Minimize your workload and better support your clients with our case and financial management solutions for personal injury attorneys. The FUTA tax rate is 6%, which taxes wages up to the first $7,000 earned by the employee during the year. There are also state and sometimes municipal payroll taxes to be collected.

These rules and regulations change with every jurisdiction, so it’s a good idea to become familiar with what’s expected of you before jumping in. You’re required to do this every 30 to 60 days depending on your state — be sure to check your state’s rules. If you have a debit in one account, it follows that there will be a credit in another account. In 1981, this money started being stored in an IOLTA, which is an interest-bearing account. Ask around to see if other attorneys have a recommendation, or ask your State Bar for referrals.

Open a business bank account

Every law firm has a responsibility to stay compliant with ethics regulations, and your firm is no exception. Ethics rules vary in each jurisdiction, but there are definitely some basics when it comes to accounting for law firms. Accounting for law firms is often intimidating—even for seasoned lawyers. While you’ve spent years honing your skills to become a great lawyer, you didn’t learn about accounting or bookkeeping for attorneys at law school.

Manage them based on your state’s specific rules within your Chart of Accounts. Track and analyze cases or clients that drive the most revenue to capitalize with better planning and resource allocation. We help you do right by your clients and get you home for dinner on time. Many small firms find that outsourcing their bookkeeping functions is a great first step in delegating work off the owner’s plate. With all the options available, we know it’s difficult to choose which software is the best choice for your firm.

Accounting software for lawyers and law firms

If you sent your client an invoice, that is immediately counted as revenue if you don’t receive the money for weeks. When you incorporate your business, you essentially separate yourself from the business entity. It’s called the “corporate veil,” and it protects business owners and their personal assets from legal action taken against the company. It’s law firm bookkeeping similar to two-way reconciliation, where you compare your bank account balance to your company’s books to make sure it matches. The key to good accounting is keeping detailed records of every single transition coming in or going out of your IOLTA. Do your due diligence and make sure every dollar going into the trust account is supposed to be there.