Accounting & Bookkeeping for Law Firms
Trust account compliance, IOLTA reconciliation, partner compensation, and law firm tax preparation for Louisiana and California attorneys.
Law firm accounting carries compliance obligations that don't exist in other businesses. Client trust accounts (IOLTA in both Louisiana and California) must be maintained separately from operating accounts, reconciled monthly to the penny, and documented meticulously. Commingling client funds with operating funds — even accidentally — is an ethics violation that can result in bar discipline, suspension, or disbarment.
ASU provides trust account accounting for solo practitioners, small firms, and growing practices in Louisiana and California. We handle IOLTA reconciliation, three-way reconciliation reports, operating account bookkeeping, partner draw and compensation accounting, and law firm tax preparation for all entity structures. Our team understands bar trust account rules in both states and maintains records that would satisfy an ethics inquiry.
“One commingling violation can end a legal career. The bar doesn’t accept “my bookkeeper made a mistake” as a defense.
”
Law Firm Accounting Services
Trust account compliance, partner accounting, and tax preparation for Louisiana and California law firms of all sizes.
Trust Account Compliance
- ✓ IOLTA account reconciliation
- ✓ Three-way reconciliation reports
- ✓ Individual client ledger maintenance
- ✓ Trust account audit support
- ✓ Louisiana State Bar & CA State Bar compliance
Operating Bookkeeping
- ✓ Operating account bookkeeping
- ✓ Overhead expense tracking
- ✓ Case cost advance (disbursement) tracking
- ✓ Contingency fee revenue recognition
- ✓ Monthly P&L reporting
Partner & Staff Accounting
- ✓ Partner draw & compensation
- ✓ Attorney W-2 & 1099-NEC
- ✓ Staff payroll processing
- ✓ Partner capital accounts
- ✓ Law firm tax returns (1065/1120-S)
ASU Guarantee
If we ever make an error on your taxes, we pay ALL penalties and interest.
Law Firm Accounting — Frequently Asked Questions
Why does trust account accounting require a specialized bookkeeper?
IOLTA trust accounts are subject to strict bar rules that don't apply to operating accounts. Louisiana and California each have specific requirements for trust account recordkeeping: three-way reconciliation, client ledgers, and documentation that would satisfy a bar ethics inquiry. A general bookkeeper who handles an IOLTA account like a regular bank account creates significant ethical risk for the attorney.
What is a three-way reconciliation for a law firm trust account?
Three-way reconciliation matches three records that must agree at all times: the bank statement balance, the trust account check register, and the sum of all individual client ledger balances. If these three don't agree, there's a problem — funds may be misapplied or unaccounted for. ASU performs three-way reconciliation monthly for every trust account we manage.
Does ASU handle Louisiana State Bar trust account compliance requirements?
Yes. Louisiana Rules of Professional Conduct require specific trust account recordkeeping: individual client ledgers, monthly reconciliations, five-year record retention, and prompt disbursement of settlement funds. ASU maintains records that meet all Louisiana State Bar requirements.
Does ASU handle California State Bar IOLTA requirements for California law firms?
Yes. Our San Diego team handles California IOLTA compliance including annual certification, required client ledger records, and the California Rules of Professional Conduct trust account recordkeeping requirements.
How does ASU handle case cost advance tracking (disbursements)?
Costs advanced for clients — filing fees, expert witnesses, court reporters, investigation costs — are tracked per client in a disbursement ledger and reflected in the client's trust account balance. When the case resolves, disbursement recovery is reconciled against the trust ledger. ASU handles this correctly and completely.
Does ASU prepare law firm tax returns for partnerships and S-corps?
Yes. We prepare Form 1065 for law firm partnerships with all partner K-1s, and Form 1120-S for law firm S-corporations. We also prepare the individual returns for partners and shareholders as part of an integrated tax engagement.
Can ASU help a new law firm get its trust account and bookkeeping properly set up from day one?
Yes. Proper setup from the start prevents trust account problems later. We handle entity formation, IOLTA account setup and documentation, QuickBooks configuration for law firms, and payroll setup for staff. We do this frequently for new solo practitioners and small firms opening in Louisiana and California.
Does ASU handle payroll for law firm staff?
Yes. Full payroll for paralegals, legal assistants, office managers, and associate attorneys — including direct deposit, W-2 filing, quarterly payroll tax filings, and year-end reporting.