Law Firms and legal issues are a highly specialized field, with lawyers needing their unique needs met. As professionals, lawyers time is extremely valuable, and it is important to work with an Accounting Firm that understands how busy you are, how valuable your time is, and how important it is that we know how to handle your account quickly. Law Firm Accounting systems need to be able to handle regular billing by junior staff, with regular reviews by the partners, and a focus on wealth building for the owners.
Our Firm has been handling law firms since we opened, and we are prepared to meet your needs quickly and efficiently,
Legal Trusts – IOLTA (Interest on Lawyers Trust Accounts)
As trusted fiduciaries of client funds, proper accounting for trust accounts is critical. It is important that your trust account records be up to date, interest be properly allocated to client and cases, or designated properly for charitable donations. Up to date records to comply with all ethical rules of your state bar keep you in good standing. We understand how important it is that this be handled reliably without creating problems for you while serving the needs of your firm and your clients.
Poor expense tracking makes client billing problematic and loses attorneys money. Accounting firms that do not specialize in law firms may now know the importance of properly tracking all expenses and allocating them to Client/Case combinations. Proper practice management systems make it easy for your staff to quickly identify the accounts so clients can be billed properly. Additionally, we make sure that any expenses not billed to a client are also tracked properly so you get all the deductions that your firm is entitled to.
Operating Agreements between Partners
Every law firm has a different operating agreement, and it is important that your accounting system reflects that agreement. Often the assumptions of legal partnership structures and the tax code present challenges to as complex an entity as a multi-partner law firm. Engage us early in the process, and we can ensure that your business and legal objectives don’t result in your overpaying of taxes by wrongly designating income or limiting your ability to write-off certain expenses. The implementation of the IRS Tax Code may result in counter-intuitive readings of tax law, making a CPA’s input valuable during partnership formation or accounting system rebuilds.
Gifts to Staff
Gifts and bonuses to staff are a routine way that law firms take care of their best junior employees. However, if handled incorrectly, your staff members either do not appreciate the contribution you are making because of taxes being over-withheld, or the bonus being treated as a non-deductible gift on the partnership. Since law firm partners are at a higher tax bracket than their staff, the failure to properly document and track these gifts will result in excessive taxes being paid because the money will be taxed at the firm owners tax rate instead of the employee’s lower tax rate.