When your business suffers a natural disaster, every part of operations may be impacted. And while you work on getting the business up and running on a physical level, what should you do about your accounting books? The answer is to engage an accountant who can help with both the mundane reconstruction tasks as well as answering more complex accounting questions. Here are five things they'll assist with.
1. Reconstructing Books
If you use a cloud-based accounting software, your records of transactions and financial statements may be intact. In this case, you'll probably only need to locate new versions of hardcopy records as well as transactions that may not have been entered yet. However, if your books are done manually, the reconstruction may be a lot harder. An accountant will work on all these tasks.
2. Handling Inventory Loss
If you maintain inventory and some of it was destroyed or rendered unsellable, you'll need to adjust your books to account for the loss. The biggest task is usually to find the right value for the destroyed inventory. This often calls for a reconstruction of inventory purchases and estimations of the costs of individual parts. Once you know how much to deduct, you enter it as an expense in your books.
3. Retiring Damaged Property
Large assets such as heavy equipment, computers, and machinery are usually subject to depreciation for accounting and tax purposes. Have any of your depreciable assets been destroyed or made unusable? If so, your accountant will work to correctly dispose of these in your books. And if some were damaged but repaired, the accountant may adjust their value down — a move known as an impairment loss.
4. Maintaining Payroll Continuity
While many accounting tasks can be delayed while you get back on your feet, payroll isn't generally one of them. There are many rules about how and when employees must be paid. And even in a disaster, you'll have to follow them. And you may or may not get a reprieve for related payroll tax deadlines. Outsource payroll work to an accountant to ensure it stays timely.
5. Reporting Insurance Payments
Hopefully, your business was covered with insurance that will kick in and help right your ship. How do insurance payments, though, fit into your books? When and where are they accounted for and how might they affect the values of items being reconstructed? These are tough questions for the layperson, but an accountant is trained to answer them.
Where to Start
If your business has suffered something catastrophic, get professional accounting help. Meet with a skilled accountant in your state to learn how they can help you recover lost information and properly record all the changes brought about by the disaster.
