How to Build a Data Backup Plan in 5 Steps

You Need a Data Backup Plan: Here’s How to Build One

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What would happen to your accounting firm if the power went out tonight?

Not a quick flicker, but a full outage. Could you move operations somewhere else and keep working?

Or would everything stop because the only copies of your client data are sitting on a server that’s now dark?

This isn’t a hypothetical. Accounting firms face a growing mix of ransomware attacks, hardware failures, and everyday human error, and any one of them can trigger a data-loss event.

Disasters are unpredictable and wreak havoc. (It’s in the name!)

And for those who manage client financial data, the stakes are especially high. Your clients and customers trust you with their most sensitive information, and they expect you to protect it.

In this post, we’ll cover what data loss costs, where it actually comes from, and how to build a data backup and recovery plan that keeps your firm protected before something goes wrong.

Why Your Firm Needs a Data Backup and Recovery Plan

Data loss hits accounting firms on three fronts: financial, reputational, and legal:

1. Financially

On the financial side, the numbers are severe.

• IBM’s 2025 Cost of a Data Breach Report puts the average global cost of a data breach at $4.44 million.
• Sophos data from 2024 shows the mean recovery cost reached $2.73 million, up nearly $1 million from 2023.

2. Reputationally

The reputational fallout may be even harder to recover from.

Research from Vercara’s 2024 Consumer Trust and Risk Report found that more than half (58%) of consumers believe brands that get hit with a data breach are not trustworthy, and 70% would stop using a brand that suffered a security incident.

For accounting firms where long-term client relationships are the core of the business, that number is catastrophic.

3. Legally

Then there’s the compliance risk. Both the FTC Safeguards Rule and IRS Publication 4557 require accounting firms to implement and document data backup and recovery practices.

For firms filing 11 or more federal returns annually, this isn’t optional guidance. It’s a legal requirement.

FTC civil penalties are significant per violation per day. In the first half of 2025 alone, an IRS news release reported that nearly 300 data breaches affecting tax professionals exposed data on up to 250,000 clients.

Would your firm survive the combined financial, reputational, and regulatory fallout of a serious data-loss event? Without a data backup and recovery plan in place, the odds are not good.

What Data Loss Really Looks Like for Accounting Firms

Data breaches and natural disasters tend to get the most attention as causes of data loss. But most firms face a much broader set of risks than they realize.

• Ransomware. Ransomware is now the leading cause of data loss for professional services firms. Attackers increasingly target backup systems directly, which means a backup that isn’t stored offsite or protected with immutable storage may be compromised right alongside your live data.
• Accidental deletion. One clumsy keystroke and a critical file disappears. Without proper backup software, it doesn’t come back.
• Rogue savers. These are employees who save files outside the firm’s established workflow, for example, saving to a local hard drive instead of a shared cloud environment. Hard drives fail without warning, and when they do, everything on them is gone permanently.
• Electrical failures. Power outages and surges can happen without a storm or flood in sight. Computer and server data can be lost in an instant.
• Third-party vendor outages. Accounting firms rely on cloud applications, tax platforms, and document management systems. When those vendors experience outages, your firm’s productivity can stop, even if your own infrastructure is intact.

Any of these events can trigger a crisis. The difference between firms that recover and firms that don’t almost always comes down to whether a solid backup planning strategy was in place before it happened.

Not sure whether your firm’s security posture is ready to handle modern threats? Our cybersecurity guide for the modern accountant is a strong starting point.

Download: The Ultimate Cybersecurity Guide for the Modern Accountant

How to Create a Data Backup Recovery Plan in 5 Steps

Knowing you need a plan and actually building one are two different things. A data backup recovery plan isn’t a single tool or a single purchase. It’s a set of deliberate choices about what you’re protecting, how you’re protecting it, and what your firm does when something goes wrong.

Step 1: Identify your critical data and systems

Before you can protect your data, you need to know what matters most.

Start by cataloging the systems and data your firm can’t operate without:

• Tax software
• Client records
• Document management system
• Email
• Billing data
• Cloud-based applications
• Any software or apps your team uses daily

Not all data carries the same urgency. Rank your systems by how quickly you’d need each one restored. Losing access to your primary client database during tax season is a crisis. Losing access to a marketing archive is an inconvenience. Knowing the difference is what makes your plan realistic and affordable.

Step 2: Set your disaster recovery targets

Every sound disaster recovery plan rests on two core metrics: RTO and RPO. Both are easier to understand than they sound.

RTO (Recovery Time Objective)

RTO (Recovery Time Objective) is how fast your firm needs systems back online after an outage. During tax season, can your firm function if systems are down for eight hours? Four hours? Thirty minutes? Your honest answer to that question is your RTO.

RPO (Recovery Point Objective)

RPO (Recovery Point Objective) is how much data you can afford to lose, measured in time. If you back up nightly and a server crashes at 4 p.m., you lose a full day of work entries. If that’s unacceptable during peak filing periods, your RPO needs to be tighter, which means more frequent backups.

Setting these targets before you choose a backup solution ensures your technology is built around your real-world needs.

And because both the FTC Safeguards Rule and IRS Publication 4557 expect documented recovery procedures, having written RTO and RPO targets also becomes part of your compliance record.

Step 3: Apply the 3-2-1-1-0 backup planning approach

Roman Kepczyk, security expert and Director of Firm Technology Strategy for Rightworks, advocates for the 3-2-1 backup strategy as the foundation of any sound backup planning effort. The 3-2-1 approach means keeping:

• Three copies of your data
• Two different storage types
• One copy stored offsite

This framework has been the standard for decades, and it still holds. But cybersecurity experts now recommend building on it with two additions that address the way ransomware actually works today. The updated model is called the 3-2-1-1-0 rule.

+1: One immutable or air-gapped copy

An immutable backup is a copy of data that cannot be modified, overwritten, or deleted for a defined retention period, even by an administrator account.

This matters because ransomware attackers now routinely target backup systems before triggering encryption across a network.

According to Sophos research, 94% of ransomware victims had attackers attempt to compromise their backups, and 57% of those attempts succeeded. A backup sitting on the same network as your production data is just as reachable to an attacker as everything else.

+0: Zero recovery errors

The final component addresses a risk most firms don’t discover until it’s too late: backup jobs that complete successfully but fail during recovery. The “0” in 3-2-1-1-0 means zero recovery errors, confirmed through regular automated testing. A backup that has never been tested is not a reliable backup.

For accounting firms, the zero-errors requirement maps directly to what the FTC Safeguards Rule and IRS Publication 4557 expect from your backup program. Documentation that backups exist is not enough. You need evidence that they work, and that evidence needs to be current. Learn what the IRS Security Six requires and how to implement each control.

Step 4: Choose cloud hosting as your backup foundation

Cloud hosting isn’t just a productivity tool for accounting firms; it’s the backbone of a reliable data backup and recovery plan. Cloud-based backup addresses the two most common failure points: geographic isolation and human consistency.

When you store data offsite in the cloud, a fire, flood, or power outage at your office can’t touch it. When backups are automated and monitored, you eliminate the risk of someone forgetting to run them or saving to the wrong location.

Not sure whether your firm is set up to take full advantage of cloud-based backup planning? Our free cloud readiness assessment can help you find out.

Step 5: Test your plan and keep it current

An untested backup is not a reliable backup. Backups fail silently, files become corrupted, and restore procedures often turn out to be more complicated than expected. Quarterly restore tests are the only way to know whether your data backup recovery plan will actually work under pressure. Both the FTC Safeguards Rule and IRS Publication 4557 expect evidence of regular testing, not just documentation that backups exist.

Testing your backup is one part of staying compliant; knowing what to do the moment a data breach is confirmed is the other.

Beyond testing, review your plan whenever your firm changes significantly. New software, new staff, new locations, or a major client transition can all create gaps in coverage that didn’t exist when you originally built the plan.

What Is the Best Data Backup Plan for Accounting Firms?

The best data backup plan for accounting firms combines the 3-2-1 strategy with cloud hosting built specifically for the security, compliance, and uptime demands of the accounting profession.

Rightworks’ cloud hosting was built with exactly that in mind. Our cloud technology:

• Stores data across multiple Tier IV data centers in geographically diverse US locations.
• Replicates data in real time and backs it up nightly.
• Retains data on a rolling, 90-day backup schedule.

That means if your data is accidentally deleted, corrupted by ransomware, or lost in a local disaster, Rightworks can recover it. What could have been a firm-ending event becomes a manageable one.

Don’t wait for a crisis to start thinking about backup planning.

Download our cybersecurity guide to start building a smarter data backup plan for your firm today.