Client trust accounts
Funds held in IOLTA belong to clients until earned, and each client ledger must reconcile to the bank.
How we helpWe keep trust funds out of income, maintain client ledgers and do a three-way reconciliation every month.
Professional services · Tax · Books · Insurance
Tax, books and insurance for law firms
Client trust money is not your money. We keep IOLTA accounts reconciled, partner draws clear and your practice ready for any review.
Solo attorneys and small partnerships work with our office for trust account bookkeeping, case cost tracking, partner returns and K-1s, payroll and professional coverage.
Reviewed by Orkun Ozkaymak, CPA, MBA·Clients in all 50 states and abroad
Law firms and attorneys
Two sets of money, one set of books
Law offices hold client funds in trust while running their own operating accounts. Mixing the two, or advancing case costs without tracking them, creates both tax and professional responsibility problems.
Our office keeps your trust and operating activity separate in QuickBooks, reconciles your trust account every month and prepares partnership or corporate returns for the firm.
Special needs
What makes law practices different, and how we help
Where attorneys most often need an accountant who understands their work.
Advanced case costs
Filing fees, experts and records you pay for clients are generally not deductible expenses when you expect to be repaid.
How we helpWe track case costs by matter as receivables, so your income and deductions are right.
Partner draws and K-1s
Partners take draws through the year, and profit splits need to match the partnership agreement.
How we helpWe track capital and draws by partner and prepare accurate K-1s on time.
Contingency fee swings
A single settlement can double a year's income.
How we helpWe plan estimated payments and retirement contributions around big fee years.
One coordinated office
Services for law offices
Tax, accounting and insurance under one roof, so the numbers on your return, your books and your policies all agree.
Tax and accounting
QuickBooks bookkeepingQuickBooks with trust accounting and matter tracking.Learn more Business income taxPartnership, S corporation and professional corporation returns.Learn more Payroll taxAttorney and staff payroll.Learn more Financial planningRetirement plans and estimated tax planning for partners.Learn more Fiduciary and trust taxEstate and trust returns for your clients' matters.Learn more
Insurance
Errors and omissionsCoverage for claims that a missed deadline or mistake cost a client.Learn more Commercial insuranceBusiness owners policy for your office, plus cyber options.Learn more Workers compensationWorkers compensation for staff.Learn more Life insuranceLife insurance and buy-sell funding for partners.Learn more
Calendar
Filings we keep on schedule
The recurring deadlines law offices face most often. We track them for you and send reminders before anything is due.
- MonthlyTrust reconciliationBank, trust journal and client ledgers agree.
- March 15Partnership return and K-1sForm 1065 or 1120-S for the firm.
- QuarterlyForm 941 and state payrollAttorney and staff payroll.
- Apr 15Jun 15Sep 15Jan 15Estimated paymentsFor partners and shareholders.
Dates shown are for calendar-year filers. When a due date falls on a weekend or holiday, it moves to the next business day.
QuickBooks Online
Books built for law offices
Your QuickBooks keeps trust and operating money apart and shows fees and costs by matter and by attorney.
Our office sets up QuickBooks Online with a chart of accounts designed for your industry and your entity type, mapped line by line to your tax return. Your books are ready for filing season all year.
Chart of accounts
- 10500IOLTA trust accountClient funds
- 24000Client trust liabilityLiability
- 12400Advanced client costsReceivable
- 41000Legal fees earnedIncome
- 41200Contingency feesIncome
- 30500Partner drawsEquity
Mapped to your tax return lines
Questions
What law offices ask us
Are client trust deposits income?
No. Money held in trust belongs to the client until it is earned and transferred to your operating account. Only earned fees are income.
Can I deduct case costs I pay for clients?
Generally not when you expect to be reimbursed from the recovery. They are treated as loans to the client. We track them by matter.
What is a three-way reconciliation?
It matches the trust bank statement, your trust journal and the total of client ledgers each month. We do it for you.
Related industries
All industriesConsultants and professional servicesYour expertise is the product. We choose the right entity, set a smart owner salary and protect you from the claims that come with advice.Explore Medical and dental practicesYou care for patients. We handle entity planning, owner pay, equipment and retirement strategy so your practice keeps more of what it earns.Explore Real estate investors and landlordsDepreciation, passive loss rules and a sale that can trigger a big tax bill. We plan every property from purchase to exit and insure it along the way.Explore
Next step
Let's talk about your business
Request an insurance quote, or start your company with our office. Prefer to talk first? Book a time, virtual or in person.