Data Protection Planning

Disasters come in many disguises. Over the last 12 months, we’ve seen major hurricanes and floods in the U.S. hit the headlines. Disasters don’t have to be headline events to close down a business operation, but --whatever form they take--they usually are unexpected, striking with little or no warning.

In today’s world, most businesses rely on technology to maintain customer records, sales and marketing plans, as well as accounting and financial data. Data protection planning should be a key component in any effective emergency preparedness or disaster plan. Many business owners add various back-up systems and archiving procedures as their business evolves and grows. That’s fine, but it is smart business practice to review the systems you have in place - to take a critical look at your business procedures to make sure you have a cohesive plan to protect your data in the event of a disaster.

Here are some questions to get the review process started:

1. What are you doing right now to backup business data?
   Backing up data on to hard drives is inadequate. Hard disks can get corrupted or damaged. If you keep backup data in the same location as the initial records, you could lose both in a fire or a flood. Adequate data protection requires that you:
   • Archive data on a regular schedule on reliable media; and
   
   
   • Transfer and retain archived material in a secure off-site location on a predetermined schedule.


2. Do your employees put critical business data in an archive?
   If the loss of certain data would make it hard for you to continue to do business, then consider the material worthy of archiving. Rather than rely on employees to remember to archive individual files, many business owners buy software to do this automatically. There are several programs available that compress and encrypt data to minimize disk space usage and provide security. Determine how often you need to run the program. (Hint: many businesses do this every night at the close of business.)



3. What about data backup? What’s the best method?
   Physical data backup is essential because computers are vulnerable to accidents, power surges, and viruses. There are different media available for this job:
   • CD ROMs are probably the least expensive and the easiest option. Unfortunately, they are probably the least reliable. They have a limited "shelf life." If budget restrictions require you to use this low-cost option, protect yourself by making several copies of each CD.
   
   
   • Tape back-ups are significantly more reliable. Tapes cost from $30 to $40 each and you’ll also need to purchase a drive that might cost up to $1,000.
   There will be little point to all your effort, if you don’t keep track of your back-up data. Don’t forget to document the systems you have in place, and to organize the backup media for speedy retrieval - otherwise finding data in an emergency when you need it quickly will be a nightmare.



4. And, what about retrieval?
   Don’t store your data back-up media in your office with all your other records. If you want your business data to be really secure, store it off-site. You might place copies with family members or trusted friends. A security box at the bank is a good option for most small businesses, and you should be able to write the security box fees off as a business expense. Your tax advisor can quickly tell you if you are eligible.

Review your data protection plan every year. And make sure your backup procedures and policies keep pace with your business’ growth.

These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact their CPA regarding the topics in these articles.

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