Professional Services Accounting | Law, Consulting

What We Handle

Service firm accounting done right

Professional services firms have unique accounting needs: billable time, retainers, work in progress, contingency fees, and for law firms, strict trust account requirements. We set up systems that reflect how your business actually operates.

Work in progress (WIP) tracking and revenue recognition
Trust and IOLTA account accounting for law firms
Project profitability reporting by client or engagement
Retainer revenue recognition and deferred revenue management
Billable vs. non-billable time cost analysis
Partner and member compensation accounting
Cash vs. accrual method analysis and conversion
Entity structure review: LLC, S-Corp, or professional corporation

WIP ManagementTrust Accounting Project ProfitabilityLaw FirmsConsulting

Cash vs. accrual: which is right for your firm?

Many professional services firms use the cash method for tax purposes because it simplifies income timing. But cash basis financials can mask the true health of the business by ignoring unbilled work and outstanding receivables.

We help firms maintain cash basis for tax while running accrual-basis management reports that give a more accurate picture of performance.

Law firm trust accounting

IOLTA accounts have strict bar association requirements for record keeping, reconciliation, and reporting. Commingling errors, even accidental ones, can have serious consequences. We set up and maintain compliant trust accounting systems.

FAQ

Professional Services Accounting Questions

How should we recognize revenue on long-term consulting projects?

Under ASC 606, revenue on long-term service contracts is recognized as performance obligations are satisfied, which may be over time or at a point in time depending on the contract structure. For consulting, this often means recognizing revenue as hours are worked or milestones are achieved, not necessarily when billed or when cash is received.

What is WIP and why does it matter?

Work in progress represents billable time and costs incurred on client matters that have not yet been billed or recognized as revenue. Tracking WIP accurately helps you understand your true pipeline, identify slow-paying clients, and produce financial statements that reflect what has actually been earned.

Should our law firm or consulting practice be an S-Corp?

It depends on your income level, state, and how you want to structure partner compensation. S-Corp elections work differently for professional service firms than for product businesses because reasonable compensation requirements are higher and more scrutinized. We run the analysis specific to your situation before making a recommendation.

Can you handle both firm-level and partner-level tax returns?

Yes. We handle partnership or S-Corp returns at the entity level and can coordinate individual partner returns as well, which simplifies the process and makes sure K-1 reporting flows through consistently.

Running a professional services firm?

Schedule a free consultation. We will talk through your billing structure, entity type, and what your financials should actually look like.

Schedule a Consultation

Accounting for service businesses built on expertise