Last-Minute Tax Moves You Can Still Make Before the Year Ends
December 2, 2025
The CPA’s Year-End Tax Checklist for Law Firm Owners
Everything You Need to Do Before January 1
The fourth quarter is make-or-break season for your law firm’s finances. Whether you’re a solo attorney or running a multi-partner practice, closing out the year without a strategic tax review could mean:
- Overpaying Uncle Sam
- Missing key deductions
- Triggering avoidable audits or penalties
- Walking into the new year without a clear plan
As your dedicated CPA for law firm owners, I’ve created the ultimate checklist to help you avoid last-minute chaos, maximize deductions, and set your firm up for a profitable, compliant 2026.
Let’s walk through what you need to check off now—before December 31.
1. Reconcile Your Books and Bank Accounts
If you’re behind on your books, this is non-negotiable.
- Match your bank and credit card statements to your accounting software
- Confirm trust account (IOLTA) reconciliation is complete and accurate
- Review and clean up expense categories
- Address any missing transactions or miscategorized entries
A clean set of books is the foundation of accurate tax filings—and it’s your best defense in an audit.
Trust account not reconciled in the last 30 days? You’re out of compliance. Fix it now. 2. Run (and Review) Key Financial Reports
Don’t just look at your bank balance—look at the data that drives your firm.
Run these reports for your internal review and your CPA:
- Profit & Loss Statement (YTD) – Are your margins healthy?
- Balance Sheet – Are your liabilities growing faster than your revenue?
- Cash Flow Report – Can you cover your Q1 expenses without taking on debt?
- Owner’s Draw Summary – Have you paid yourself consistently and tax-efficiently?
Ask your CPA to compare actuals to your quarterly tax payments. If you’re ahead or behind—there’s still time to adjust.
3. Confirm Your Entity Structure Still Works for You
If you’re structured as a sole proprietorship, PLLC, or S Corp, the tax impact is real—and it changes with your income.
A year-end check-in with your CPA should answer:
- Is your current entity still the most tax-efficient?
- Would switching to an S Corp save you money in 2026?
- Are you properly documenting reasonable compensation (if you’re already an S Corp)?
Your business evolves. Your entity strategy should, too.
4. Make (Smart) End-of-Year Purchases
Only spend if it makes strategic sense—but don’t miss out on legit deductions by waiting too long.
Common purchases that help:
- New computers, office furniture, or tech
- Prepaid subscriptions (research tools, legal software)
- Marketing services for Q1
- Continuing education and bar association dues
Timing matters. Cash-basis firms only deduct what’s paid by December 31.
5. Maximize Your Retirement Contributions
Don’t leave free money on the table.
Depending on your entity type and payroll setup, you may be eligible to contribute to:
- Solo 401(k) – for owner-employees with W-2 wages
- SEP IRA – for LLCs and partnerships
- Defined Benefit Plan – for high-earning attorneys seeking larger deductions
Confirm deadlines and contribution limits with your CPA.
6. Review Payroll and Contractor Data
Avoid 1099/W-2 chaos by reviewing:
- Employee wages, benefits, and withholdings
- Contractor payments—especially those exceeding $600/year
- Missing W-9s (request them now)
- Classification accuracy (employee vs. contractor)
Run your final payroll no later than December 31 to count toward this year’s deductions.
7. Document Charitable Giving
Did you donate to a 501(c)(3) organization this year?
- Keep written acknowledgments for donations over $250
- Ensure you made the donation before December 31
- Make a last-minute contribution if it aligns with your firm’s values and tax strategy
Charitable giving is not only good for your community—it can reduce your taxable income when documented properly.
8. Meet with Your CPA to Forecast
Before the year ends, your CPA should help you:
- Estimate your 2025 tax liability
- Evaluate if you’ve overpaid or underpaid quarterly taxes
- Plan final moves—bonuses, draws, equipment, contributions
- Build a Q1 cash flow forecast for 2026
This is the moment to course-correct—not in March when it’s too late to do anything but pay up.
Need Help? That’s What We Do.
At Prestige Accounting & Consulting, we work exclusively with lawyers and law firm owners—which means we know exactly what matters for your compliance, tax strategy, and growth.
If you’re feeling overwhelmed, behind, or just want peace of mind heading into the new year…
Let’s make sure you walk into January with confidence—not a pile of tax-time stress.
