Industry focus
Law Firm Accountant and Trust Bookkeeping
Solo practitioners, multi-partner firms, legal consultants, and mediation services: we structure partner draws, manage trust accounting, and build tax strategies that protect what you've worked hard to earn.
How we work with this industry
Law firm accounting has one requirement that outranks the rest: client trust money is not firm money, and the records have to prove it at any moment. Beyond that, partner draws, contingency timing and how the firm is structured all shape the tax result. We keep the operating and trust books properly separated, handle the payroll, and plan the partner distributions with the year in view.
Trust accounting is a reconciliation discipline before it is a filing one. Your bar association sets the standard, and it turns on a three way agreement: the bank balance, the trust ledger and the sum of the individual client balances all match in every period, and they match without one matter quietly covering another. We keep that tie current, so a client balance can be produced the day it is asked for rather than rebuilt afterward from deposit slips.
On the operating side, the two things most often misread are costs advanced for clients and how the owners are paid. Whether an advanced cost is an asset you expect back or a current expense turns on what your fee agreement says the client owes: where the client is obligated to repay out of any recovery, the money is a receivable until the matter resolves; where the agreement leaves the cost with the firm, courts have treated it as a current business expense. We read the agreement and book to match it. Draws, payroll and distributions depend on how the firm is organized, and getting that mix right is a planning question we work through with you before year end.
What We Do
What We Handle for Law Firms
The bookkeeping and filing work a practice needs, kept separate where it has to be separate.
Trust and Operating Books Kept Apart
Separate ledgers, a running balance for every client matter, and a reconciliation each period that ties the bank, the trust ledger and the client balances to one another.
Client Costs Advanced
Filing fees, expert charges and records costs tracked by matter and booked to match what your fee agreement actually says the client owes, so a settlement does not quietly absorb money you already put out and the tax treatment is not decided by accident.
Owner Compensation and Draws
Payroll, draws and distributions set from how the firm is organized, with the mix modeled during the year instead of discovered at the return.
Staff Payroll and Filings
Pay runs for associates, paralegals and administrative staff, with Form 941, Form 940 and Florida reemployment tax on schedule and W-2s issued at year end.
Referral Fees, Fee Splits and Settlement Disbursements
A W-9 collected before money moves, and the year end reporting prepared from payment records kept through the year. Fees paid to co-counsel and gross proceeds disbursed to another attorney are reported differently and on different forms, and the exception that lets you skip reporting to a corporation does not apply to legal services. None of that is a January scramble if the records are kept as you go.
Firm Return and Owner K-1s
The entity return prepared early enough that each owner has a K-1 in hand to file from, with the personal returns handled alongside it if you want them in one place.
Common Problems
Where Law Firm Books Go Wrong
Four failures that are cheap to prevent and painful to explain later.
Fee Advances Recorded as Income
An advance against fees the firm has not yet billed is the client's money, not revenue. Booking it as income on receipt overstates the year and blurs exactly the line the trust account exists to hold. A true retainer, paid to secure your availability rather than to be billed against, is a different animal, and which one you are holding is set by your fee agreement and your bar's rules rather than by the bookkeeping.
One Matter Covering Another
A trust account that balances in total but not client by client will not survive the per matter comparison your bar's trust accounting rules call for, even when nothing is missing. The per matter ledger is the only thing that proves otherwise, and it is the record we keep.
Advanced Costs Booked Without Reading the Agreement
Where the client is obligated to repay them, costs fronted for a client are receivables, not overhead, and expensing them understates what the firm is owed and makes every contingency matter look less profitable than it is. Where your fee agreement leaves the cost with the firm, the answer is different. The agreement decides it, and it is worth deciding once rather than invoice by invoice.
Money Paid Before the W-9
Referral partners, contract paralegals and experts paid without a W-9 on file leave the firm chasing taxpayer numbers in January for reporting that was already required.
Services we offer in this industry
The services most often used by businesses in this industry. Each one is led by an Enrolled Agent.
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Common questions
Questions we hear in this industry
Straight answers, from an Enrolled Agent.
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