Professional Services
Law firms, consultants, and agencies bill for expertise. We track revenue by client, manage trust accounting, and keep partner distributions clean.
The Expertise Trap
You charge clients a premium for your knowledge. Attorneys, consultants, and agency owners bill for expertise that took years to develop. The work you do for clients justifies every dollar. But then tax season arrives and you realize you’ve spent 30 hours this year staring at bank statements, sorting through receipts, and trying to figure out why QuickBooks doesn’t match your bank account.
Revenue in professional services is rarely straightforward. Retainers come in before work is performed. Project fees span multiple months. Hourly billing creates receivables that sit unpaid for 60 or 90 days. Without proper tracking, you might feel busy all year but have no idea whether you actually made money or just moved it around.
Who This Covers
Who This Covers
Law firms, consulting practices, marketing and creative agencies, PR firms, IT consultants, and any professional services business where partners or principals generate most of the revenue through their own expertise and time.
The Complexity
The Complexity
Multiple revenue types create accounting confusion. A $25,000 retainer paid in January is not $25,000 of income in January. Understanding what has been earned versus what remains as a prepaid liability matters for taxes and for knowing how the business is actually performing.
What We Handle
We track profitability by client and engagement. The goal is knowing which work actually makes money after accounting for the time and resources invested. A $40,000 project that consumed 200 hours of your team’s time might be less profitable than a $12,000 engagement that wrapped up in 30 hours. Without this breakdown, you end up subsidizing difficult clients with the revenue from your best ones.
For firms with multiple partners, the books need to track capital accounts, profit allocations, and guaranteed payments with precision. Partner draws should be based on real numbers, not guesswork about what the business can afford. We keep these records clean so compensation decisions are grounded in fact.
Trust Accounting for Law Firms
Trust Accounting for Law Firms
IOLTA accounts require complete separation from operating funds. Client money cannot touch your business account until earned. We reconcile trust accounts monthly and maintain the documentation that keeps you compliant with Idaho State Bar requirements.
Revenue Recognition
Revenue Recognition
Prepaid retainers get recognized as income when services are performed, not when the check clears. Your financial statements reflect what you have actually earned. This gives you an honest picture of monthly performance instead of wild swings based on payment timing.
Common Problems
Trust account violations happen faster than people expect. A busy office manager accidentally pays a vendor from the wrong account. Client funds get commingled with operating money. This is how bar complaints start. Law firms need someone outside the daily rush to review the accounts and catch errors before they become compliance problems.
Partner draws that exceed actual profit are another recurring issue. When there is cash in the account, it feels safe to take a distribution. But if the books are behind, you might be pulling out more than the firm earned. This leaves the business short when quarterly tax estimates or payroll obligations come due. The problem compounds until someone finally reconciles the accounts.
Retainers Booked Wrong
Retainers Booked Wrong
Treating prepaid retainers as income when received inflates your revenue in the first quarter and deflates the rest of the year. Your P&L swings dramatically even though you are doing consistent work every month. This makes financial planning nearly impossible.
Receivables That Slip
Receivables That Slip
Corporate clients on net-30 or net-60 payment terms need active monitoring. Without a system, invoices drift past 90 days. That outstanding balance strains cash flow and creates awkward conversations when you finally follow up months later.
What Changes
You know which clients are worth the effort. Not just which ones pay the largest invoices, but which ones generate real profit after accounting for the time invested. This informs pricing, resource allocation, and which new engagements you are willing to pursue. You stop accidentally subsidizing unprofitable relationships.
Partner conversations get simpler. Distributions, compensation adjustments, and year-end planning are based on clean financial statements rather than competing interpretations of incomplete data. Everyone is working from the same numbers because the numbers are actually correct.
Trust Account Confidence
Trust Account Confidence
For law firms, the monthly reconciliation is documented and ready for review. If the Idaho State Bar ever comes asking, the records are organized and complete. You handle the audit without scrambling.
Tax Strategy That Works
Tax Strategy That Works
Accurate books make real tax planning possible. Our Enrolled Agents can identify deductions you are missing and help you make informed decisions about quarterly estimates, entity structure, and long-term strategy. The conversation shifts from fixing the books to maximizing the benefit.
The Treasure Valley's Tax and Accounting Team
The Next Step:
A Short Conversation
Tell us what you're dealing with. We'll listen, answer your questions, and give you a straightforward quote.
