Planning for Unexpected Absence from your Business
There’s more to being financially resilient than simply saving enough money for a rainy day. One aspect of being financially responsible is maintaining good financial records – and making sure the people who will need access to your records, like family members or key business partners, know where to find them if something happens to you. Here are some ideas for your consideration.
Systems and lists
You’re probably managing your accounting through a digital platform like QuickBooks, but what about other tools that supplement your needs? Do you have a chart of your accounting tech stack and ecosystem? What about Excel worksheets that supplement your use of QuickBooks? Is it clear where these can all be accessed? Do your loved ones know how to find these items if something happens to you?
Now that so many things are digitized, it’s not as easy for others to access the intel required to run your business in your absence. Digitization is a critical advancement in business management, but it does make things a bit trickier for your representatives to step in. For example, your financial records might be in a dozen different places on your computer or the cloud. Being organized and planning for a smooth financial future for your loved ones means making a list of instructions on how to access all of your financially-related digital assets. Keep in mind, this information is highly sensitive and should not be shared until it’s absolutely necessary.
Your list might include:
- Contact information for your accountant, who will likely have access to your cloud-based accounting software.
- A list of banks you do business with.
- A list of credit cards that need to be paid monthly.
- List of government-related accounts, such as social security and IRS.gov.
- List of regular monthly bills, such as utility, credit cards, and rent, plus their associated email accounts.
- Details of regular monthly income received.
- Where to find financial files on your computer or cloud, such as tax returns, bank statements, and real estate closing documents.
A password management system like LastPass can help you share sensitive and critical data securely and even at a moment’s notice. We can’t stress enough how important it is to keep this information private and secure, and under no circumstance do we recommend sharing this information before it’s necessary.
If your computer crashes, will you be able to recover your financial files? Taking periodic backups will prevent a loss of records. In the IT world, there’s a common saying that “two is one and one is none.” This means that if you only have one backup file and it fails, you’re left with nothing. Having two backup systems ensures that the data is still preserved even in the event of one failure.
What to keep in case of an audit
You hope it will never happen, but if it does, are you prepared for an audit with the IRS or a state agency? Do you know what records to keep and for how many years?
Having good documentation, sharing financial knowledge and goals with the right people, and making a backup plan will boost your financial confidence. You will be more prepared than most households when it comes to financial safety.
How financially resilient do you feel? Take into consideration the above ideas to help you stay one step ahead.