Deducting Legal and Accounting Fees

Don't miss out on these valuable business tax deductions.

By , J.D.
Need Professional Help? Talk to a Tax Attorney.

There was a problem with the submission. Please refresh the page and try again
Full Name is required
Email is required
Please add a valid Email
Phone Number is required
Please add a valid Phone Number
Zip Code is required
Please add a valid Zip Code
Description is required
By clicking "Find a Lawyer", you agree to the Martindale-Nolo Texting Terms. Martindale-Nolo and up to 5 participating attorneys may contact you on the number you provided for marketing purposes, discuss available services, etc. Messages may be sent using pre-recorded messages, auto-dialer or other automated technology. You are not required to provide consent as a condition of service. Attorneys have the option, but are not required, to send text messages to you. You will receive up to 2 messages per week from Martindale-Nolo. Frequency from attorney may vary. Message and data rates may apply. Your number will be held in accordance with our Privacy Policy.

You should not send any sensitive or confidential information through this site. Any information sent through this site does not create an attorney-client relationship and may not be treated as privileged or confidential. The lawyer or law firm you are contacting is not required to, and may choose not to, accept you as a client. The Internet is not necessarily secure and emails sent through this site could be intercepted or read by third parties.

If you own a business, you can deduct fees that you pay to attorneys, accountants, consultants, and other professionals as business expenses if the fees are paid for work related to your business.

Example: Ira, a freelance writer, hires attorney Jake to represent him in a libel suit. The legal fees Ira pays Jake are a deductible business expense.

Legal and professional fees that you pay for personal purposes generally are not deductible. For example, you can't deduct the legal fees you incur if you get divorced or you sue someone for a traffic accident injury. Nor are the fees that you pay to write your will deductible, even if the will covers business property that you own.

Buying Long-Term Property

If you pay legal or other fees in the course of buying long-term business property, you must add the amount of the fee to the tax basis (cost) of the property. You may deduct this cost over several years through depreciation or deduct it in one year under IRC Section 179.

Starting a Business

Legal and accounting fees that you pay to start a business are deductible only as business start-up expenses. You can deduct $5,000 of start-up expenses the first year you're in business and any excess amounts over 180 months. The same holds true for incorporation fees or fees that you pay to form a partnership or LLC.

Accounting Fees

You can deduct any accounting fees that you pay for your business as a deductible business expense—for example, fees you pay an accountant to set up or keep your business books, prepare your business tax return, or give you tax advice for your business.

Self-employed taxpayers may deduct the cost of having an accountant or other tax professional complete the business portion of their tax returns—Schedule C and other business tax forms—but they cannot deduct the time the preparer spends on the personal part of their returns. If you are self-employed and pay a tax preparer to complete your Form 1040 income tax return, make sure that you get an itemized bill showing the portion of the tax preparation fee allocated to preparing your Schedule C (and any other business tax forms attached to your Form 1040).

March 2013

Get Professional Help
Talk to a Tax attorney.
There was a problem with the submission. Please refresh the page and try again
Full Name is required
Email is required
Please add a valid Email
Phone Number is required
Please add a valid Phone Number
Zip Code is required
Please add a valid Zip Code
Description is required
By clicking "Find a Lawyer", you agree to the Martindale-Nolo Texting Terms. Martindale-Nolo and up to 5 participating attorneys may contact you on the number you provided for marketing purposes, discuss available services, etc. Messages may be sent using pre-recorded messages, auto-dialer or other automated technology. You are not required to provide consent as a condition of service. Attorneys have the option, but are not required, to send text messages to you. You will receive up to 2 messages per week from Martindale-Nolo. Frequency from attorney may vary. Message and data rates may apply. Your number will be held in accordance with our Privacy Policy.

You should not send any sensitive or confidential information through this site. Any information sent through this site does not create an attorney-client relationship and may not be treated as privileged or confidential. The lawyer or law firm you are contacting is not required to, and may choose not to, accept you as a client. The Internet is not necessarily secure and emails sent through this site could be intercepted or read by third parties.

How It Works

  1. Briefly tell us about your case
  2. Provide your contact information
  3. Choose attorneys to contact you