Legal practice accounting has specific compliance and economic dynamics — trust accounting rules, partnership compensation structures, and state-specific tax elections — that generalist CPAs often handle imprecisely.
Client trust account rules are unforgiving. Commingling, late deposits, or sloppy reconciliations create State Bar disciplinary exposure. Trust accounting has to be airtight.
Most law firms start on cash-basis and eventually have to convert — at a revenue threshold, a partner addition, or a structural change. The conversion has multi-year tax implications.
Partnership distributions, capital accounts, and guaranteed payments accumulate complexity. Most agreements get written once and never revisited as the firm changes.
The PTET election can save partners meaningful federal tax — but only if the election is timed correctly and the partnership structure supports it. Most firms miss this annually.
We work with Bay Area law firms across the size spectrum, from solo practitioners to partnerships.
Trust account reconciliation, three-way reconciliation against the bank and client ledger, audit-ready trust files, and State Bar reporting support.
Partner compensation modeling, guaranteed payments, capital account maintenance, and buy-in / buy-out structuring.
Section 481(a) adjustment modeling, multi-year spread analysis, and the timing decisions that minimize the tax cost of converting.
Annual PTET election timing, qualifying-entity analysis, June 15 deposit coordination, and partner-level federal benefit calculation.
PLLC, LLP, professional corporation, and partnership analysis — with awareness of California professional-services rules.
Law firm-specific bookkeeping, fee billing reconciliation, trust-vs-operating account separation, and management reporting.
A law firm CPA has to get the trust accounting right — that is non-negotiable. But the work that actually moves the needle is the partnership economics, the entity choice, the PTET election, and the cash-to-accrual conversion. We handle all of it as one engagement.
A complimentary 30-minute consultation. We review your situation and tell you honestly whether Milestone is the right firm.
