Bookkeeping for Attorneys

[thomtax]

I will be starting to do the bookkeeping for an attorney. Besides that normal bookkeeping procedures, is there anything special that I need to be aware of.

Perhaps, some of you know of a publication that will refer to any oddities I should look out for.

Thanks in advance for your advice.

LT

[Jiggers]

Attorneys

Attorneys are notorious for skirting the tax law. They are among the highest non-filers of all taxpayers according to IRS statistics.

Be careful.

Attorneys think they know everything, including income taxes. I am absolutely sure that they don't!

Get a good deposit up front, like they do. Also nickel and dime them for all expenses such as postage, copies, mileage, phone calls, etc., like they do!

Be sure they sign an engagement letter.

The attorneys in my community are know for not paying their bills.

[KJ Judd]

My experience with attorneys has been different than Jiggers. Mine are good clients, understand the value of your time and aren't hesitant to pay you for it.

Before I went solo, I was the tax accounting manager for a large law firm. If you have any specific questions, feel free to ask.

The main issue with attorneys is the trust funds. They need to be kept separate by State Bar rules (each state can be slightly different.) The interest escheats to the state each month. You can't issue a check until the deposit has cleared or the Bar rules consider it embezzling from the clients. There is no tolerance for error with trust accounts. So be sure to reconcile them monthly and make sure each client's portion doesn't go below zero.

[Uncle Sam]

Bookkeeping for Attorneys

There is a Market Segment Specialization Program guide for Attorneys - on what tax issues there are with the way in which they record income, expenses, and maintain escrow accounts.
Your client will need to have a bookkeeping system that accommodates his/her type of practice. Not all attorneys practice law the same way, so their income processes are different.

[JCH]

Attorneys are notorious for skirting the tax law. They are among the highest non-filers of all taxpayers according to IRS statistics.

Be careful.

Attorneys think they know everything, including income taxes. I am absolutely sure that they don't!

Get a good deposit up front, like they do. Also nickel and dime them for all expenses such as postage, copies, mileage, phone calls, etc., like they do!

Be sure they sign an engagement letter.

The attorneys in my community are know for not paying their bills.

Ditto. I couldn't have put it better myself, except maybe the bill paying part. The main thing to remember about attorneys is they always think they're smarter than you, and they generally hate accountants. They bill for every fraction of a minute in their practice, so don't forget to reciprocate.

[veritas]

And they are

right brain thinkers like artists and musicians.

I remember once speaking to my son's geometry teacher. She asked what I did and commented "Oh you probably liked geometry, lawyers do very well with it".

I flunked geometry.

[JON]

Type of practice

besides the Trust issue you also have the "client costs" issue. Some costs will be charged as due back from the client and have to separated and billed to the client. The billing issues depend on the type of practice, but hopefully you will not have to get involved with that.

I am glad I do not live in some of the towns above. Attorneys should be a great client and even a better source of good referrals.

[thomtax]

Thanks

Thanks to everyone for the advice.

One thing that I don't have to worry about with this attorney, is being honest with me or paying. I already do personal return. I jokingly made a comment to his secretary one day about he should do something. She looked up at me real seriously and said "He's too honest for that." He's also my landlord. There are some others in town that I do not feel the same about their honesty.

It's a simple practice, so not a lot of exotic things to worry about. A very simple bookkeeping was done by his secretary in the past. She just left and his comment to me was "Just set it up right and do it."

[veritas]

Bartering

Lawyers love it.


So do dentists.