There are several tax tips that owners of small law firms can take advantage of to keep the holiday and tax season, as free from stress as possible, and here are just a few:
- Be aware of your deadlines and be sure to meet them:
One way of ensuring that you never miss a tax deadline is to employ the services of a tax professional, who will help you decipher whether your fiscal year coincides with the calendar year or whether you’re on an accrual or cash method of accounting, for example. The answers to these questions will help your tax professional determine when your taxes are due and what income you are required to report.
- Organize your records:
Recording and maintaining accurate financial records for your business is vital if you’re to get it right at tax time. When you meet with your tax professional, be sure to have your previous tax returns with you, statements of income, balance sheets and any invoices and receipts for business expenses. Keep all relevant paperwork neatly filed where you can quickly and easily access it and try to stay on top of this throughout the year.
- Check what deductions you may qualify for:
Again, the best person who can help you to determine what deductions might be relevant for you as the owner of a small law firm, is your tax professional. Meet with them and discuss whether you work from home, whether you have made any charitable donations or have invested in new office equipment, for example; each of these may qualify you for a deduction.
- Never forget or omit your tax responsibilities as an employer:
Whether you work with independent contractors or have employees, you will need to send out W-2 forms to them at the appropriate time, and as an employer, file W-2’s and your W-3 form with the Social Security Administration. If you paid your independent contractors a minimum of $600 during the fiscal year, then you will need to give the contractor a Form 1099 – MISC
- Look for ways to lower your income:
Your tax professional can help you find ways of lowering your income, such as by contributing to your retirement plan, and in doing so you’ll be able to formulate a better plan for the future of your small law firm.
Tax time for anyone, let alone the owner of a small law firm, can be stressful, complicated and generally tiresome. However, hiring an experienced tax professional to guide you through the entire process is the best way to minimise the stress and ensure that you prep your taxes in the best way possible.