plan, make one now. If you have one, review it now. Plans should include what to do when an emergency strikes. For example, if your building has an elevator that will cease to function in a disaster, how will you evacuate employees, including those who may have a disability? Think about different scenarios so you can have your responses mapped out.

Be sure to have all important phone numbers in your contact list, including employees (or someone who will contact all employees), your insurance agent, FEMA (800-621-3362), and the SBA (800-659-2955). Ready.gov has toolkits to help you plan for power outages, inland flooding, and other events that put your business at risk.

tax and financial planning for a disaster

Look into mitigation measures

What can you do now to ensure the safety of your business property? Depending on location, a business may want to take actions for wind mitigation (e.g., install a safe room or storm shelter; update pressure-rated windows), flood mitigation (e.g., elevate structures; add sump pumps), wildfire mitigation (e.g., install non-combustible gutters; install a Class A fire-rated roof), and earthquake mitigation (e.g., anchor rooftop-mounted equipment; strengthen and retrofit masonry buildings).

The SBA offers mitigation assistance in the form of low-interest disaster loans to small businesses impacted by a disaster. Up to 20% of the loan proceeds can be used to make building upgrades.

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You can write off the cost of mitigation efforts. Capital improvements to your facilities usually are recovered through depreciation over a number of years, but may qualify for an immediate deduction through first-year expensing (100% of the cost up to an annual dollar limit) or bonus depreciation (80% of the cost in 2023 with no dollar limit). Check your options through IRS Publication 946, How to Depreciate Property (the publication hasn’t been updated for 2023, but you can get a general idea). Also talk with your CPA or other tax adviser to determine how much tax savings you can reap from your mitigation efforts.

Note: There is a proposed law in Congress—the Shelter Act—that would provide a tax credit of up to $5,000 for businesses that make disaster mitigation improvements. This would apply to such improvements as strengthening the durability of a roof or elevating a building within a flood zone.

Review your insurance coverage

Be sure your existing policy provides the coverage you think you have or what you need. Your policy should cover your property—your building, inventory, equipment, etc.

You may also want to look into business interruption coverage, also called business income insurance. It provides lost net income due to a closure while repairs are made. It provides cash to pay rent, employee wages, taxes, loan payments, and other ongoing costs. This type of policy is designed primarily for companies with 100 or fewer employees and revenue up to $5 million. The NAIC estimates that 30-40% of small business owners carry this type of insurance.

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The Insurance Information Institute has information on insuring your business against catastrophe. As you think about coverage, keep in mind that premiums decline as you increase policy deductibles and premiums are fully tax deductible.

Recordkeeping tips

Businesses are required to keep good books and records. This includes an accounting system as well as other documentation (e.g., receipts; invoices). If a disaster destroys the records, it becomes very difficult to reconstruct them from memory. You can request back tax returns from the IRS.

Today, it’s easy to store tax documents and other materials online. Your options:

  • Scan documents and store them in the cloud or copy files to a CD or DVD that you keep offsite.
  • Use a document service, such as Shoeboxed, that will scan your documents and index them for easy retrieval. Check prices.

Also have an inventory of your business property, such as desks, computers, machinery, and merchandise. This can expedite an insurance claim.


If you do experience a disaster, you may be eligible for various government-assistance, such as disaster loans through the SBA and tax filing and payment extensions from the IRS.

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