CPA for Law Firms in Colorado Springs
Dedicated CPA services for solo attorneys, partnerships, and small law firms. We handle the financial complexity of legal practice — IOLTA trust accounting, partner distributions, contingency fee tracking, and compliance — so you can focus on your clients.
Trust Account Compliance
IOLTA trust accounts require meticulous record-keeping and strict separation from operating funds. We reconcile trust accounts monthly and maintain the documentation required by Colorado's Rules of Professional Conduct.
Partner Distributions
Multi-partner firms need proper profit allocation, guaranteed payment structures, and distribution tracking that aligns with partnership agreements. We manage the accounting and tax implications of partner compensation.
IOLTA Accounting
Client trust funds demand separate tracking, timely disbursements, and complete audit trails. We manage IOLTA accounting in QuickBooks Online so your firm stays compliant and your trust records are always current.
UNDERSTANDING LAW FIRM FINANCES
Law firms operate under financial requirements that general accountants rarely encounter. Trust accounting rules, contingency fee structures, and partnership distributions create complexity that demands a CPA who understands legal practice.
IOLTA Trust Accounting
Colorado's Rules of Professional Conduct require attorneys to maintain Interest on Lawyers' Trust Accounts (IOLTA) for client funds. These accounts must be completely segregated from the firm's operating accounts, with detailed records of every deposit, disbursement, and client balance.
Trust accounting errors can result in disciplinary action, so accuracy is non-negotiable. Common pitfalls include commingling trust and operating funds, failing to promptly disburse earned fees, and inadequate record-keeping of individual client balances within the pooled trust account.
We manage IOLTA accounting in QuickBooks Online with proper fund segregation, monthly reconciliation against bank statements, and detailed per-client balance tracking. Your trust account records are always audit-ready, and you can verify any client's trust balance at any time.
Partner Distributions & Profit Allocation
Multi-partner law firms must allocate profits according to their partnership agreement — and the tax implications of different allocation methods can be significant. Guaranteed payments, profit-sharing ratios, equity vs. non-equity partner structures, and draws against future earnings all require careful accounting.
For firms operating as partnerships or multi-member LLCs, each partner receives a Schedule K-1 reporting their share of income, deductions, and credits. Partners pay self-employment tax on their distributive share of net earnings unless the firm has elected S-Corp status, which can reduce this tax by splitting income between salary and distributions.
We help law firms structure partner compensation for optimal tax treatment, prepare accurate K-1s, and advise on whether S-Corp elections or other entity modifications would benefit the firm. When partners join or leave, we handle the accounting for capital account adjustments, buyout payments, and changes to profit-sharing arrangements.
Contingency Fee Revenue & Cash Flow
Law firms that handle contingency fee cases face unique revenue recognition challenges. Unlike hourly-billing firms with predictable monthly revenue, contingency practices may experience significant income fluctuations — months with no contingency income followed by large settlements.
This variability affects tax planning, estimated tax payments, and cash flow management. Cash-basis firms recognize contingency fee income when received, which can create large income spikes in settlement years. Proper planning — including retirement contributions, equipment purchases, and estimated tax adjustments — can smooth the tax impact of lumpy revenue.
We help contingency fee firms plan for income variability, time deductions strategically, and maintain adequate reserves for operating expenses during periods between settlements. Our year-round approach ensures you are never caught off guard by a large tax bill after a successful case.
Entity Structure, Deductions & Tax Planning
The right entity structure can save a law firm thousands in taxes annually. Solo attorneys earning above $60,000 in net profit often benefit from S-Corp elections that reduce self-employment tax. Multi-partner firms need structures that accommodate varying ownership percentages, new partner admissions, and departing partner buyouts.
Law firms have access to significant deductions including malpractice insurance, continuing legal education, bar association dues and licensing fees, legal research platforms (Westlaw, LexisNexis), case-related expenses, and professional development. Retirement plan contributions through SEP-IRAs, SIMPLE IRAs, or solo 401(k) plans provide additional tax savings and wealth building.
We work with your firm throughout the year to identify tax planning opportunities, estimate quarterly payments accurately, and ensure you take advantage of every deduction available to Colorado law practices. Our goal is to minimize your tax burden while keeping your firm compliant with all federal and state requirements.
IOLTA Trust Accounting
We manage IOLTA accounting in QBO with proper fund segregation, monthly reconciliation, and per-client balance tracking. Your trust records are always audit-ready and compliant with Colorado's Rules of Professional Conduct.
Partner Distributions & Profit Allocation
Guaranteed payments, profit-sharing, K-1 preparation, and S-Corp election analysis. We structure partner compensation for optimal tax treatment and handle accounting when partners join or leave the firm.
Contingency Fee Revenue & Cash Flow
We help contingency fee firms plan for income variability, time deductions strategically, and manage estimated tax payments so you are never surprised by a large tax bill after a settlement.
Entity Structure & Tax Planning
S-Corp elections, partnership structuring, malpractice insurance deductions, retirement planning, and year-round tax strategies tailored to Colorado law practices.
HOW WE HELP YOUR FIRM
Business Tax Preparation
Complete preparation of your firm's tax return — Form 1065, 1120, or 1120-S — with Schedule K-1s for partners and law firm-specific deduction analysis.
Learn More → Included in PackagesMonthly Bookkeeping
CPA-managed bookkeeping in QuickBooks Online including operating account and IOLTA trust account reconciliation. Clean, segregated records every month.
Learn More → Included in PackagesPayroll Management
Accurate payroll for your associates, paralegals, and support staff. Tax withholding, direct deposit, quarterly filings, W-2 preparation, and Colorado compliance.
Learn More → Total PackageIRS Notice Response
If the IRS or Colorado Department of Revenue sends your firm a notice, we handle the response. No panic, no surprise bills — notice resolution is included in your monthly package.
Learn More → Included in PackagesAudit Defense
In the event of an IRS audit, your CPA team represents your firm. We compile documentation, communicate with auditors, and protect your interests throughout the process.
Learn More → Included in PackagesStrategic Consulting
Entity structure analysis, partner compensation planning, profit allocation strategies, and new partner buy-in structuring for law firms.
Learn More → $250/hr Ad HocBusiness Tax Preparation
Complete tax return preparation with law firm-specific deduction analysis and K-1s.
Learn More → Included in PackagesMonthly Bookkeeping
QBO bookkeeping with operating and IOLTA trust account reconciliation monthly.
Learn More → Included in PackagesPayroll Management
Payroll for associates, paralegals, and staff — filings, W-2s, and compliance.
Learn More → Total PackageIRS Notice Response
We handle IRS and state notices — no surprise bills, included in your package.
Learn More → Included in PackagesAudit Defense
Full audit representation and documentation support, included in your package.
Learn More → Included in PackagesStrategic Consulting
Entity structuring, partner compensation, and profit allocation strategies.
Learn More → $250/hr Ad HocMONTHLY PACKAGES FOR YOUR FIRM
BASIC BUSINESS PACKAGE
- Business tax preparation
- 1099 filing
- IRS notice response
- Audit defense
- Bookkeeping
- Payroll management
PROFESSIONAL BUSINESS PACKAGE
- Business tax preparation
- 1099 filing
- IRS notice response
- Audit defense
- Monthly bookkeeping (QBO)
- Payroll management
TOTAL BUSINESS PACKAGE
- Business tax preparation
- 1099 filing
- IRS notice response
- Audit defense
- Monthly bookkeeping (QBO)
- Payroll management
Why Law Firms Choose Monthly Packages
When your CPA handles bookkeeping (including trust accounts), payroll, and tax preparation year-round, your firm's finances stay organized and compliant. No scramble in April. No trust accounting gaps. One team manages everything — so you can focus on practicing law. Compare all packages →
OUR PROCESS
Firm Assessment
We start with a 45-minute meeting to understand your firm — entity structure, partnership agreement, trust account setup, staff size, and financial goals.
Financial Onboarding
We connect to your QuickBooks Online, set up bank feeds for operating and trust accounts, organize your chart of accounts for legal practice, and establish clean processes.
Monthly Management
Each month, we record transactions, reconcile operating and trust accounts, process payroll (if applicable), and keep your books current and compliant.
Tax Preparation & Review
When tax season arrives, your books are already clean. We prepare your return and K-1s, maximize every deduction, and review planning strategies for the year ahead.
Firm Assessment
45-minute meeting to understand your firm, entity structure, and trust account setup.
Financial Onboarding
QBO setup with operating and trust account feeds, chart of accounts for legal practice.
Monthly Management
Transaction recording, operating and trust reconciliation, payroll, clean books monthly.
Tax Preparation & Review
Clean books, accurate K-1s, every deduction maximized, planning for next year.
FREQUENTLY ASKED QUESTIONS
IOLTA trust accounts must be maintained separately from your firm's operating accounts, with detailed records of every deposit, disbursement, and client balance. We track trust account activity in QuickBooks Online with proper segregation from operating funds, reconcile trust accounts monthly, and maintain the records required by the Colorado Supreme Court's Rules of Professional Conduct. Our goal is to ensure your trust accounting is always audit-ready.
In most law firm partnerships, profits pass through to individual partners on Schedule K-1 and are taxed at each partner's individual rate. Partners also pay self-employment tax on their share of net earnings. If the firm has elected S-Corp status, partners can split income between reasonable salary and distributions, potentially reducing self-employment tax. We help structure compensation and distributions to minimize total tax burden while complying with IRS reasonable compensation requirements.
Most small law firms operate as LLCs, partnerships, or professional corporations. The right choice depends on your state bar requirements, number of partners, income level, and growth plans. In Colorado, many solo attorneys and small firms benefit from S-Corp elections that reduce self-employment tax on distributions. For multi-partner firms, partnership structures with proper profit allocation provisions are common. We evaluate your specific situation and recommend the structure that provides the best tax outcome.
Yes. Contingency fee cases create unique accounting challenges because revenue is uncertain until a case settles or a judgment is awarded. Cash-basis firms recognize contingency fee income when received, while accrual-basis firms may need to address work-in-progress and receivable recognition differently. We help your firm choose the appropriate accounting method and ensure contingency fee income is properly reported on your tax return.
Law firms can deduct office rent and utilities, staff salaries and benefits, malpractice insurance premiums, continuing legal education, bar association dues and licensing fees, legal research platforms (Westlaw, LexisNexis), case-related expenses, technology and software, marketing and advertising, and professional development costs. We identify every applicable deduction during tax preparation to minimize your firm's tax liability.
Yes. Our monthly packages are designed for firms with 1-3 partners and 1-10 employees, which covers the majority of independent law practices in Colorado Springs. Whether you are a solo practitioner, a two-attorney partnership, or a small litigation firm, we provide dedicated CPA support — tax preparation, monthly bookkeeping, trust account reconciliation, notice response, and audit defense.
Our Basic Business Package at $999 per month includes business tax preparation, 1099 preparation, monthly bookkeeping in QuickBooks Online (including trust account reconciliation), IRS notice response, and audit defense. Our Total Business Package at $1,249 per month adds comprehensive payroll management for your associates, paralegals, and support staff. Both packages provide year-round CPA support tailored to legal practice finances.
Ready for a CPA Who Understands Law Firms?CPA Services for Law Firms
Monthly accounting packages built for law firms. Tax preparation, trust account bookkeeping, and year-round CPA support — all for one predictable fee.Tax prep, trust accounting, and year-round support in one monthly package.