Accounting for Lawyer and Law Firms

At Presti & Naegele, we understand the unique financial challenges faced by legal professionals. Our dedicated team of accountants and CPAs provides comprehensive accounting and advisory services to help lawyers and law firms manage their finances effectively. Whether you’re a solo practitioner or part of a larger firm, we offer tailored solutions to identify deductions, optimize tax strategies, and ensure compliance.

Lawyers and law firms can operate as sole proprietors, partnerships, LLCs, or corporations. Each structure has distinct tax implications. P&N can assist you in choosing the right business entity. Choosing the right structure for your business is crucial, as it affects legal liability, taxation and operational flexibility. Each business type has its own trade-offs. We can walk you through the process identifying the advantages and drawbacks of one entity vs the other.

Legal Structure: How lawyers pay taxes depends on the structure of their business.  At P&N, we can evaluate your situation and recommend the right entity for your business.

Sole Proprietorship – A sole proprietorship is the simplest form of business, where the owner and the business are one.

Limited Liability Company (LLC) – An LLC combines the liability protection of a corporation with the flexibility of a partnership.

Partnership – A partnership involves two or more individuals or entities sharing ownership and responsibilities.

S-Corporation – An S-Corporation is a pass-through entity that combines features of

corporations and partnerships.

Retirement Planning

As a Lawyer or Law Firm, you have several retirement options to help you defer earnings and secure your financial future. Some of the more popular choices:

• 401K PLANS - Many law firms offer 401(K) plans. Lawyers can contribute a portion of their pre-tax salary, which grows tax-deferred until retirement. Employers may match contributions up to a certain percentage.

• INDIVIDUAL RETIREMENT ACCOUNTS (IRA) – Lawyers can open Traditional or Roth IRA’s, which offer tax advantages for retirement savings.

• SIMPLIFIED EMPLOYEE PENSION (SEP) – Self-employed lawyers or those with their own practices might consider a SEP-IRA. It allows for higher contribution limits and contributions are tax deductible.

• DEFINED BENEFIT PLAN – Provides a fixed retirement benefit based on years of service and salary history.

• PROFIT SHARING PLANS – Law firms can set up profit sharing plans. Contributions are based on the firm’s profits.

• CASH BALANCE PLANS – Popular among firms with high-income partners. Cash balance plans provide a guaranteed benefit like a pension but with individual accounts.