Not unlike many of my colleagues, I’m spending what is turning out to be an amazingly beautiful Spring weekend in the Bay Area preparing tax returns due next week – most specifically those of my law business, Confluence Law Partners.
What I’ve discovered is that there are key components of Confluence’s model that don’t fit neatly within standard accounting practices, resulting in higher bookkeeping and tax preparation costs and exposing me and the firm to potentially higher tax liability.
While its going to take some time for the new normal shop to reduce bookkeeping and tax preparation costs, there are some things that can be done now to protect against inflated tax liability. Furthermore, on reflection, its not surprising that current bookkeeping practices are not easily applied to the new normal model’s aggregation of outside legal and non-legal services; status quo bookkeeping practices are directed to serving insular status quo hourly law firms that don’t rely on significant outside collaborations to deliver legal services and whose model dissuades its lawyers from using outside legal services. More after the jump.