What is a law firm chart of accounts?

It's the list of every account a law firm uses to record its finances, grouped into assets, liabilities, equity, revenue, and expenses. It includes legal-specific accounts like trust bank accounts, trust liability, and client costs.

What accounts should a law firm chart of accounts include?

At minimum: operating and trust bank accounts, accounts receivable, a trust liability account for each trust account, accounts for client costs, partner capital and draws, fee income, and the usual operating expenses.

How is a law firm chart of accounts different from a regular business one?

It has to show client money held in trust as a liability, not as the firm's own money, and it tracks costs paid on behalf of clients separately from overhead.

What is a trust liability account?

It's a liability account that shows how much money the firm holds for clients. Its balance should always equal the matching trust bank account.

Should advanced client costs be recorded as an asset or an expense?

Either method can work. The asset method keeps profit steadier and shows how much is owed back to the firm. The expense method is simpler. Your CPA should help you choose, since the choice can affect taxes.

How should a law firm number its accounts?

Give each group its own range, such as 1000s for assets and 2000s for liabilities, and number accounts in steps of 10 so you can add new ones without renumbering.

How do you track multiple offices or practice groups in a chart of accounts?

Keep one set of accounts and tag transactions by office or practice group using your software's class, department, or dimension feature. Then run reports by tag.

Law Firm Chart of Accounts: What to Include (With a Template)

A law firm chart of accounts with trust liability, client cost and partner accounts, plus a numbering system and a free template for mid-size firms.