Lawyers

Lawyers: work-related expenses

To claim a work-related deduction:

• you must have spent the money yourself and weren’t reimbursed
• it must be directly related to earning your income
• you must have a record to prove it.

If the expense was for both work and private purposes, you can only claim a deduction for the work-related portion.

Deductions for lawyers can include:

• Car and travel expenses
• Clothing expenses
• Self-education expenses
• Home office expenses
• Phone expenses
• Meal expenses
• Tools and equipment expenses
• Insurance expenses
• Other expenses

Other expenses you can’t claim

• Admission fees – you can’t claim a deduction for the cost of admission fees.
• Club membership fees and club sponsorship fees – you can’t claim a deduction for club membership fees, for example, your annual golf club membership fees, even if it helps you to meet clients.
• Gifts and greeting cards – you can’t claim a deduction for the cost of gifts and greeting cards you buy for clients. This is a private expense.
• Social functions – you can’t claim a deduction for the cost of attending staff dinners or other social functions even if clients meet you there.
• Suspension from practice – you can’t claim a deduction for the cost of defending your right to practise.

Remember to report all income in your tax return and remove any portion of your expense that is not work-related.

When you claim a deduction, you are stating that everything you have told us is true and can be supported with records. You are responsible for the claims you make in your tax return, even if you use a registered tax agent to prepare and lodge it on your behalf.

Thinking of starting a law firm?

Starting a business is a bit like building a house that requires solid foundation. In a business sense these foundations include the right tax structure and accounting software, adequate and appropriate insurances together with a marketing plan and a lead generation website. Your choice of business structure is absolutely critical and there are a number of different options including sole trader, partnership, company and trust.

Whenever we provide advice on business structures we always take into account:

• Income Tax Minimisation
• Maximize Asset Protection
• Allow for the Admission of New Business Partners or Investors
• Comply with all Legal Requirements in your Industry
• The Risk Profile of Your Industry
• Consider Future Entitlement to Discount Capital Gains Tax Concessions

Lawyers are one of our specialist client groups and having mentored a number of business owners through the start-up phase of their business we have built a reputation as business start-up specialists. If you are looking to start a business as a lawyer or buy into an existing business, there are numerous issues to consider. It can be a maze of issues but as accountants and business advisors we can assist you in all of these areas plus provide advice on the preparation of a business plan, marketing plan and a cash flow budget.

We will help you understand the ways to grow a business plus identify the key profit drivers in your business. We can walk you through a number of profit improvement strategies and even quantify the profit improvement potential in your business. Our role is to make sure you know your numbers and don’t leave any profit or tax savings on the table.

The law firm industry is challenging but can be very rewarding. All business owners need to budget, plan, and monitor their business’ performance. We know the pitfalls of law firm industry and look forward to working with you to build your business and grow your wealth.

In summary, we strive to deliver practical, timely and cost effective advice that could give you a serious competitive edge in your industry. Contact us now to arrange the first free 1/2 hour meeting to discuss in details.