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Accountant for Law Firms in Ottawa
A law practice runs on two kinds of money: client funds held in trust and the firm’s own money in the general account. As an accountant for law firms, BBA Tax keeps your general account books in QuickBooks, files your HST, sorts out disbursements and work in progress, and prepares year-end returns for sole practitioners, partnerships and professional corporations in Ottawa. The result is a general ledger that lines up with your trust records and tax bills you can plan for.
How We Help Ottawa Law Practices
We record each fee transfer from trust against the bill it pays, post client payments and firm expenses, and reconcile your general bank and credit card accounts in QuickBooks every month. Disbursements you pay on a client’s behalf are tracked by matter, so recoverable costs make it onto the next bill.
We register your firm for HST, charge it correctly on fees and taxable disbursements, claim input tax credits on rent, software and supplies, and file returns on your schedule. Accounts you render to Legal Aid Ontario are taxable too, even though the legal aid plan’s own service to clients is exempt.
We model whether practising through a professional corporation makes sense at your income level, then set up the tax side: business number accounts, a payroll account for your salary, and the first T2. The certificate of authorization the corporation needs comes from the Law Society, and you apply for it.
Draws are not a business expense, and partners pay tax on their share of partnership income whether or not they withdraw it. We plan draws, salary and dividends with that in mind, estimate your tax instalments, and help you set money aside for the balance owing.
At year-end we account for unbilled work in progress, close the books and prepare financial statements. For a professional corporation, the T2 deadline falls six months after year-end, but any balance owing comes sooner, two or three months after year-end depending on the corporation, so we plan for both dates.
Books That Respect the Trust Line
Law Society By-Law 9 sets out the records a practice must keep for trust money and for general money, including a signed monthly comparison of trust bank balances against the total your client ledgers show you hold. Your trust records and reconciliations remain your responsibility, and we build the general side of your books to sit cleanly beside them.
That starts with the transfers. When a fee moves out of trust, it should match a bill you have delivered, and the general account should record it as payment of that bill in the same month. When the two sets of records agree every month, year-end goes faster and questions are easier to answer.
What an Accountant for Law Firms Handles
BBA Tax covers the full financial cycle of a small practice: monthly bookkeeping, HST returns, payroll for law clerks and assistants, T4 slips, year-end financial statements and tax returns. Sole practitioners report professional income on a T1, a professional corporation files a T2, and a partnership files a T5013 return when it meets the CRA’s filing conditions. We meet Ottawa clients at our Westboro office and work remotely with practices elsewhere in Canada.
Why Law Firms Need Accounting Built for Legal Practice
A law practice deals with tax rules a retail shop or consulting business never sees: HST that depends on when you bill and where your client lives, income that includes work you haven’t billed, and limits on how professional corporations are owned and taxed. An accountant who knows these rules can catch problems before they reach a return. Here is where we focus.
HST Follows the Bill
The CRA treats HST as owing in the reporting period that includes the invoice date, even if the client hasn’t paid yet. A retainer held in trust against future fees is generally treated like a deposit, so tax applies when you bill or apply it, whichever comes first. A bill dated December 30 can land in a different return than one dated January 4.
Clients Across the River
For most legal services, the HST rate follows the client’s home or business address. A client with an Ontario address pays 13% HST, while a client with a Gatineau address generally pays 5% GST, and Quebec’s own sales tax rules are a separate question. Some services, such as those relating to real property, follow the property’s location instead.
One Business Limit, Shared
If your professional corporation is a partner in a law firm, the small business deduction on its partnership income is generally limited to its share of one notional $500,000 limit for the whole partnership, not a full $500,000 of its own. Any partnership with a corporate partner must also file a T5013 return each year, whatever its size.
Corporations Come With Conditions
A law professional corporation needs a certificate of authorization from the Law Society, a name that includes the words Professional Corporation, and articles that limit it to practising law and related activities, including investing surplus funds. Incorporating does not reduce your professional liability. What it can change is how much tax you pay now versus later.
Tax Returns & Filings for Law Practices
Your deadlines depend on how you practise, and our list of 2026 tax deadlines has the full calendar. Sole practitioners have until June 15, 2027 to file for 2026, but any balance is due April 30. Incorporated practices get six months from their year-end to file. We help with:
Personal returns reporting professional income for sole practitioners
T2 returns and financial statements for professional corporations
T5013 partnership returns, HST returns and T4 slips
Why Ottawa Lawyers Work With BBA Tax
Lead Accountant Karim Bitar, an ELITE Certified QuickBooks ProAdvisor, heads a team that includes bookkeepers for the monthly work. A practice needs attention every month, not only at tax time, because the general account, HST and payroll each run on their own schedule. You can meet us at 203-307C Richmond Road in Westboro.
We are clear about our role: we do not audit trust accounts or file Law Society reports for you. Within that line, you get bookkeeping, tax and payroll in one place. Pricing begins at $1,000 for a corporate T2 return and $1,225 a year for bookkeeping. A free intro call is the simplest way to see if we fit your practice.
What We Handle for Law Firms
From a solo practice to a small partnership, these are the jobs we take off your desk.
General account bookkeeping in QuickBooks
HST registration and returns
Professional corporation tax setup
Staff payroll, remittances and T4 slips
T1, T2 and T5013 returns
Law Firm Accounting FAQ
Do lawyers charge HST on disbursements?
Some disbursements carry HST and some do not. Under the CRA’s policy statement P-209R, costs a lawyer pays as the client’s agent, such as court filing fees, land registration fees and land transfer tax, are reimbursed without HST. Costs incurred to provide the lawyer’s own service, such as photocopies, courier charges, title searches and the lawyer’s travel, are taxable when billed to the client. The CRA follows these categories unless there is strong evidence that a particular disbursement should be treated differently.
Can family members own shares in a law professional corporation in Ontario?
Generally no, unless the family member is also a Law Society licensee. Ontario’s Business Corporations Act requires every share of a professional corporation to be owned, directly or indirectly, by members of the same profession. Only professional corporations for physicians and dentists can have family members as non-voting shareholders. For lawyers, the tax case for incorporating rests mainly on leaving profits in the corporation, where active business income within the $500,000 limit is taxed at a combined 11.2% after Ontario’s July 2026 rate cut.
Do lawyers pay tax on unbilled work in progress?
Generally yes. The CRA’s guide for self-employed professionals says professional income normally includes the value of work in progress at the end of the fiscal period, meaning services you have started but not finished providing. Waiting until January to bill does not simply move that work into next year’s income. Tracking unbilled time and costs by matter makes the year-end figure easier to calculate and support.
Can a law firm use the GST/HST Quick Method?
No. The CRA’s Quick Method guide excludes businesses that provide legal, accounting or actuarial services, along with bookkeeping, financial consulting and tax preparation services. A law practice calculates HST the regular way: tax collected on fees and taxable disbursements, minus input tax credits on rent, supplies and other business costs. That makes complete records of the HST you pay on expenses worth keeping, since every missed credit comes out of the firm’s pocket.
Guides for Lawyers and Law Firms
Go deeper with these guides from the BBA Tax blog:
- How to Pay Yourself as a Small Business Owner in Canada?
- Differences Between T2 Corporate Return and T1 Self-Employed Return
- CRA Tax Instalments in 2026: Who Has to Pay and How to Avoid Interest
- Understanding HST/GST Filing for Canadian Businesses: Everything You Need to Know
- Year-End Tax Planning Strategies for Canadian Business Owners
Success Stories
I'm an ELITE Certified QuickBooks ProAdvisor
Business owners regularly face issues with bookkeeping & this is where a ProAdvisor can help! Using my skills & experience, I can help you organize your books & even bring you back up to date if required. Let’s build up your books in order to provide you with the most up to date, reliable and accurate information about your company!
