Accounting & Tax Services for Law Firms in Canada
Specialized Canadian accounting for law firms — trust account compliance with provincial law societies, PCLaw and Clio integration, partner remuneration planning, and T5013 partnership returns.
Law firms operate under unique compliance rules
Canadian law firms operate under provincial law society trust accounting rules that are stricter than the accounting and tax rules applicable to almost any other industry. Trust account reconciliations must be performed monthly with specific procedures. Annual trust account compliance filings are required by most provincial law societies (Law Society of Ontario, Law Society of British Columbia, Law Society of Alberta, etc.). Trust account shortages must be reported immediately. Even minor trust account errors can trigger law society discipline and Trust Compliance Insurance Plan involvement.
Beyond trust accounting, law firms typically operate as partnerships (with T5013 partnership returns), often use specialized practice management software (PCLaw, Clio Manage, CosmoLex, Soluno), and have complex partner remuneration arrangements with draws, distributions, capital accounts, and tax allocations. The accounting work has to match all of this.
Who we serve
- Solo practitioners
- Small partnerships (2–10 lawyers)
- Mid-size firms
- Boutique practice areas (family, immigration, real estate, criminal, corporate)
- In-house counsel teams considering external structure
- Personal Law Corporations (PLCs) where permitted
Trust account compliance
Provincial law societies require:
- Monthly trust account reconciliation with three-way reconciliation (general ledger, bank statement, client ledger)
- Annual filings (LSO Trust Compliance Filing in Ontario, BC Trust Audit and Trust Report in BC, etc.)
- Immediate reporting of trust shortages
- Specific bookkeeping methods (no commingling of trust and general funds, separate trust accounts for designated funds where required)
- Practice management software approved by the law society
Partnership tax — T5013
Most multi-lawyer firms operate as general partnerships. Partnerships do not pay income tax themselves; income is allocated to partners and reported on each partner's T1. The partnership files a T5013 partnership information return reporting partnership income and the allocation to each partner. Partner draws against income, capital contributions, capital account maintenance, and partnership accrual vs cash method elections all interact with the T5013. We handle T5013 preparation and partner T1s in coordination.
What we deliver for law firms
- Trust account three-way reconciliation monthly
- Annual law society trust compliance filings
- General ledger and operating account bookkeeping
- Integration with PCLaw, Clio, or other practice management software
- T5013 partnership return preparation
- Partner T1 personal returns
- Personal Law Corporation T2 returns where applicable
- Payroll for staff (assistants, paralegals, articling students)
- GST/HST quarterly returns
- WSIB/WCB registration and remittance
- Year-end financial statements for partner review and bank requirements
What Canadian businesses commonly miss about this service
Across the hundreds of Canadian businesses we work with, the same handful of issues come up repeatedly. Many small business owners delay engaging professional accounting until a crisis: a CRA review letter, an unfiled GST/HST return demand, a denied bank loan because financial statements aren't ready, or a Notice of Reassessment that arrived weeks ago. By the time we are first contacted, the cost to fix the problem is often several times what proper ongoing accounting would have cost from the start. Proactive engagement is dramatically cheaper than reactive cleanup.
The Canadian tax landscape also changes constantly. Recent changes that affect most Canadian taxpayers include the 2023 anti-flipping rule (residential real estate sold within 365 days is automatically business income, not capital gain); the Underused Housing Tax (UHT-2900 annual filing requirement for many corporations, partnerships, and trusts holding residential property even when no tax is owing — with $5,000 to $10,000 per-property failure-to-file penalties); the Quebec QST joint registration changes since 2021; the post-2018 Tax on Split Income (TOSI) rules that effectively eliminated casual income splitting through family dividends; the post-2021 $200,000 stock option vesting limit on the 50% deduction for options granted by non-CCPCs; the CSRS 4200 Compilation Engagement standard replacing the older Notice to Reader engagement; and ongoing CRA increased scrutiny on pre-construction assignments, short-term rental businesses, and cash businesses.
How BOMCAS Canada delivers this service
Every engagement begins with a written, fixed-fee engagement letter signed before any work is performed. The engagement letter describes exactly what is in scope, what deliverables you will receive, when those deliverables are due, what your monthly or project fee is, and what (if anything) is outside scope. This eliminates the hourly-billing surprise that most accounting clients fear. The only time we use hourly billing is for genuinely unpredictable items such as CRA audit response or complex one-off projects — and even then we agree to a maximum cap before starting.
Once the engagement letter is signed, you e-sign the CRA authorization (RC59 for businesses or AUT-01 for individuals), and we onboard you to the encrypted client portal with multi-factor authentication. All document exchange flows through the portal — no emailing of sensitive financial documents. Meetings happen by video conference or phone at times that work for you, including outside normal business hours when needed.
Our Canadian tax compliance philosophy
BOMCAS Canada is structured around four operating principles:
- Tell the truth. If a tax position is aggressive, we say so. If a deduction will not survive a CRA review, we say so. If the engagement is going to cost more than originally quoted because the scope changed, we say so before doing the work.
- Bill what we said we would bill. No surprise invoices. No scope-creep billing. If something legitimately changes scope, we discuss it and re-quote before doing the additional work.
- Answer the phone. One-business-day response standard on client communications during normal business hours. No voicemail backlogs.
- Specialize. Canadian tax and accounting is too complex to be a generalist. We do not do US-only tax, UK tax, or any other foreign jurisdiction in isolation. We are Canadian. Our cross-border work is always anchored by deep Canadian compliance.
What ongoing engagement with BOMCAS Canada looks like
For most clients, the ongoing relationship is structured around predictable monthly deliverables. For an incorporated small business client, that typically includes: monthly cloud bookkeeping with full bank and credit card reconciliation; quarterly or annual GST/HST returns prepared and filed; monthly payroll for owner-managers and any employees, with CRA source deduction remittances; year-end Compilation Engagement (CSRS 4200) financial statements; T2 corporate income tax return; owner-manager T1 personal tax return (and spouse where applicable); annual salary-vs-dividend optimization with written recommendation; unlimited email and phone support during business hours; one quarterly check-in call to review numbers and discuss the business; and CRA correspondence handling for routine review letters.
For a personal tax client, the ongoing engagement includes: annual T1 preparation; any required Quebec TP-1 (for Quebec residents); CRA pre-assessment and post-assessment review response when CRA requests additional documentation; Notice of Assessment reconciliation; and proactive tax planning conversations during the year about RRSP, TFSA, and FHSA contributions, major life events (marriage, kids, retirement, real estate), and any planned business or investment changes.
Frequently asked questions about engaging BOMCAS Canada
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Are your fees fixed or hourly?
Can I switch from my current accountant?
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Why Canadian businesses choose specialized accounting over generalist accounting
The Canadian tax and accounting landscape has become significantly more complex over the past decade. The 2018 TOSI rules, the 2021 changes to stock option taxation, the 2022 mandatory reporting changes for trusts, the 2023 anti-flipping rule, the Underused Housing Tax, the changes to the small business deduction phase-out for passive investment income, the new CSRS 4200 Compilation Engagement standard, the continued expansion of digital sales tax rules, and the ongoing post-COVID CRA focus on cash businesses and unreported income have all required accountants to specialize more deeply. A generalist firm trying to cover personal tax, corporate tax, US tax, real estate, trusts, cross-border, and every industry vertical inevitably falls behind on the depth of expertise that any one client needs.
BOMCAS Canada is structured deliberately to maintain depth: we are Canadian-only by design; we work in industries where we have genuine specialized experience; we maintain ongoing professional education in Canadian tax law; we use Canadian-experienced staff at every level; and we coordinate with specialized partners (US-licensed cross-border, legal counsel for corporate restructuring, audit-engagement licensed practitioners) where required rather than trying to handle everything in-house.
Talk to a Canadian accountant who knows your industry
Call 780-667-5250 or submit the contact form. We respond within one business day.