Bookkeeping Services for Law Firms

Preparing the chart of accounts is mandatory for all firm to segregate their accounts. It's usually a list of categories where different accounts are systematically arranged. In law firms, accounts have the will to set up different categories of accounts for managing the financial operation. Generally, a law firm keeps 5 core categories for managing accounting tasks; assets, liabilities, revenue, expenses, and equity.

Firms operating trust accounts follow some basic accounting principles. Lawyers must deposit all nominal and short-term funds they receive from clients to an IOLTA account. Note that, this account is not a regular business account rather it provides a hectic amount of interest. Besides that, specific calculations are there to manage this account.

A law firm must comply with a 3-way reconciliation to meet regulatory requirements. These firms deal with trust accounts so following the reconciliation rules are must for them. First, they can reconcile the trust account with trust ledgers. Second, check the client's ledger book to match specific account details. And third, rely on a third party for statement verification.

Like every business, law firms manage their funds by following general accounting principles. A Trust account is generally a special bank account where lawyers keep their client's funds safe. Interestingly, this account is separate from others that handle law firm operating functions.

In this method, accountants manage operations in two simultaneous accounts. Each financial transaction has two sides; one is debit and another is credit. Here, every entry needs an opposite entry from one account to another. In the end, the total debit value must match the total credit value.