Top 5 Tax Breaks for Your Law Firm — A CPA’s Guide to Saving More This Year

By Carlton, CPA & Founder of Watchmen Consulting

📣 Law Firm Owners: Don’t Miss These Tax Breaks!

Running a successful law firm means juggling a lot—client demands, court deadlines, staffing, and of course, the financial health of your practice. As a CPA who works closely with law firms, I’ve seen many firms leave money on the table simply because they weren’t aware of the tax strategies available to them.

Here are the top 5 tax breaks every law firm should know about—and how you can take advantage of them:

1. Home Office Deduction

If you run your firm (or part of it) from a home office that’s used exclusively and regularly for business, you may be able to deduct a portion of your home expenses—including mortgage interest, rent, utilities, and insurance.

Tip: The simplified method allows $5 per square foot (up to 300 sq ft), but calculating actual expenses often yields a larger deduction for growing firms.

2. Retirement Plan Contributions

Setting up a retirement plan is not only a great way to prepare for the future but also a powerful tax-saving tool. Solo 401(k)s, SEP IRAs, and defined benefit plans can provide large deductions, especially for high-income partners.

CPA Insight: Law firms with employees should consider Safe Harbor 401(k)s to avoid nondiscrimination testing and still maximize partner contributions.

3. Section 179 and Bonus Depreciation

Bought new computers, legal software, or office furniture? You may be able to write off the full cost in the year of purchase using Section 179 or 100% bonus depreciation.

Eligible items include:

• Law practice management software

• Office equipment

• Client-facing tech (like conferencing tools)

4. Professional Services & Continuing Education

Most law firm expenses related to CLEs (continuing legal education), bar association dues, subscriptions, and consulting services (including tax and financial strategy) are fully deductible.

Pro Tip: Even travel related to conferences can be deducted—just make sure to document the business purpose.

5. Hiring Your Spouse or Children

If you’re a sole proprietor or single-member LLC, hiring your spouse or kids (especially teens) to help with administrative tasks can reduce your taxable income and shift income into a lower tax bracket.

CPA Bonus Tip: Wages paid to children under 18 (if structured properly) can be exempt from Social Security and Medicare taxes.

Final Word from Your CPA

The tax code is complex—but when you know where to look, it can work for your law firm. These five tax breaks are just the beginning. Working with a CPA who understands the nuances of legal practices can uncover even more savings and help you build a smarter financial foundation for your firm.

At Watchmen Consulting, we specialize in helping law firms like yours maximize deductions, stay audit-ready, and plan for growth. If you'd like a customized tax strategy for your practice, let’s connect.

Need help navigating taxes for your law firm?📞 Schedule your free consultation at www.watchmen-consulting.com