Managing the Tax Planning Process to Avoid Unpleasant Surprises

The year-end tax planning process involves projecting year-end results, setting expectations with partners, developing a strategy to meet those expectations and communicating action plans. The tax planning process not only dictates the tax strategy and results, it also affects the partners' individual tax situations, compliance with bank covenants, financial reporting goals, the budget for 2011 and long-term business goals such as ensuring there is sufficient capital. The payoff for putting sufficient time, thought and energy into the year-end planning process is avoiding unpleasant surprises at the beginning of 2011. The following is a step-by-step process to ensure a smooth year-end tax planning process.

Step 1: Projecting Year-End Results and Potential Adjustments

The first step in managing the tax planning process is projecting year-end results. In order to do this, you need to use a clean starting point and project out results through the end of the year. Review your financial results through Nov. 30 of this year and make any adjustments that need to be made to report accurate financial results. Are there items on the balance sheet that have yet to be reconciled? Are there expense items or large miscellaneous balances that must be reclassified? Once you feel comfortable that the November month-end results are accurate, project out cash basis income and expenses for December to arrive at a year-end projection.

Consider what year-end adjustments have to be made and what related decisions those will trigger. Some typical year-end adjustments include depreciation expense, write-offs for uncollectible client hard costs and accrued pension contributions. Each of these adjustments may leave you with a range of alternatives. Set the minimum and maximum adjustments that can be made for your firm's situation. For example, firms can choose to take the basic depreciation required on current year property and equipment additions or can elect to take the maximum allowable under Section 179, if that is an option for the firm. Some firms have discretion over determining the amount of current year employer contributions to be made to the pension plan. (Other firms have mandatory requirements under safe harbor plans or top-heavy rules.) Consider what the minimum required and maximum deductible and allowable pension contributions are, and determine with firm management the amount to contribute within this range.

Brainstorm to determine whether there are any items not deductible for tax purposes that need to be considered and communicated to management. These typically include items such as non-deductible portions of meals and entertainment, and officers' life insurance premiums. There may also be other limitations on deductions based on your firm's legal structure. C corporations have limitations on currently deductible charitable contributions to consider. After reviewing actual results to date, projections through year end and potential adjustments, you have developed a preliminary year-end tax plan; but with that done, you have only just begun the process.

Step 2: Review Current Tax Law for Compliance, Alternative Approaches and Potential Tax Traps

Accelerated Depreciation Deductions

Summarize all of your capital expenditures by major classification: computer software, computer equipment, furniture and fixtures, office equipment, capital leases and leasehold improvements. Different classes of assets have different depreciable lives for tax purposes, so this is an important first step.

Next, break down each major class of additions by date placed in service and date paid. Your firm is eligible for a depreciation deduction based on date placed in service, but the asset must have been paid for by the end of 2010. If an asset addition was paid with a credit card, but the credit card bill was not paid until 2011, make sure the addition is on your 2010 list. Even for cash-basis taxpayers, credit card expenditures are tax deductible in the year charged, not the year cash was paid, similar to a note payable or line of credit.

The next step is to review depreciable lives for assets purchased. Generally, computer software is depreciated over three years, computer equipment over five years, furniture and fixtures and office equipment over seven years, and qualified leasehold improvements over 15 years for 2010.

Also review any limitations for depreciation that may affect your firm. These may include total annual additions to be eligible for a Section 179 deduction, luxury auto rules and placed-in-service dates mentioned above.

It is important to determine whether your firm is eligible for the Section 179 depreciation election. The new Small Business Jobs and Credit Act of 2010 (H.R. 5297) considerably expanded incentives for capital expenditures. Your firm may be allowed to deduct 100% of eligible additions up to $500,000 for 2010, and then use accelerated methods of depreciation and bonus depreciation for the remaining additions up to gross annual additions limitations. This optional election can represent a significant additional tax deduction for your firm. However, there are some limitations. If your firm has over $2 million in qualifying additions, then the eligible Section 179 expense deduction gets phased out for additional expenditures.

If your firm moved during 2010, remember to write off the unamortized leasehold improvements related to the former lease. In addition, if your firm is a C corporation and has a tax loss, there will be additional limitations. Firms that moved in 2010 may be able to take advantage of component depreciation rules. This is a method of breaking down the details of a leasehold improvement project to see if any individual purchases can be depreciated over a shorter time period than the traditional 15 years (for 2010). There are very specific rules related to this area, so talk to your tax adviser. In addition, remember to write off or deduct the remaining net value of leasehold improvements from your former office space. Sometimes this is a surprise deduction. These assets may have been depreciating over 15 or 39 years, yet may still have a significant net value remaining. The write off must be taken in the year of the move and termination of the prior lease. This is great news for firms looking for extra tax deductions, and can be shocking news for firms that are not. If your firm is looking for those extra deductions, an attractive new rule in 2010 is that of the $500,000 in allowable Section 179 expense, $250,000 can be used for qualified leasehold improvements.

Finally, plan for 2011. Project capital expenditure needs and depreciation deductions and see how this may affect your estimated tax profits in 2011, based on the depreciation strategies being considered for 2010.

Pension Plan Deductions

How can you change your firm's taxable income for 2010 using features that exist in your current pension plan? If your pension plan has a discretionary contribution feature, it may provide your firm with an additional tax deduction. Plans with discretionary 401(k) match or discretionary profit-sharing features, as stated in the current pension plan documents or adoption agreements, may allow firms to decide after year end to make a discretionary contribution for 2010. The beauty of this rule is that the contributions may not have to be funded until 2011, but firms still get a deduction for 2010. If you are looking to reduce your pension contribution, you should review the balance of funds in the plan forfeiture account that may be used to offset the required employer contribution for 2010 as defined in the plan documents.

The IRS recently announced pension plan limitations for 2011. The following limitations remain the same as 2010:

• Elective deferral ' $16,500
• Catch-up contribution (50+) ' $5,500
• Defined contribution (415 max) ' $49,000
• Defined benefit (415 max) ' $195,000
• Annual compensation limit ' $245,000
• Key employee compensation ' $160,000
• Highly compensated limit ' $110,000

Uncollectible Client Costs

Capitalized advanced client costs considered not collectible as of year end can be deducted for tax purposes in 2010 as “bad debt.” Review your accounts receivable and work in process to make sure you deduct any capitalized costs in 2010 if they were deemed uncollectible at that point in time. Although there has been some legal pressure to change the IRS rules requiring firms to treat hard costs as loans to client vs. tax deductible expenses when paid, no changes have been made for 2010.

Revenue Recognition

One would think that revenue recognition in a cash-basis taxpayer firm is pretty simple. If the cash came in before year end, whether it was deposited or not, it is a taxable cash receipt. However, there are a few instances when it is not so clear. The existence of client fund accounts and the prudent practice of accepting retainers for work not yet performed complicate this matter ' so does accepting property, investment interests or notes receivable in payment of fees.

As fees are earned and billed to clients, authorized payments should be transferred from a client fund retainer account to the firm's operating account and recognized as taxable revenue. If this is not done in a timely manner, two problems exist. Your firm may be underreporting taxable income and your firm is commingling client funds with firm assets, which is prohibited. Make sure you, your financial staff and other employees of the firm who handle client fund accounts are aware of the rules surrounding accounting for client funds.

If the firm has received property in lieu of cash payment for fees, what is the value of the property? If the property received is an investment interest in an unrelated business that operates as a “flow through entity,” such as a partnership or an S corporation, the firm could have additional tax income or loss associated with the investment. In order to decrease the chances of unexpected taxable income, it is wise to request estimates of what taxable income may be generated and allocated to your firm from these outside investments so it is not a surprise when the Form K-1 comes in, thus changing the firm's taxable income unexpectedly at the last minute.

Limitations on Deductions

Just because the firm disbursed cash, it does not mean it will necessarily receive a tax deduction. Do not assume that changes in cash at year end translate into additional deductions. Cash can be disbursed for items that are not tax deductions, such as deposits, client hard costs, repayments of debts, and distributions, to name a few. Some firms make the mistake of assuming that a decrease in cash translates into a decrease in taxable income. This is not always the case. Other limitations on deductions include capital losses and charitable contributions in excess of limitations for C corporations.

Owner Benefits

Are officers' life, disability and health benefits and other taxable fringe benefits or non-deductible personal expenses summarized and being handled properly from a tax point of view at your firm? To find the answer, summarize all owner benefits and review them with your tax adviser for compliance. Some benefits may not be deductible by the firm, but can be deducted individually by the owner. Do not miss the opportunity for a proper tax deduction for benefits paid to owner employees. In addition, do not fall short of tax requirements in the treatment of employer-owned vehicles or stock given in lieu of compensation. Changes made under the Small Business Jobs and Credit Act of 2010 generally treat medical premiums paid by self-employed individuals as deductions in arriving at self-employment income in 2010. (So far for 2011, this is set to revert back to the old rules of not being deductible in determining self-employment income.) Also, you must report as additional W-2 income all benefits paid to greater than 2% shareholders of S corporations.

Multi-state Tax Issues

Is your firm filing income tax returns in all required states? Consider where attorneys are licensed, maintain offices, have property or equipment, or are paying payroll taxes in other states to determine what your obligation is to pay income taxes to those other states.

Step 3: Setting Management Expectations

An important step in managing the tax planning process is setting management expectations. This should be done early enough to effectuate desired changes. After you have taken a first pass at projecting year-end results, review the plan with management, agree upon goals and set expectations. Just because you have projected a certain amount of profits, it does not mean that this is an agreeable plan for management. If management expectations are greater, you may need to look at strategies to reduce expenses and put a full-court press on collections to accelerate cash received before year end. If management believes the results are too rich and 2011 holds various uncertainties, is there a way to prepay certain expenses and maximize certain deductions to come closer in line with year-end goals and expectations?

Points to consider to help manage taxable income:

1) What are realistic targets for the firm's collections? What can be done to accelerate collections if this is the goal? What can be done to defer collections if that is the goal?

• Collecting the maximum amount before year end requires a detailed review of receivables and work in process by partner and by client. Goals should be set at the client and partner level. This process needs to start right away if it has not started already. Clients need to be contacted, letters must be written, e-mails sent, and backup provided. This can be a labor-intensive, time-consuming process if receivables have been neglected throughout the year.
• Deferring collections may be an easier process than accelerating collections. One sure way to defer collections is to delay billing and slow down collection efforts. This may seem like a foolish strategy, but firms successfully use this approach to their tax advantage if there was a windfall of revenue in the current year and the outlook for next year is uncertain. However, take caution in this effort to avoid creating bad debts that cannot be collected later. Carefully weigh outcomes before delaying collection efforts for clients who may be experiencing hard times or facing an uncertain future.

2) Review expenses to determine what must be paid prior to year end, what can be paid next year and what can be prepaid in the current year to accelerate deductions. Discuss this with your tax adviser for more ideas.

• Some firms prepay certain expenses to manage the taxable income to expectations. Items to consider prepaying include rent, certain employee benefits, maintenance contracts, and professional fees. Only prepay vendors with whom you will be doing business in the future and who are financially sound. And if prepaying vendors, use the opportunity to request discounts for paying in advance to solidify a business purpose.
• Most law firms pay taxes on the cash basis of accounting vs. the accrual basis so cash receipts and disbursements have a big impact on taxable income.
• Review expenses that have alternative approaches and decide what course of action to take, such as when to pay employee bonuses, what method of depreciation to use and finalizing the firm's discretionary pension plan contribution.

Step 4: Consider How Your Plan Affects Other Parts Of Your Business

Before finalizing your year-end plan, consider how it affects other constituents, such as the bank, your shareholders, and your budget for 2011. Some questions to ask include:

• Will any parts of the plan cause the firm to be in default of any debt loan covenants?
• How will the plan affect income, expenses and cash flow in 2011?
• How will the plan affect partner compensation goals and expectations?
• Does the strategy adversely affect firm capital retention plans?

Final Step: Avoid Unpleasant Surprises

Have a few strategies ready to put into motion if things do not end up as expected. Plan for unexpected events and have a pre-approved contingency plan that can be implemented at the last minute. For example, if you expected certain receipts that did not come in, or if you received a last-minute wire transfer of taxable income, what additions deductions can you limit or use to achieve results that will come in line with expectations? Remember that in 2010, Dec. 31 lands on a Friday, which may be a payday at your firm and possibly a holiday. If your office is closed, who is checking the bank accounts online to determine whether unexpected wire transfers are received?

There are many steps to wade through as part of a prudent year-end planning process. Be sure not to skip any and end up unpleasantly surprised in the new year. Take the time to manage the tax planning process properly so you can relax, enjoy and have a Happy New Year!

K. Jennie Kinnevy, a member of this newsletter's Board of Editors, is the director of the Law Firm Services Group at Feeley & Driscoll, P.C. (http://www.fdcpa.com/). The Law Firm Services Group provides tax, accounting, business advisory and consulting services to law firms. Based in Boston, Kinnevy can be reached at [email protected] or by phone at 617-456-2407.

The year-end tax planning process involves projecting year-end results, setting expectations with partners, developing a strategy to meet those expectations and communicating action plans. The tax planning process not only dictates the tax strategy and results, it also affects the partners' individual tax situations, compliance with bank covenants, financial reporting goals, the budget for 2011 and long-term business goals such as ensuring there is sufficient capital. The payoff for putting sufficient time, thought and energy into the year-end planning process is avoiding unpleasant surprises at the beginning of 2011. The following is a step-by-step process to ensure a smooth year-end tax planning process.

Step 1: Projecting Year-End Results and Potential Adjustments

The first step in managing the tax planning process is projecting year-end results. In order to do this, you need to use a clean starting point and project out results through the end of the year. Review your financial results through Nov. 30 of this year and make any adjustments that need to be made to report accurate financial results. Are there items on the balance sheet that have yet to be reconciled? Are there expense items or large miscellaneous balances that must be reclassified? Once you feel comfortable that the November month-end results are accurate, project out cash basis income and expenses for December to arrive at a year-end projection.

Consider what year-end adjustments have to be made and what related decisions those will trigger. Some typical year-end adjustments include depreciation expense, write-offs for uncollectible client hard costs and accrued pension contributions. Each of these adjustments may leave you with a range of alternatives. Set the minimum and maximum adjustments that can be made for your firm's situation. For example, firms can choose to take the basic depreciation required on current year property and equipment additions or can elect to take the maximum allowable under Section 179, if that is an option for the firm. Some firms have discretion over determining the amount of current year employer contributions to be made to the pension plan. (Other firms have mandatory requirements under safe harbor plans or top-heavy rules.) Consider what the minimum required and maximum deductible and allowable pension contributions are, and determine with firm management the amount to contribute within this range.

Brainstorm to determine whether there are any items not deductible for tax purposes that need to be considered and communicated to management. These typically include items such as non-deductible portions of meals and entertainment, and officers' life insurance premiums. There may also be other limitations on deductions based on your firm's legal structure. C corporations have limitations on currently deductible charitable contributions to consider. After reviewing actual results to date, projections through year end and potential adjustments, you have developed a preliminary year-end tax plan; but with that done, you have only just begun the process.

Step 2: Review Current Tax Law for Compliance, Alternative Approaches and Potential Tax Traps

Accelerated Depreciation Deductions

Summarize all of your capital expenditures by major classification: computer software, computer equipment, furniture and fixtures, office equipment, capital leases and leasehold improvements. Different classes of assets have different depreciable lives for tax purposes, so this is an important first step.

Next, break down each major class of additions by date placed in service and date paid. Your firm is eligible for a depreciation deduction based on date placed in service, but the asset must have been paid for by the end of 2010. If an asset addition was paid with a credit card, but the credit card bill was not paid until 2011, make sure the addition is on your 2010 list. Even for cash-basis taxpayers, credit card expenditures are tax deductible in the year charged, not the year cash was paid, similar to a note payable or line of credit.

The next step is to review depreciable lives for assets purchased. Generally, computer software is depreciated over three years, computer equipment over five years, furniture and fixtures and office equipment over seven years, and qualified leasehold improvements over 15 years for 2010.

Also review any limitations for depreciation that may affect your firm. These may include total annual additions to be eligible for a Section 179 deduction, luxury auto rules and placed-in-service dates mentioned above.

It is important to determine whether your firm is eligible for the Section 179 depreciation election. The new Small Business Jobs and Credit Act of 2010 (H.R. 5297) considerably expanded incentives for capital expenditures. Your firm may be allowed to deduct 100% of eligible additions up to $500,000 for 2010, and then use accelerated methods of depreciation and bonus depreciation for the remaining additions up to gross annual additions limitations. This optional election can represent a significant additional tax deduction for your firm. However, there are some limitations. If your firm has over $2 million in qualifying additions, then the eligible Section 179 expense deduction gets phased out for additional expenditures.

If your firm moved during 2010, remember to write off the unamortized leasehold improvements related to the former lease. In addition, if your firm is a C corporation and has a tax loss, there will be additional limitations. Firms that moved in 2010 may be able to take advantage of component depreciation rules. This is a method of breaking down the details of a leasehold improvement project to see if any individual purchases can be depreciated over a shorter time period than the traditional 15 years (for 2010). There are very specific rules related to this area, so talk to your tax adviser. In addition, remember to write off or deduct the remaining net value of leasehold improvements from your former office space. Sometimes this is a surprise deduction. These assets may have been depreciating over 15 or 39 years, yet may still have a significant net value remaining. The write off must be taken in the year of the move and termination of the prior lease. This is great news for firms looking for extra tax deductions, and can be shocking news for firms that are not. If your firm is looking for those extra deductions, an attractive new rule in 2010 is that of the $500,000 in allowable Section 179 expense, $250,000 can be used for qualified leasehold improvements.

Finally, plan for 2011. Project capital expenditure needs and depreciation deductions and see how this may affect your estimated tax profits in 2011, based on the depreciation strategies being considered for 2010.

Pension Plan Deductions

How can you change your firm's taxable income for 2010 using features that exist in your current pension plan? If your pension plan has a discretionary contribution feature, it may provide your firm with an additional tax deduction. Plans with discretionary 401(k) match or discretionary profit-sharing features, as stated in the current pension plan documents or adoption agreements, may allow firms to decide after year end to make a discretionary contribution for 2010. The beauty of this rule is that the contributions may not have to be funded until 2011, but firms still get a deduction for 2010. If you are looking to reduce your pension contribution, you should review the balance of funds in the plan forfeiture account that may be used to offset the required employer contribution for 2010 as defined in the plan documents.

The IRS recently announced pension plan limitations for 2011. The following limitations remain the same as 2010:

• Elective deferral ' $16,500
• Catch-up contribution (50+) ' $5,500
• Defined contribution (415 max) ' $49,000
• Defined benefit (415 max) ' $195,000
• Annual compensation limit ' $245,000
• Key employee compensation ' $160,000
• Highly compensated limit ' $110,000

Uncollectible Client Costs

Capitalized advanced client costs considered not collectible as of year end can be deducted for tax purposes in 2010 as “bad debt.” Review your accounts receivable and work in process to make sure you deduct any capitalized costs in 2010 if they were deemed uncollectible at that point in time. Although there has been some legal pressure to change the IRS rules requiring firms to treat hard costs as loans to client vs. tax deductible expenses when paid, no changes have been made for 2010.

Revenue Recognition

One would think that revenue recognition in a cash-basis taxpayer firm is pretty simple. If the cash came in before year end, whether it was deposited or not, it is a taxable cash receipt. However, there are a few instances when it is not so clear. The existence of client fund accounts and the prudent practice of accepting retainers for work not yet performed complicate this matter ' so does accepting property, investment interests or notes receivable in payment of fees.

As fees are earned and billed to clients, authorized payments should be transferred from a client fund retainer account to the firm's operating account and recognized as taxable revenue. If this is not done in a timely manner, two problems exist. Your firm may be underreporting taxable income and your firm is commingling client funds with firm assets, which is prohibited. Make sure you, your financial staff and other employees of the firm who handle client fund accounts are aware of the rules surrounding accounting for client funds.

If the firm has received property in lieu of cash payment for fees, what is the value of the property? If the property received is an investment interest in an unrelated business that operates as a “flow through entity,” such as a partnership or an S corporation, the firm could have additional tax income or loss associated with the investment. In order to decrease the chances of unexpected taxable income, it is wise to request estimates of what taxable income may be generated and allocated to your firm from these outside investments so it is not a surprise when the Form K-1 comes in, thus changing the firm's taxable income unexpectedly at the last minute.

Limitations on Deductions

Just because the firm disbursed cash, it does not mean it will necessarily receive a tax deduction. Do not assume that changes in cash at year end translate into additional deductions. Cash can be disbursed for items that are not tax deductions, such as deposits, client hard costs, repayments of debts, and distributions, to name a few. Some firms make the mistake of assuming that a decrease in cash translates into a decrease in taxable income. This is not always the case. Other limitations on deductions include capital losses and charitable contributions in excess of limitations for C corporations.

Owner Benefits

Are officers' life, disability and health benefits and other taxable fringe benefits or non-deductible personal expenses summarized and being handled properly from a tax point of view at your firm? To find the answer, summarize all owner benefits and review them with your tax adviser for compliance. Some benefits may not be deductible by the firm, but can be deducted individually by the owner. Do not miss the opportunity for a proper tax deduction for benefits paid to owner employees. In addition, do not fall short of tax requirements in the treatment of employer-owned vehicles or stock given in lieu of compensation. Changes made under the Small Business Jobs and Credit Act of 2010 generally treat medical premiums paid by self-employed individuals as deductions in arriving at self-employment income in 2010. (So far for 2011, this is set to revert back to the old rules of not being deductible in determining self-employment income.) Also, you must report as additional W-2 income all benefits paid to greater than 2% shareholders of S corporations.

Multi-state Tax Issues

Is your firm filing income tax returns in all required states? Consider where attorneys are licensed, maintain offices, have property or equipment, or are paying payroll taxes in other states to determine what your obligation is to pay income taxes to those other states.

Step 3: Setting Management Expectations

An important step in managing the tax planning process is setting management expectations. This should be done early enough to effectuate desired changes. After you have taken a first pass at projecting year-end results, review the plan with management, agree upon goals and set expectations. Just because you have projected a certain amount of profits, it does not mean that this is an agreeable plan for management. If management expectations are greater, you may need to look at strategies to reduce expenses and put a full-court press on collections to accelerate cash received before year end. If management believes the results are too rich and 2011 holds various uncertainties, is there a way to prepay certain expenses and maximize certain deductions to come closer in line with year-end goals and expectations?

Points to consider to help manage taxable income:

1) What are realistic targets for the firm's collections? What can be done to accelerate collections if this is the goal? What can be done to defer collections if that is the goal?

• Collecting the maximum amount before year end requires a detailed review of receivables and work in process by partner and by client. Goals should be set at the client and partner level. This process needs to start right away if it has not started already. Clients need to be contacted, letters must be written, e-mails sent, and backup provided. This can be a labor-intensive, time-consuming process if receivables have been neglected throughout the year.
• Deferring collections may be an easier process than accelerating collections. One sure way to defer collections is to delay billing and slow down collection efforts. This may seem like a foolish strategy, but firms successfully use this approach to their tax advantage if there was a windfall of revenue in the current year and the outlook for next year is uncertain. However, take caution in this effort to avoid creating bad debts that cannot be collected later. Carefully weigh outcomes before delaying collection efforts for clients who may be experiencing hard times or facing an uncertain future.

2) Review expenses to determine what must be paid prior to year end, what can be paid next year and what can be prepaid in the current year to accelerate deductions. Discuss this with your tax adviser for more ideas.

• Some firms prepay certain expenses to manage the taxable income to expectations. Items to consider prepaying include rent, certain employee benefits, maintenance contracts, and professional fees. Only prepay vendors with whom you will be doing business in the future and who are financially sound. And if prepaying vendors, use the opportunity to request discounts for paying in advance to solidify a business purpose.
• Most law firms pay taxes on the cash basis of accounting vs. the accrual basis so cash receipts and disbursements have a big impact on taxable income.
• Review expenses that have alternative approaches and decide what course of action to take, such as when to pay employee bonuses, what method of depreciation to use and finalizing the firm's discretionary pension plan contribution.

Step 4: Consider How Your Plan Affects Other Parts Of Your Business

Before finalizing your year-end plan, consider how it affects other constituents, such as the bank, your shareholders, and your budget for 2011. Some questions to ask include:

• Will any parts of the plan cause the firm to be in default of any debt loan covenants?
• How will the plan affect income, expenses and cash flow in 2011?
• How will the plan affect partner compensation goals and expectations?
• Does the strategy adversely affect firm capital retention plans?

Final Step: Avoid Unpleasant Surprises

Have a few strategies ready to put into motion if things do not end up as expected. Plan for unexpected events and have a pre-approved contingency plan that can be implemented at the last minute. For example, if you expected certain receipts that did not come in, or if you received a last-minute wire transfer of taxable income, what additions deductions can you limit or use to achieve results that will come in line with expectations? Remember that in 2010, Dec. 31 lands on a Friday, which may be a payday at your firm and possibly a holiday. If your office is closed, who is checking the bank accounts online to determine whether unexpected wire transfers are received?

There are many steps to wade through as part of a prudent year-end planning process. Be sure not to skip any and end up unpleasantly surprised in the new year. Take the time to manage the tax planning process properly so you can relax, enjoy and have a Happy New Year!

K. Jennie Kinnevy, a member of this newsletter's Board of Editors, is the director of the Law Firm Services Group at Feeley & Driscoll, P.C. (http://www.fdcpa.com/). The Law Firm Services Group provides tax, accounting, business advisory and consulting services to law firms. Based in Boston, Kinnevy can be reached at [email protected] or by phone at 617-456-2407.