As the leaves start to fall and pumpkin spice lattes make their seasonal debut, it’s time for a less thrilling but crucial autumn activity—preparing for year-end taxes. For attorneys and fast food franchise owners, this time of year can be stressful, but a little proactive planning can go a long way. The good news is that with the right approach, you can avoid last-minute headaches, maximize deductions, and get your financial house in order before the holiday season kicks in.
Let’s break down some actionable, easy-to-follow tips that will help you tackle year-end taxes with confidence, no matter what kind of business you run.
1. Get Organized: Your Financial Paperwork Matters
First things first—organization is key. Whether you’re running a law firm or a fast food franchise, tax preparation can quickly become overwhelming if your financial documents are scattered. Here’s what you need to have in hand:
- Income Statements: Ensure that all revenue streams are documented and accessible. For attorneys, this might include legal fees, retainers, or consulting income. For franchise owners, make sure you’re capturing sales data from all locations.
- Expense Receipts: It’s time to gather every single receipt from the year. This includes everything from office supplies and equipment purchases to employee salaries and any marketing costs. Attorneys may want to keep a close eye on deductible legal expenses like continuing education, while franchise owners should track inventory and operational costs.
- 1099s and W-2s: If you employ staff or hire contractors, ensure you have the right tax forms in place. This is also the time to reconcile employee salaries, bonuses, and benefits.
- Bank Statements and Credit Card Reports: These provide a good check against your income and expenses, ensuring that nothing gets missed.
By organizing everything now, you’ll make the actual tax-filing process much smoother. It’s a small step that can prevent huge headaches down the road.
2. Understand Industry-Specific Tax Deductions
One size does not fit all when it comes to tax deductions. Both attorneys and fast food franchise owners have unique opportunities to save on taxes if they know where to look.
Tax Deductions for Attorneys:
- Home Office Deduction: If you run a law practice from home, you may be eligible to deduct expenses like a portion of your rent or mortgage, utilities, and even office furniture.
- Continuing Education: Any classes, seminars, or certifications taken to further your legal career may be tax-deductible. This includes the cost of attending industry conferences and purchasing study materials.
- Professional Fees and Dues: Memberships in legal organizations like the American Bar Association or local bar associations are also deductible.
Tax Deductions for Fast Food Franchise Owners:
- Franchise Fees: Initial and ongoing franchise fees are often deductible, which can be a significant tax saver, especially for new franchise owners.
- Equipment and Repairs: Any upgrades or repairs made to your restaurant, from kitchen equipment to dining furniture, can often be written off. Consider Section 179 deductions, which allow you to deduct the full cost of qualified equipment purchased during the year.
- Food Waste: Depending on your location, you may be able to write off a portion of unsold food or inventory losses due to spoilage or other factors.
3. Plan for Quarterly Tax Payments
Many business owners forget about quarterly tax payments, which can lead to an unpleasant surprise at the end of the year. Both attorneys and franchise owners are typically required to make estimated tax payments throughout the year. The key is to ensure that you’re on track and don’t owe a significant amount when tax season rolls around.
- Attorneys: If your practice sees a steady flow of income, but you’re not making quarterly payments, you could face penalties. Now’s a great time to review your income-to-date and make a catch-up payment if necessary.
- Franchise Owners: Fast food franchises often have seasonal ebbs and flows. If your sales peaked over the summer but dipped in the fall, take stock of your overall earnings and adjust your quarterly tax payments to match.
A tax professional can help you review your payments and make sure you’re not underpaying or overpaying.
4. Maximize Retirement Contributions
One of the most overlooked but effective tax strategies is contributing to retirement plans before the year ends. Attorneys and franchise owners alike can benefit from setting aside income in tax-advantaged retirement accounts.
- Solo 401(k) or SEP IRA for Attorneys: If you’re a solo practitioner, contributing to a solo 401(k) or SEP IRA can reduce your taxable income and help you save for the future. The good news? You have until April 15 of next year to make these contributions, but planning ahead can give you a sense of how much to set aside.
- SIMPLE IRA for Franchise Owners: Many fast food franchise owners offer SIMPLE IRAs to their employees, and contributions to these accounts are tax-deductible. Even better, contributing to your own retirement plan will help reduce your taxable income.
5. Consult a Professional—Don’t Go It Alone
Tax preparation can feel like an overwhelming, endless maze of forms, deductions, and calculations. That’s why consulting a tax professional is one of the smartest moves you can make. Accountants and bookkeepers who specialize in working with attorneys and franchise owners can offer valuable insights into how to maximize deductions, avoid common tax pitfalls, and ensure you’re staying compliant with tax laws.
If you’ve had a particularly complex year—like expanding your law practice or opening a new franchise location—it’s especially important to get expert guidance.
6. Don’t Forget End-of-Year Bonuses
Many business owners like to show their appreciation to employees through end-of-year bonuses. For fast food franchise owners, this could mean rewarding staff who have worked through busy periods. For attorneys, it might be an opportunity to thank paralegals or office staff for their support.
Bonuses are deductible, but they must be reported as employee compensation. Don’t forget to factor these into your year-end planning.
7. Review Any COVID-19 Relief and PPP Loan Forgiveness
If you received COVID-19 relief funds or participated in the Paycheck Protection Program (PPP), now is the time to review your situation. PPP loans that were forgiven may not be taxable, but the forgiveness process must be correctly documented. Fast food franchise owners and attorneys who received any form of government aid should work with their accountant to ensure everything is properly recorded.
While October is usually associated with spooky season, there’s no need for your year-end tax prep to be a nightmare. By getting organized now, understanding your industry-specific deductions, planning your quarterly payments, and consulting a professional, you can enjoy a stress-free holiday season knowing that your taxes are well in hand.
Remember, staying proactive and informed is the key to making tax season a little less daunting and a lot more manageable.
Need help preparing for your year-end taxes? Contact us today to schedule a consultation! We specialize in helping attorneys and fast food franchise owners maximize deductions and simplify their tax filings. Let’s take the stress out of tax season—together.