As the year draws to a close, business owners are often focused on wrapping up financial matters, meeting tax deadlines, and setting plans for the upcoming year. One area that shouldn’t be overlooked is legal expenses. Strategic investments in legal services before December 31st can provide significant tax benefits while positioning your business for success in the new year. Here are some of the best end-of-year legal expenses for business owners to consider.
1. Review and Update Business Contracts
The end of the year is a great time to review key contracts, including vendor agreements, client contracts, and employee agreements. Ensure your terms are up to date, compliant with any new laws, and reflective of your current business needs. If necessary, invest in drafting or amending contracts to avoid potential disputes and clarify expectations.
Why now? Legal fees for contract reviews are typically tax-deductible as ordinary and necessary business expenses, and addressing these updates now prevents disruptions in the coming year.
2. Establish or Update Your Business Structure
If you’ve been operating as a sole proprietor or partnership, consider forming a formal entity like an LLC or corporation. For those with an existing entity, now might be the time to restructure or update your operating agreement or bylaws.
Benefits:
- Protect personal assets from business liabilities.
- Take advantage of potential tax benefits offered by certain entity types.
- Avoid disputes by formalizing ownership and operational rules.
3. Trademark or Copyright Your Business Assets
Protecting your intellectual property (IP) ensures that your brand, products, and content are secure from infringement. Whether it’s trademarking your logo or copyrighting your website content, now is the time to lock down your assets.
Why act now? The process can take several months, and starting now helps avoid delays. Plus, IP protection costs are generally deductible as business expenses at the time they occur.
4. Set Up Employment Policies and Agreements
With employment laws constantly evolving, it’s crucial to ensure your business complies with current regulations. Investing in employment agreements, handbooks, and policies before the year ends can save you from costly disputes in the future.
Key areas to address:
- Employee classification (e.g., exempt vs. non-exempt).
- Harassment and discrimination policies.
- Remote work guidelines.
5. Invest in Tax Planning and Compliance
Working with a business attorney alongside your accountant can help you identify opportunities to minimize your tax burden. This could include:
- Prepaying deductible expenses.
- Ensuring compliance with state and federal regulations.
- Preparing for any potential audits or disputes.
Pro Tip: Legal fees associated with tax planning are often deductible, reducing your taxable income.
6. Prepare or Update Estate Plans for Business Owners
If you own a business, your estate plan should account for the succession and future management of your company. Work with an attorney to establish or update:
- A business succession plan.
- Power of attorney and healthcare directives.
- Trusts to minimize estate taxes.
Why now? Starting the new year with these protections in place ensures your business and loved ones are secure, no matter what happens.
7. Set Up or Audit Your Data Privacy and Cybersecurity Policies
With increasing regulations around data protection, such as the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA), investing in cybersecurity policies and compliance audits is crucial. A legal audit can ensure your business meets regulatory standards and avoids costly fines.
8. Plan for 2025 Goals
Year-end legal consultations aren’t just about wrapping up the current year—they’re about setting yourself up for success in the future. Consider investing in strategic planning sessions with a business attorney to discuss:
- Growth strategies.
- Risk management.
- Expansion plans, including acquisitions or partnerships.
Why End-of-Year Legal Expenses Matter
Many of these legal expenses are not only deductible but also proactive investments that reduce risk and position your business for growth. Taking action now ensures you’ll hit the ground running in the new year while potentially lowering your tax bill.
Ready to Take the Next Step?
At Landry Legal, PLLC, we specialize in helping business owners make informed legal decisions. Whether you need contract reviews, intellectual property protection, or assistance with business structuring, we’re here to guide you every step of the way.
Contact us today to schedule your year-end consultation and make the most of your legal expenses before the clock runs out!
