Crash Course for Law Firm Year End Accounting and Tax Prep
If you run a law practice, or are jointly responsible for running one, the end of year could signal the end of the fiscal year too. Sole proprietors have a matching tax and fiscal year end of December 31, by default. Law firms can simplify their own accounting by overlapping their fiscal and tax year calendars too.
Many lawyers and firms will choose to have the tax year and fiscal year overlap simply because the end of the year seems to be the slowest time for legal practices. Thus, it makes sense to make December the accounting month.
If you've recently started your own practice, or have been struggling with taxes ever since you did, below you'll find a brief crash course for your end of year accounting.
If you're new to business taxes, you have to make sure you cover the basics. Know when deadlines trigger, know what you have to do, and know what exactly you were supposed to keep organized all year.
Were you in a partnership with 10 or more other lawyers at any point over the last year? Do you know about TEFRA? If not, you better get to reading, or else you could find yourself on the wrong end of an audit with no one to blame but yourself.
It may be difficult to say "no" to peer pressure, but when it comes to taxes, keeping things on the up and up is probably the safest way to avoid trouble. If you think your partners are playing fast and loose with the numbers, find out what's going on before it causes an impact on your bottom line.
If you travel for work, you can deduct it. But if it is frivolous spending while travelling for work, you may want to think twice or get some advice.
Finding every available and applicable tax deduction is often worth paying a professional to do. But, it can really help if you know about a few of the trickier deductions law firms tend to miss as you're preparing your documents for your tax wizard.
- Tax Tips for Solo and Small Firm Lawyers (FindLaw's Strategist)
- Top Small Firm and Solo Practitioner Tax Tips for 2017 (FindLaw's Strategist)
- 6 Tax Issues You Should Remind Your Clients About (FindLaw's Strategist)
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