Fleming Accounting Solutions Case Studies

See how we’ve helped clients manage their payroll, accounting, and taxes more effectively and efficiently.

Case Study 4:

How We Saved a Law Firm Over $50,000 Per Partner in Taxes

What we analyzed

Status quo (Partnership): 

The firm had been filing as a partnership since inception, with each partner’s distributive share fully subject to self-employment (SE) tax. Their previous CPA had not reviewed entity structure or discussed tax planning opportunities, leaving limited flexibility in compensation design and significant unnecessary tax exposure.

S-Corp strategy: 

We evaluated the firm’s income, partner roles, and compensation levels to determine whether an S corporation election could reduce overall tax liability. The proposed approach:

Pay reasonable W-2 wages to partners based on their active involvement in the business.
Treat remaining profits as distributions not subject to self-employment tax.
Coordinate with payroll and state filing requirements to ensure a seamless transition and ongoing compliance.

Outcome

After restructuring to an S corporation and aligning partner compensation:

Tax Savings: Over $50,000 per partner in the first year alone (combined federal and state).
Increased flexibility: Partners gained the ability to balance salary and distributions, creating more control over cash flow and quarterly tax planning.
Improved visibility: Regular payroll processing and formalized distributions provided a clearer picture of each partner’s take-home income and future retirement contribution opportunities.

Why it mattered:

This change not only reduced the firm’s annual self-employment tax burden but also created a more strategic, sustainable framework for managing partner compensation and long-term financial planning. The result was a structure that maximized after-tax income without disrupting the way the firm operated day to day.

How Fleming Accounting Solutions approaches entity & tax strategy

Scenario modeling

We quantify tax impact, retirement options, payroll requirements, and cash-flow timing—then highlight trade-offs in plain English. 

Implement & maintain:

We don’t just recommend; we handle elections, payroll setup, retirement plan coordination, and quarterly tax planning. 

Iterate with growth:

As numbers change, we re-run scenarios so your structure fits your current reality—not last year’s. 

Disclosure: Results vary by state, income mix, deductions/credits, payroll levels, “reasonable compensation,” and retirement plan specifics. Figures shown are client-specific estimates and should not be relied upon as universal outcomes.

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