You bill in six-minute increments. Let us handle the books — trust accounting, partner compensation, and entity structure, so you can focus on practicing law instead of reconciling ledgers.
Law firms have a financial structure most general CPAs don't see anywhere else: client trust funds that can never touch firm cash, income that may not be "yours" until a case settles, partners paid in draws instead of paychecks, and an entity decision — LLP, PLLC, PC, or sole proprietorship — that's often dictated as much by your state bar as by tax efficiency.
At Mercer Flanagan, we've been working with attorneys and small law firms in Frederick and surrounding counties for over 50 years. We know trust accounting. We know partner compensation. We know the deductions specific to legal practice. And we're here year-round — not just in April.
"The firms that come to us mid-year usually have the same problem: their trust ledger and their P&L tell two different stories, and nobody's reconciled them in months. That's not just a bookkeeping problem — it's a bar complaint waiting to happen."
We work with:
These are the situations we hear about most often from new law firm clients.
IOLTA and client trust accounts have to reconcile to the penny, client by client, on a regular schedule. When this slips, it's not just messy books — it's a compliance exposure with your state bar. We set up and maintain a three-way reconciliation so this never becomes a problem.
Sole proprietorships and general partnerships expose every dollar of profit to self-employment tax. An LLP, PLLC, or S-Corp election (where your state allows it for licensed professionals) can meaningfully change what partners keep. Many firms have never had this analyzed.
Advancing case costs for months or years before a settlement creates a timing mismatch between when money goes out and when it comes back in. Without the right bookkeeping treatment, this distorts your P&L and makes it hard to know if the firm is actually profitable.
Guaranteed payments, profit splits, capital accounts — multi-partner firms need this calculated correctly and consistently, or partners end up disputing their own K-1s every March. We build a compensation structure that's documented and repeatable.
Bar dues, CLE, malpractice (E&O) premiums, legal research subscriptions, court filing fees — these are routinely missed by generalist preparers who don't know what's normal for a law practice.
Income from a law practice is rarely smooth — a big settlement in Q3 can wreck an estimate calculated in January. We adjust your quarterly payments as the year actually unfolds, not just once at the start.
How your firm is legally organized affects self-employment tax, liability exposure, and how partner income gets reported. Most states restrict which entities licensed attorneys can use — here's how the common options compare.
| Structure | Self-Employment Tax | Admin Complexity | Best For |
|---|---|---|---|
| Sole Proprietorship | 15.3% on all net income | Lowest | Solo practitioners just starting out |
| Professional LLC (PLLC) | 15.3% unless S-Corp election made | Moderate | Solo and small firms wanting liability protection |
| S-Corp Election (where permitted) | Only on reasonable salary | Moderate | Profitable solo/small firms earning $80K+ net |
| LLP (Limited Liability Partnership) | SE tax on distributive share | Moderate–High | Multi-partner firms wanting liability shielding |
| Professional Corporation (PC) | Varies by election | High | States requiring a PC for licensed professionals |
Several states don't permit attorneys to use a standard LLC or to make certain entity elections — the rules are bar-specific. We confirm what your state allows before recommending a structure. Read our S-Corp vs. LLC guide →
Three-way reconciliation of your IOLTA or client trust account — bank balance, book balance, and client ledger balances — every month, so you can certify compliance to your bar without scrambling.
We confirm what your state bar permits, run the numbers on a possible S-Corp or LLP election, and handle the filing if it makes sense for your firm's profit level and partner structure.
S-Corp vs. LLC: Which Is Right for You? →Schedule C for solo practitioners, Form 1065 with partner K-1s for partnerships, Form 1120-S for S-Corp firms — paired with your personal Form 1040 so we have full context across both returns.
Small Business Tax Services → Individual Tax Preparation →If your practice touches estate planning or probate, we handle the Form 1041, 706, and 709 filings your clients' estates and trusts need — and coordinate directly with you on timing and document requirements.
Estate & Trust Tax Services → Read: Maryland Attorney's Guide to Estate & Trust Filings →A documented, repeatable methodology for guaranteed payments, profit allocations, and capital accounts — so K-1s are consistent year over year and partners aren't disputing their own numbers.
Bookkeeping built around the reality of plaintiff-side practice — costs advanced on open cases tracked separately from firm overhead, so your financials reflect what the firm has actually earned.
We recalculate your estimates as the year unfolds — particularly useful when a settlement or large fee lands mid-year and changes your tax picture.
Tax Planning Services →Clean, current books for your operating account, separate from trust — so you can see profitability by practice area, attorney, or matter type, not just at year-end.
QuickBooks Support & Training →Compiled financial statements for a line of credit, office lease, or partner buy-in agreement — prepared in a form lenders and incoming partners will accept.
Financial Statement Compilations →These are the deductions generalist preparers most often underutilize or miss for attorneys and law firms. Eligibility always depends on your specific facts — these are worth discussing with us directly.
*Fee-splitting and referral arrangements are subject to your state's rules of professional conduct, separate from their tax treatment — we coordinate on the accounting side, not the ethics rules. Documentation requirements apply to every category above; we make sure what you claim holds up if questioned.
Big firms want big corporate clients. We built our practice around the attorneys, business owners, and professionals who are the backbone of Frederick County. You won't be handed off to a junior associate. You won't wait three weeks for a call back. You get a CPA who knows your name and your situation.
Year Mercer Flanagan was founded in Frederick, MD
Years serving local professionals, businesses & nonprofits
Rated by clients across Frederick County
Access to your CPA — not just during tax season
Year-round access to your CPA. Questions get answered when you have them, not weeks later.
We understand IOLTA rules and the recordkeeping your bar expects.
We're based in Frederick, MD. We know this community and we're not going anywhere.
We don't just file your returns. We contact you when something changes that affects your tax situation.
Book a free 20-minute consultation. We'll tell you honestly whether we can help — and what it would cost. No pressure, no obligation.
Book a Free Consultation