September 01, 2020 The Finance Issue

The Tax Planning Checklist

After the tax year of a law firm ends, it is too late to manage income. Review income and expenses prior to year-end. 2020 may be a tough year for some law firms impacted by COVID-19.

Mary E. Vandenack
A closeup of Benjamin Franklin's likeness on a one-hundred dollar bill.

A closeup of Benjamin Franklin's likeness on a one-hundred dollar bill.

(The related economic disruption and governmental response following the recent health pandemic will also invariably raise tax and accounting issues and require additional planning related to employee benefits. This article was written prior to new legislation signed into law that made a number of changes to the popular Paycheck Protection Program (PPP) loans for small businesses. Please accept our apologies if some items now appear dated. We are monitoring developments in all such areas, and updates since the writing of this article can be found here.)

Tax planning for law firms is impacted by several factors, including firm size and entity tax election—C corporation (professional service corporation), S corporation, partnership, disregarded entity. This article focuses on tax planning considerations that apply to all law firms despite tax election but does identify differences where appropriate. This article also notes some unique issues for law firms presented by COVID-19 relief.

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