Calculating the tax liability of a partner at a law firm can be complex especially in cases where the firm files multiple state tax returns. When firms operate as pass-through entities, income tax also becomes the obligation of the individual partners as is obligatory reporting business income on a form K-1 and paying federal and self-employment taxes. CBM helps identify all deductions allowed to partners and calculates estimated quarterly tax payments.
It can be a shock for a recently promoted associate to suddenly find herself an owner at her law firm, liable for the cost of benefits, quarterly estimated income taxes and capital contributions. Newer partners may find that their monthly draw payouts are lower than what they received as an associate! Understanding how to navigate the changing tax and business liabilities of new partners is not easy. CBM helps make sense of your new situation.
CBM specializes in consulting on critical business transactions, one of the most important of which is shareholder agreements. When an attorney is made partner, his relationship with the firm takes on added complexity and obligations. Our professionals help law firms and new partners structure agreements in a way that will be mutually beneficial to the attorney and his business in the long term.
CBM’s divorce financial planning team is sought by family law attorneys and other professionals who serve divorcing individuals to provide in-depth financial strategy during one of life’s most challenging transitions. We provide informed guidance in mediation, financial dispute resolution, litigation and forensic strategy. We are active in a wide range of Washington, DC area divorce groups and are available to provide expert witness testimony when a case goes to trial. Finally, we cultivate relationships with attorneys pursuing the best financial outcomes for divorcing clients.
Calculating the tax liability for your law firm will depend on a number of factors including the entity type of the firm, the number of owners, the location(s) of your practice and finance considerations. Firms in a large market must comply with tax laws unique to each state where they do business while solo practitioners must file a Schedule C with their return. CBM’s team of tax professionals can also help firms identify deductions to minimize their tax liability. Our expertise dealing with these and other challenges comes from working with firms to ensure federal and state compliance.
Every estate attorney can benefit from a partnership with an experienced accounting team, and CBM brings a broad range of expertise you will find essential. Our tax accountants, financial planners and valuations specialists provide insights on complex financial issues your clients will need to consider as you help them draw up their estate documents. Business succession planning, asset gifting and the taxation of trusts are only a few areas in which we supplement your expertise to ensure the process is a satisfactory one that helps each individual meet their estate planning goals.
Attorneys tend to be well compensated for their expertise and, as a result, may find it beneficial to work closely with a wealth management professional. Through May Barnhard Investments, CBM’s financial advisory subsidiary, law firm partners are provided with access to the in-depth expertise of a team familiar with tax strategy, retirement planning, investment management, estate planning and developing short- and long-term financial plans. Contact MBI now to learn how our professionals can help you secure a prosperous and peaceful future.
CBM’s quick reference resources are high-level insights published by our forward-thinking tax, accounting and consulting professionals that focus on critical issues and concerns facing law firms and other businesses. CBM is available to help you implement solutions that minimize risks and keep you on the road to long-term business sustainability.