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Business Tip of the Month
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Is your business prepared for disaster??
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Over the past several years, businesses that couldn't spare the time to prepare for emergencies have learned a tough lesson: floods, fires and other disasters strike when
least expected. Some of these companies have closed their doors for good; others will take years to rebuild. Don't let your business become a statistic like one of them.
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Here's a short list to help prepare your company for emergencies.
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Protect your records. If your business relies on hardcopy and electronic records to run its day-to-day operations, make sure those records are protected. Prioritize
files, consider their vulnerability to damage from different types of disasters (earthquake, flood, fire, hurricane), and establish a plan to protect them. This might include raising computers above
flood level, storing essential documents off site, and backing up electronic records by uploading them to a secure Internet site. Purchasing a fireproof safe for important hardcopy files, such as written
contracts, also makes sense.
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Check your insurance coverage. Make sure your business maintains adequate disaster insurance and other types of hazard insurance. Verify with your agent that the
coverage is up to date and policy information is readily accessible in case of emergency.
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Establish an emergency fund. An emergency fund is commonly recommended for individuals; businesses need one too. It's prudent for companies to maintain an easily
accessible account that could cover several months' worth of expenses. If disaster strikes, you may need those funds to keep payroll flowing and ongoing bills current.
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Communicate your plan.
Let clients, suppliers, and employees know how your company expects to respond when different types of emergencies strike. As a side benefit, apprising them of your disaster preparedness plan will likely increase their confidence in your firm's foresight and ability to manage risk.
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Put it in writing.
A wise business owner will document the details of his or her strategy for dealing with disasters, and will update that plan regularly. Without a written plan, the stress of immediate needs during a disaster may overwhelm even the best manager. A well-defined disaster preparedness plan can alleviate some of this stress and get the company back on its feet in a timely fashion.
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You've worked long and hard to build your firm. Preparing for the possibility of disaster will help ensure that your investment is protected.
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Due to rising gas prices, the IRS has increased the "standard mileage rate" for business drivers in 2008.
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The standard mileage rate is an IRS-approved shortcut. Instead of tracking all the actual business expenses of your vehicle, you can use the prescribed flat rate
for the year. But you still must keep detailed records of every business trip.
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Example: You drive 1,000 business miles a month in 2008. Over the course of the year, you incur $500 in related
tolls. For the first six months, you can deduct $3,030 (50.5¢ x 6,000). For the last six months, the deduction increases to $3,510 (58.5¢ x 6,000). When you add $500 in tolls, your deduction
for 2008 equals $7,040 ($3,030 + $3,510 + $500)
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Dye and Whitcomb’s "Tax Tips" are published weekly to provide
current tax information, tax-cutting suggestions, and tax reminders. The tax information contained in this site is of a general nature and should not be acted upon in your specific
situation without further details and/or professional assistance.
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Unlike EE Bonds, I-Bonds are sold at face value — $50 will buy you a $50 I-Bond. In addition, the interest rate on an I-Bond has two components: one that's fixed, one that's
variable. The fixed rate is set when you purchase the bond. The variable rate, based on the consumer price index, is adjusted every six months to track inflation.
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You should also be aware that I-Bonds have some drawbacks. For one thing, you can't redeem an I-Bond until you've owned it for at least a year. As a result, these bonds are less
liquid than, say, a money market account. Also, if you redeem an I-Bond within five years, you'll forfeit three months' interest.
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For those planning to leave their money invested at least five years, stock mutual funds may provide a better hedge against inflation. Historically speaking, the broad stock market has
generated higher returns than either EE Bonds or I-Bonds. Over the long term, you may earn a 4-5% return with an I-Bond versus a 10-12% return on a stock growth fund. Of course, history is not always an accurate
predictor of future performance. But for long-term investors, a diversified portfolio of mutual funds may significantly outperform either type of U.S. Treasury bond.
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