Accounting for Professional Services Firms

Service revenue recognition and unbilled work are core to what we do for professional firms.

Under ASC 606, most engagements are recognized over time because your work creates no asset with alternative use and you have an enforceable right to payment for the work completed to date.

We measure progress with an input method, typically labor hours or costs incurred, so revenue tracks the effort you have actually delivered.

Fees you have earned but cannot yet bill sit as a contract asset, an unbilled receivable, until only the passage of time stands between you and payment, at which point it becomes a receivable.

Fees collected before the work is done are booked as a contract liability, or deferred revenue, and recognized as you perform.

For firms on the cash method, we plan around the fact that revenue is not taxed until fees are collected. On large unbilled and uncollected balances, that is a real deferral advantage.

We also help you decide between the cash and accrual methods, factoring in the IRC §448(c) gross-receipts test and the personal-service-corporation rules.

Clean, well-documented revenue recognition keeps your financials review-ready and your partner distributions predictable.

Yes. We work with the major accounting and practice-management platforms and can optimize your current setup or recommend a better fit.

Our team supports QuickBooks (time tracking, progress invoicing, and trust accounting) alongside the practice-management and billing systems professional firms rely on.

If you are on spreadsheets or an outgrown system, we help you move to a stronger platform without losing your historical data.

We assess your current workflow, tighten billing, WIP, and revenue-recognition processes, and identify the improvements that matter most.

From there, your accounting, billing, and payroll data flow cleanly between systems.

We train your staff and build custom reports and dashboards that show utilization, realization, and profitability by client or matter.

For firms with multiple entities or offices, we use cloud-based solutions that centralize reporting while keeping each entity tracked separately.

The result is one reliable source of truth for both engagement-level and firm-level performance.

Partner-level tax planning is where a professional-services CPA adds the most value, and we map it well before year-end, not after.

Partners are taxed differently than employees: fixed amounts paid for services are guaranteed payments under IRC §707(c), and a partner cannot be a W-2 employee of their own partnership (Rev. Rul. 69-184), so compensation flows on a Schedule K-1 with no withholding.

A general partner’s distributive share and guaranteed payments are subject to self-employment tax under §1402, so we build a quarterly-estimate plan that avoids surprises.

We help you elect the pass-through entity tax (PTET), the state-level SALT-cap workaround that IRS Notice 2020-75 approved: state income tax paid by the partnership or S-corp is deducted at the entity level rather than being limited by the individual SALT cap.

The qualified business income deduction under §199A matters here, because law, accounting, and consulting are specified service trades (SSTBs) whose 20% deduction phases out once taxable income clears the threshold and disappears entirely above the top of the range.

Architecture and engineering firms are specifically excluded from SSTB status, so we plan to preserve the full QBI deduction for A&E owners, subject only to the wage and property limits.

We evaluate entity choice (PLLC, PC, partnership, or S-corporation) within your state’s professional-entity and licensing rules.

For S-corporation owners, we document reasonable compensation before distributions, the area the IRS scrutinizes most for professional practices.

We coordinate federal and Colorado filings and keep documentation that stands up to IRS review.

Retirement plan design is one of the largest tax-deferral levers available to high-income partners, and we build it around your firm’s demographics.

A cash-balance plan is a defined-benefit plan, so deductible contributions are actuarially determined to fund a target benefit rather than capped at a fixed amount, letting older partners deduct six figures a year.

For 2026, the §415(b) annual defined-benefit limit is $290,000, which drives how much a cash-balance plan can fund each year.

Firms routinely pair a cash-balance plan with a 401(k) and profit-sharing plan, whose §415(c) total annual additions limit is $72,000 for 2026, including the $24,500 elective-deferral limit.

We model contribution scenarios across the partner group so the plan passes nondiscrimination testing while directing the largest deductible amounts to the owners.

Coordinating the plan with your entity structure, guaranteed payments, and reasonable-compensation figures keeps contributions fully deductible.

We also plan around multistate exposure, because a remote hire or out-of-state client can create income-tax and payroll obligations in new states.

Most states now source service revenue where the client receives the benefit, and P.L. 86-272 does not shield services, so we manage apportionment and nexus proactively.

We review the plan and your overall tax position throughout the year and adjust as the partner group and income change.

Yes. Our services scale from core bookkeeping to full outsourced CFO support as your firm grows.

Beyond compliance, we provide cash flow forecasting tied to your billing pipeline, budget-versus-actual reporting by client or matter, and KPI dashboards that track utilization and realization.

We build financial models for new offices, service lines, and partner buy-ins so you can evaluate decisions with clear numbers.

For firms with multiple entities, we deliver consolidated reporting across the practice plus the K-1 flow-through each partner needs.

We support internal controls, policy development, and the reporting packages your bank and partners expect.

During hiring gaps or periods of rapid growth, we can step in as interim finance leadership.

Our fractional controller and CFO services give you consistent financial leadership while you build internal capacity.

We also support partner admissions, buy-outs, and succession, and provide due diligence when you merge with or acquire another firm.

Whether you need occasional advisory or a steady-state finance partner, we size the engagement to your goals and budget.