What You’ll Regret Not Doing Before December 31
November 27, 2025
The CPA’s Year-End Tax Checklist for Law Firm Owners
December 4, 2025
Last-Minute Tax Moves You Can Still Make Before the Year Ends
For Attorneys Who Like to Cut It Close—But Still Want to Win
If you’re reading this in December, take a deep breath.
Yes, you’re behind.
But no, it’s not too late—yet.
There are still legal, strategic moves you can make to reduce your 2025 tax bill. You just need to act fast, know what’s still on the table, and avoid Hail Marys that trigger IRS scrutiny.
This guide gives you last-minute, lawyer-specific tax strategies that are still in play before December 31—and how to use them wisely.
1. Spend Smarter: Accelerate Eligible Expenses
The IRS doesn’t care if you plan to spend. They only care when the money actually moves.
That means if you’ve been putting off:
- Buying new computers, monitors, or legal software
- Paying for bar dues, CLEs, or business insurance
- Scheduling that website overhaul or marketing campaign
Now’s the time to pay those bills.
Doing so in December gives you a 2025 deduction.
⚠ Reminder:
To be deductible, the service or item must be ordinary and necessary for your business—and paid for by year-end.
2. Fund Your Retirement (Yes, Even Now)
You don’t need a perfect retirement plan to make a smart move now.
If you’re a solo or small firm owner, you might still be able to contribute to a:
- Solo 401(k)
- SEP IRA
- Defined Benefit Plan (for high-income owners)
These contributions reduce your taxable income and invest in your future.
✅ Tip for S Corps:
Your W-2 wages determine how much you can contribute to a Solo 401(k). If you’re cutting it close, talk to your payroll provider now about running an additional December payroll to increase your contribution eligibility.
3. Pay Bonuses (the Right Way)
Yes, bonuses are tax-deductible—if you follow the rules.
To qualify:
- Bonuses must be paid before December 31
- They must be documented properly in payroll
- They must follow standard compensation guidelines (no disguised draws)
Bonuses can also help reduce your firm’s taxable income while boosting team morale during the holidays.
⚖ Legal Note:
Don’t try to “backdate” bonuses or disguise them as expenses. Stick to clean, traceable compensation practices.
4. Review (and Adjust) Owner Draws
If you’ve paid yourself irregularly—or haven’t been tracking draws vs. salary—you may be on track for:
- A larger-than-expected tax bill
- Payroll tax issues (especially if you’re an S Corp)
- Underpayment penalties for not withholding enough
CPA Tip:
Use your P&L and cash flow data to see if an end-of-year distribution makes sense, or if you’re better off leaving cash in the business and taking the distribution in 2026.
5. Prepay January Expenses
Prepaying expenses is one of the easiest, most IRS-approved ways to reduce taxable income—especially for cash-basis firms.
What you can prepay:
- Rent
- Legal research subscriptions
- Software
- Business insurance
- Utilities
This only works if you’re on a cash basis accounting method, which many small firms are. (If you’re unsure—book a call. We’ll tell you.)
6. Reconcile Your IOLTA and Clean Up Your Books
Even though this isn’t a “tax deduction” per se, you must finish the year with:
- Fully reconciled trust accounts
- Organized profit & loss statements
- Categorized business expenses
- No unrecorded income
You can’t maximize deductions or prepare an accurate return if your books are a mess. And come audit time, sloppiness is a liability.
⚠ Avoid This Mistake:
Trust account records that don’t match client ledgers. It’s one of the fastest ways to get in trouble with both the IRS and your state bar. Visit FixMyIOLTA.com if you need help!
7. Make Charitable Contributions (With Receipts)
Giving back feels good—but it’s also smart tax strategy when done right.
Law firms can deduct qualifying charitable contributions made to 501(c)(3) organizations if paid by year-end. The contribution must be documented and traceable.
This is a great time to:
- Donate to legal aid orgs or justice reform nonprofits
- Support community-based causes your firm believes in
- Reinforce your firm’s values and reputation while lowering your tax bill
8. Schedule a Strategy Call (Seriously)
A 15-minute call with your CPA could be the most valuable time you spend all month.
Here’s what you can clarify together:
- Whether you’ve overpaid or underpaid quarterly taxes
- Which deductions you’ve missed (or are about to miss)
- Whether a bonus or final draw makes sense
- What you should set up in January to avoid this rush next year
🔥 You’re Out of Time—But Not Out of Options
There’s no extension for December 31.
If you want to save on taxes, stay compliant, and feel good walking into 2026—move now. These next few weeks matter more than you think.
And if you’re not sure where to start? That’s what we’re here for.
Let’s make sure your last moves are your smartest ones!
