We are aware that running a practice is not just legal work. Money acts in unusual ways: retainers arrive before work starts, client costs get advanced and later reimbursed and IOLTA (trust) activity has to stay separate from operating cash. Add court filing fees & e-discovery vendors and expert witnesses along with the courier charges — and it’s easy for matter costs to blur. That’s when our accountants for law firms step onto the stage.
What are the Dedicated Accounting Services for Law Firms?
It’s the monthly and year-end practice that is performed in order to keep books precise, client funds traceable and taxation data ready. Clients get a professional record of operating activity & trust activity and matter costs — so documentation fully matches what actually happened. Our law accountants for law firms deliver the below items:
- Month-end close — banks, cards, payroll entries
- Trust tracking and three-way reconciliation
- Matter-level cost & reimbursement tracking
- Owner distributions and contractor payments with 1099 support
- Year-end package fully aligned to the tax return
Why Does Law Firm Recordkeeping Break Down so Easily?
The “owner” of the money changes by transaction. Client funds in trust — are not firm revenue. Retainers might be earned over time. Reimbursed costs may easily look like income on a bank statement — while being a pass-through in fact. Within this aspect, Trouble spots can be presented as below:
- Retainers posted as revenue on day one
- Client cost advances mixed into office spending
- Trust disbursements recorded in operating accounts
- Payments to contract attorneys lacking a clean paper trail
- Partner draws labeled like wages — or the reverse
What Should a CPA for Law Firms Deliver Each Month?
Your monthly package should always be tax-ready and readable. It shouldn’t be a spreadsheet of guesses. The best rhythm presents control without burying you in detail. Our specialized accountants for law firms target the below monthly outputs:
- Operating account reconciliation and review
- Trust activity validation — against matter ledgers
- Fee and collection reporting in parallel to the distinct billing model
- Matter cost visibility — so margin can be viewed by case type
- Owner-focused summaries for cash needs and distribution planning
How do you Keep Retainers, Trust Funds and Fees from Getting Tangled?
You must separate them by design — distinct accounts & clear posting rules and a repeatable review step — before reports go out. This is where mistakes get expensive. So, we build the rules once — and apply them in a consistent way.
Which Transactions Cause Posting Mistakes in General?
| Transaction | Where it belongs | Frequent risk |
| Retainer received | Trust liability or deferred revenue — engagement terms + state rules | Booked as income at deposit |
| Client cost advance | Matter cost receivable/client costs | Blended into overhead |
| Fee earned and billed | Revenue | Timing mismatch vs deposits |
| Trust payout | Trust account only | Hits operating books |
| Referral fee/co-counsel split | Classification depends on facts | Missed 1099 management |
Does a Law Firm CPA Lower Tax Surprises?
Our dedicated accountants for law firms constantly evaluate taxable income during the year — not only at filing time. In other words, we perform forecasting profit from collections and spot deduction gaps. We plan owner payments — with fewer last-minute scrambles. Our core focus areas are presented below:
- Owner compensation and distribution strategy — entity-dependent
- Quarterly estimates in parallel to profit trends
- Deduction support for research subscriptions, CLE, bar dues and mileage logs
- Multi-state filing exposure if you have staff/offices or recurring work
- K-1 support for individual taxation when owners file their returns
What Does a Strong Setup Look Like?
Law firm bookkeeping services should establish a simple system — where your practice tools & accounting file agree on the basics:
- What was billed
- What was collected
- What belongs to the client
Our expert team sets up “the chart of accounts”. So operating activity & trust activity and matter costs stay distinct. Our setup can be outlined as below:
- A chart of accounts built for fees & trust and client costs
- Matter tags or classes for reporting — when supported
- Deposit rules that separate fees from retainers
- A close checklist that clears “uncategorized” items fast
How Does the Onboarding Process Work?
It starts with mapping the distinct billing model and trust structure. Then our accountants for law firms establish a routine in a repeatable manner. The first month is generally about onboarding cleanup & stabilization:
- Discovery call — to confirm fee types & trust accounts and entity details
- Secure access to banking & payroll and accounting platforms
- Build posting rules for retainers & costs and fee deposits
- Reconcile prior periods — as needed — and lock a close checklist
- Deliver monthly reporting — plus quarterly review meetings
Ready to Talk with Dimov Tax About Your Law Firm’s Books?
Contact our experts today to satisfy your trust handling and matter costs as well as partner reporting needs. Our accountants for law firms are ready to review your existing flow and determine next actions.
FAQs
How are accounting services for law firms priced?
Pricing is set by monthly transaction volume. We also take client-fund account activity, payroll and reporting needs into consideration. A short review lets us quote a flat monthly rate.
Can accountants for law firms sync my billing tools and payments with the books?
Yes. We can align tools — like Clio or LawPay — with your accounting file. Therefore deposits & retainers and client-fund transfers post correctly.
Does a law firm CPA work for partners’ personal returns?
Yes — owners can get support for individual taxation. We can cover K-1 coordination and quarterly estimate inputs.
What do law firm accounting services include for payroll and 1099s?
Our services cover payroll postings and contractor tracking along with year-end 1099 support in order to record compensation cleanly.
Can law firm bookkeeping services fix messy books from prior months?
Definitely — we simply fix misclassifications and perform reconciliation. Then our team rebuilds matter ledgers and client-fund balances if cleanup is necessary.