Bookkeeping for Professional Services & Law Firms

Professional firms lose money in a way that rarely shows up as a loss. The work gets done, the client is generally satisfied, and yet the return on that work is lower than it should be because of what happened between performing the service and collecting for it. Three things drive that gap, and all three are bookkeeping problems before they are management problems.

Disbursements are the first. A firm pays search fees, filing fees, court fees, expert reports, agency costs and courier charges on a client’s behalf, often in small amounts across many matters. Each is recoverable, and each is easy to absorb if it is not attached to the matter at the moment it is incurred. The GST treatment also depends on the nature of the disbursement. Where a cost is incurred as agent for the client, so that the client is the recipient of the supply, the recovery is generally treated as a reimbursement outside the GST net. Where the firm incurs the cost in its own right and passes it on, the recovery is generally part of the firm’s taxable supply. Applying one treatment to both categories produces a BAS that is consistently wrong, and it is a common finding in professional firms.

Work in progress is the second. Time recorded but not yet billed is the firm’s largest asset and the one most likely to age out. Work not billed within a reasonable period becomes progressively harder to bill at all, because the client’s memory of the value fades faster than the file does. Keeping unbilled work visible is what allows a partner to act while it is still billable.

Trust records are the third. Law practices in Western Australia operate under statutory trust account obligations with prescribed record keeping and an annual external examination. We support your trust reconciliation and keep the underlying records in order, working alongside the external examiner rather than performing that examination ourselves.

We track billing and recoverable disbursements against each matter with the correct GST treatment, keep work in progress and aged debtors visible, support your trust reconciliation, run payroll for fee earners and support staff, and prepare your BAS.