Law Firms

1. Trust Accounting and Compliance

  • Trust Account Management: Strict segregation of client money (retainers) from the firm’s operating funds.
  • Client Trust Ledgers: Maintaining individual, detailed records for every client file that holds trust money.
  • Three-Way Reconciliation: Monthly reconciliation of the trust bank balance, the total of all client trust ledgers, and the total in the general trust ledger—a mandatory compliance requirement.
  • Law Society Reporting: Preparing the mandatory annual or periodic financial reports and certificates required by the provincial Law Society (e.g., Law Society of Ontario).
  • Transfer of Fees: Accurate and timely transfer of earned legal fees from the trust account to the operating account, following all regulatory rules.

2. Day-to-Day Financial Management

  • General Bookkeeping: Recording transactions for the firm’s operating account, including overhead expenses, payroll, and received fees.
  • Expense and Disbursement Tracking: Meticulously tracking expenses paid on behalf of clients (disbursements) to ensure proper recovery and GST/HST treatment.
  • Invoicing and Billing: Assistance with setting up a billing system that accurately reflects billable hours, fixed fees, and disbursements.
  • Accounts Receivable: Managing the process of ensuring clients pay their invoices for services already rendered.
  • Software Integration: Expertise in legal-specific accounting software such as PCLaw, Clio Manage, or CosmoLex.

3. Corporate Tax and Compensation

  • Corporate Tax Return (T2): Preparing and filing the annual corporate income tax return for the lawyer’s Professional Corporation.
  • GST/HST Compliance: Ensuring GST/HST is properly charged on taxable services and correctly remitted, including complex rules for disbursements.
  • Professional Corporation Tax Planning: Advising the lawyer on the most tax-efficient structure for withdrawing funds (salary vs. dividends) from the professional corporation.
  • Deductible Expenses: Guidance on allowable professional write-offs (e.g., professional dues, home office expenses, continuing legal education).

4. Financial Reporting and Strategy

  • Financial Statement Preparation: Producing required financial statements (Income Statement, Balance Sheet) for firm management, lenders, or shareholders.
  • Performance Metrics: Analyzing key metrics specific to a law practice, such as:
    • Billable Hours/Utilization Rate
    • Realization Rate (percentage of billable hours collected)
    • Client Profitability
  • Budgeting and Forecasting: Helping the firm set financial goals and project future income and expenses.