CPA for Seattle Lawyers & Law Firms

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Entity Selection

Your entity selection will affect Income Tax and Payroll/Self-Employment Tax, so there are a number of considerations there in. Certified Public Accountants familiar with the practice of law are more qualified to advise lawyers as to which business entity to select.

Entity Types

  • Sole Proprietorship– Or self employed
  • PLLC– Single Member – Taxed as sole proprietorship if no election is made, or with elections can be taxed as S Corporation or C Corporation.
  • PLLC– Multi Member – Tax as partnership if no elections are made, or with election can be taxed as S Corp or C Corp.
  • Professional Service Corporation – Such as C Corporation (if no elections are made), or S Corp (if elections are made).
  • Partnership – Each partner treated as self-employed
  • Shared Expense Arrangements – Sharing expenses versus sharing profit

Common Tax Deductible Expenses Available To Lawyers

Entertainment Expenses

  • Substantiation under IRC Sec. 274

Travel Expenses

  • Must comply with substantiation requirements of IRC Sec. 274

Books, Periodicals, and Software

  • Cost of books and subscription services with useful life of more than one year is depreciable over 5 years.
  • Software is not depreciable property subject to bonus depreciation of section 179 depreciation. Software is to be amortized over 3 years straight-line.
  • Books, subscription services, and software purchased on annual basis having useful life of one year of less are currently deductible.

Bonus Depreciation and Section 179 Depreciation

  • The bonus depreciation amount for qualifying business assets purchased after December 31, 2011 has returned to 50%.
  • Bonus Depreciation Qualifying Property: The bonus deprecation allowance is only available for new property (original use must being with the taxpayer) which is depreciable under MACRS and has a recovery period of 20 years of less.
  • Section 179 depreciation has a $125,000 dollar limit and $500,000 investment limit for tax years beginning in 2012.

Other considerations for lawyers include:

  • Which is the best method of accounting:  Cash versus Accrual?
  • What are the tax implications of a specific retainer, an annual retainer?

 

And, it’s likely that you have your own specific question. Call us at 1-425-483-6600 or e-mail us at info@huddlestontax.com and we’ll do our best to give you a straight forward answer.

 

 

Check out our Google, Yelp, and Yahoo Reviews -or- Read our Self Employed Tax Guide.

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