Tea and Cookies & with the IRS? Avoiding IRS Pitfalls
It’s tax season! ….“UuuuggGH!” If that’s how you and your law firm associates are feeling these days, I get it. Totally understandable. After all, you’re the superheroes that sort out complicated messes, save people’s houses from being foreclosed upon and often untangle the most mysterious of stories (…only to find “it was the Professor Plum in the Library with the Candlestick that did it”… Gosh… “Didn’t see THAT ONE COMING!“) So yeah, you guys are kiiiinda the cool kids on the block, but it also makes you more susceptible to those pesky IRS audits. Don’t even worry about it. I’m gonna refresh your memory about the top things Law Firms can do, to help stay out of hot water with “big brother.”
Things you can do to side-step the old one-two:
Watch how you parcel out different client expenses – Update these records regularly, keeping your client’s trust…so to speak, as well as the tax collector’s – it’s a win-win!
Watch those employee reimbursements – better yet, categorize them. No red flag flies higher for the IRS than if they think you’re deliberately finagling them away from their share of the dollars.
Watch out for excessive meals deduction.
Watch out if you write off a personal vehicle on the books as a company vehicle.
Watch how and when you are reimbursing your company’s stockholders. Are they getting paid a reasonable salary? And, is it on time? These are the things the IRS LOVES to “sit down and have tea over”…in a cold, cemented room. …minus the tea and cookies. Sound like a movie to you? Hey, it happens a lot more than you might think!
Watch how you report about any trust accounts for escrow funds – be sure you are accurately recording these transactions. Be a stickler on acknowledging the income because ‘you KNOW …the IRS ain’t really your bro!‘
So, you’re more likely to be audited preparing your own taxes because let’s face it — even bootstrapping lawyers such as yourselves don’t have time for the extra bureaucracy that comes with “shifty” numbers and fussy line-item protocols. “Bitter-pill to swallow you say?” Nahhhhhh! Remember, you’ve got better things to do than memorize tax laws too…‘A’hem…that is if you aren’t in practice with tax law, to begin with — in which case,
my point is moot.
You’re at Rockstar status,
and you just really like to read my blogs because they’re that cool!
Are you on Social Media? Use #bootstrappinglawyers in QB Community Live so I know it’s you! QB Community Live is a public group on Facebook, where you can find me and a lot of other geniuses too. It’s fun and friendly. Please, invite your bookkeeper too!
Are you an attorney with books that you know are not the best and need help? Or are you an attorney with a law firm that you know is in some desktop software that keeps crashing and makes you cringe because you cannot get out the reports you need? Contact me! We have the most awesome workflow that is automated. We take advantage of technology and the web with cloud-based software. Find your metrics, grow your firm SMARTER! Call 239-349-2004 today!