Three things set it apart. Owners take profit rather than salary, so compensation structure drives the tax result more than any other decision. Revenue comes from time and billings, which puts work in progress and unbilled receivables at the centre of the balance sheet in a way product businesses never see. And many professional firms hold money belonging to clients or third parties, which needs segregation and reconciliation outside standard GAAP. The chart of accounts, the reporting cadence, and the tax strategy all follow from those three.

Partner compensation planning covers how owners get paid: guaranteed payments, profit distributions, retirement contributions, and reasonable compensation where a professional corporation is involved. Each lands differently on a partner's return. A structure that works for two partners with equal origination rarely works for twelve partners with unequal books. Handled well, it ties pay to performance and keeps tax friction low. Handled badly, partners overpay tax, underfund retirement, and start disputing the split.

Many professional service firms qualify for cash basis, which defers tax until fees are collected and usually suits a firm with lumpy collections. Accrual gives a truer picture of performance, which matters when a lender, an incoming partner, or a buyer is reading the statements. Some firms run cash for tax and accrual internally for management reporting. The right answer depends on your gross receipts, your entity type, and what you are planning in the next few years. Changing method requires an accounting method change filing, so it pays to decide deliberately rather than drift.

CTAPP is the Client Trust Account Protection Program run by the State Bar of California. Under California Rule of Court 9.8.5 and State Bar Rules title 2, division 1, rule 2.5, nearly every California licensee must annually register each IOLTA and non-IOLTA client trust account open at any point in the reporting period, report the December 31 year-end balance, complete a self-assessment of trust account practices, and certify compliance with rule 1.15 of the Rules of Professional Conduct. The deadline matches the annual licence fee due date. Law firms can register accounts on behalf of their attorneys through the State Bar's Agency Billing application.

The State Bar began mandatory compliance reviews in August 2025. A selected firm engages a State Bar-approved CPA at its own expense, and the reviewer examines records rather than intentions. The areas covered include whether clients received notice within 14 days of funds arriving, whether undisputed funds were distributed within 45 days, whether trust accounting records are complete, and whether monthly three-way reconciliations were performed. Attorneys grossing under a stated threshold may request an in-house State Bar review instead. Confirm current requirements and thresholds with the State Bar, since the programme continues to develop.

Yes, on the accounting side. We handle client trust account bookkeeping, monthly three-way reconciliation between the bank statement, the trust ledger, and individual client ledgers, and the supporting documentation behind your annual certification. That is the record a compliance review examines. Conducting the CTAPP compliance review itself is a separate engagement type, and the State Bar maintains its own approved list for it. Your designated licensee under rule 2.5(E) retains the duty either way, since that rule requires them to perform or supervise the monthly reconciliation personally.

Usually at a complexity threshold rather than a revenue number. Multiple partners with different origination, more than one location, a lender relationship with covenants, or a planned transaction each create questions a bookkeeper cannot answer. An outsourced CFO delivers forecasting, partner reporting, profitability analysis by service line or matter, and financial leadership in the room for major decisions, without the cost of a full-time hire.

Generally once the plan reaches 100 or more participants with account balances at the start of the plan year. At that point the Form 5500 must carry a report from an independent qualified public accountant. The 80-120 participant rule gives one exception: a plan sitting between 80 and 120 participants may file in the same category it used the previous year. Professional firms often cross the threshold through hiring or a merger without anyone flagging it. GreenGrowth CPAs is a member of the AICPA Employee Benefit Plan Audit Quality Center.

Valuation usually starts from a multiple of revenue or EBITDA, then adjusts for the things a buyer actually worries about: client concentration, how much revenue depends on one or two partners, retention risk after the transaction, the mix of recurring versus project work, and growth trajectory. Law firms, medical practices, and consulting firms each carry their own conventions. The factors that move the number take years to change, which is why succession planning that starts three to five years out produces a materially better outcome than a rushed sale.