Law Firm Books CleanupFor Texas owners, the four papers still have to agree.
Trust files for this work stay in Dallas, and the four papers are read on the day we named.
Bring a Texas monthDallas holds the binders.
Neighbors in Dallas can sit with the same month we already have open. A firm whose office is in Dallas can talk with us as neighbors. A firm in Houston, Austin, San Antonio, or a smaller town is met on a video call. We are all Texans. There is no second office, and we do not claim a room in your town. The books are shared, the call is on video, and the four papers still have to agree on the day we named, whichever town your office sits in.
Spring in Dallas throws hail, lightning, and a tornado. We are all Texans under that sky, and a closed month still gets that care. The same care holds when the storm is over your town and the ledger is open on our side of the call. Weather does not move the tie.
Places a Dallas reader already knows.
Old Red still holds a clock over downtown. It is the historic Dallas County courthouse, red stone and a tower that has outlasted a century of files. We can all enjoy a building that outlasted that many matters. A trust record should be that stubborn. The clock does not care that a return was filed. The five year file does not care either.
The white arch over the Trinity still shows when the river is up. That arch is the Margaret Hunt Hill Bridge, and the floodplain under it goes wide in a high month. We look at high water and want the trust balance to hold in a high month too. A busy settlement month is that kind of water. The four papers are how the balance holds.
Reunion Tower is the ball on the downtown skyline, and some nights it dresses in green. Sort the settlement before a night out, because the whole check is not the fee. The client's money and the firm's fee are two lines. A green night is a fine reason to leave the office. It is a poor reason to book the whole check as income.
A Wednesday plate of enchiladas has been the El Fenix habit in Dallas since 1918. A trust file should show up with that same regularity for five years after the matter ends. People know where that plate will be. A later reader of the file should know where the client ledger will be, including the matters that had no activity.
The rest of the year, and the rest of the state.
July and August in Dallas average highs near 96 degrees, with several days over 100, which is the stretch anyone who works on air conditioning plans around. We can all feel a month people want to call finished while the afternoon is still hot. A trust month has that same impatience. Calling it closed does not open the ledger that was never read. If you are outside Dallas and Fort Worth, we are all Texans in that heat too, and we still read the shut paper on the video call.
Family schedules in Dallas follow the school calendar of Dallas ISD, second largest district in the state. We can all feel a clock a whole city already lives by. The five year file is that kind of clock. It does not move because a return was filed. A box leaves the shelf only after you count five years from the day the representation ended. If the end date is missing, the box stays.
DFW is the airport the region actually uses, about 16 miles northwest of downtown, and it is American Airlines' largest hub. We can all feel the pull of a morning flight. A trust month should be tied before that morning, not reconstructed after someone lands. We work with Texas owners remotely from Dallas. The tie happens before the flight, on the shared books, not in a conference room at the airport.
Rooms that hold more than one person's money.
Dealey Plaza is the western edge of the West End, the warehouse blocks that changed jobs without losing the district line. We can all feel a boundary that survives a new use. A reconciliation keeps a boundary like that. Drop the client ledger and the other three papers are just a pile. The bank statement, the check register, and the general trust ledger can all look tidy while one matter has no page of its own.
Northwest of downtown, the Design District turned old warehouse floors into showrooms and galleries. We can all enjoy a room that found a second life. A firm's file should outlast a move like that one. The five year record does not end because the office changed buildings. A new address is not an end date.
Locals still say Dallas Convention Center when they mean the hall officially named Kay Bailey Hutchison. We can all picture one room holding many people's money at once. A proceeds log is that room written down. Each payment needs its own name before the year is filed. A fee and a settlement from the same matter are two lines, not one blended number.
NorthPark sits at Northwest Highway and Central Expressway, a mall Dallas has walked for decades. We can all appreciate a place people already know how to find. A source on these pages should be that easy to find, named beside the figure it supports. A utilization number or a franchise number stays only while the publication it came from is still open beside it.
The SMU Mustangs are the teams of Southern Methodist University in University Park, a name the city already knows how to say. We can all enjoy a name that does not need a footnote. The boundary on the questions page should be that plain. The papers are here. The software objects are not. A printout is usually about a missing paper, not a click path.
Lockhart Smokehouse in Bishop Arts is the spot Visit Dallas names for brisket brought over from Lockhart. We can all respect a plate that has a known origin. A reply should have a known origin too, the paper you named. We answer from Dallas. The note should say which paper was missing, and the call starts there.
The four names the State Bar of Texas prints.
For a monthly reconciliation, the State Bar trust account page names the bank statement, the check register, a general trust ledger, and an individual ledger for each client. The same page names Excel as one program that can hold the work. The State Bar trust account page also gives two tips that matter more than any software menu. Reconcile the trust account every month. Understand the difference between a true non-refundable retainer and an advanced fee. The same page says trust account errors are a frequent path into the disciplinary system.
Rule 1.14(a), as printed in the State Bar trust account guide, tells the lawyer to preserve complete records of trust account funds and other client property for five years after termination of the representation. The five year trust record is a discipline rule. Rule 1.14(b) requires prompt notice and delivery of the funds the client or a third person is entitled to receive. A third person has an interest for purposes of Rule 1.14 only when that person has a matured legal or equitable interest. The guide's discussion includes a statutory lien, a judgment, a court order, a written assignment, a subrogation right, or a signed letter of protection.
An advanced fee can sit in the trust account and move to the operating account only as it is earned. The trust account guide says Rule 1.15(d) requires the return of unearned fees when the representation ends. A contingent fee matter also needs a written accounting under Rule 1.04(d), whether or not the client asks for one. The fee that has been earned can move. The fee that has not been earned stays.
Sources. The four names are the ones the State Bar of Texas lists for lawyers reconciling a trust account. The page is texasbar.com, trust accounts. The five year keeping rule sits in section 1.14(a) of the trust guide the State Bar of Texas prints for lawyers, GuidetoTrustAccounts.pdf.
Interest on a short trust balance.
An IOLTA account is one kind of trust account. The guide says all IOLTA accounts are trust accounts, and not every trust account is an IOLTA account. Client funds that are nominal in amount, or that the lawyer reasonably expects to hold for a short time, go into an IOLTA account because they cannot reasonably earn interest for the client. The interest is paid to the Texas Access to Justice Foundation.
Closing the account is not only a bank form. Once that IOLTA account is shut, the Texas Access to Justice Foundation gets word within thirty days, by letter or by an electronic note. Client money and any third person's share leave first. The bank balance can reach nothing only after those amounts are gone, and an unearned fee is part of that departure. Closing an IOLTA account, and the 30 day notice to the Texas Access to Justice Foundation, is a different act from the five year keep. That notice does not replace the five years.
Legal fees and the Comptroller's service list.
A trust page on this subject begins with the State Bar guide, an IRS publication, or a Comptroller page, and is then rewritten in this practice's words before it stays. Legal services do not appear in the Comptroller's January 2026 list of taxable services. Publication 96-259 says Tax Code Section 151.0101 covers 16 categories, including debt collection, information services, data processing, and security services. The practice of law is not one of those categories. A firm that also sells a listed service, such as debt collection that is not legal representation, has to read that category on its own.
Court research and similar databases can be an information service even when the legal fee is not. The publication lists data retrieval and research, including court cases, as an information service, and says 20 percent of the charge for an information service is exempt from sales tax. Using software to practice law is not automatically a taxable data processing service. The publication says merely using a computer as a tool to perform a professional service is not data processing, and gives an architect's plans and a bookkeeper's financial statements as the examples.
The franchise report.
A professional corporation, a professional association, an S corporation, and a limited liability company, including a single member LLC, are on the Comptroller's 2026 list of entities subject to franchise tax. A lawyer who never formed a company stays off the franchise report. Forming a limited liability company with a single owner puts that practice onto the Comptroller's entity list. Federal disregarded status does not decide the Texas filing. The instructions say an entity disregarded for federal income tax is still a separate entity for franchise tax.
A report whose original due date falls in 2026 or in 2027 owes nothing when annualized total revenue is 2,650,000 dollars or less. The compensation deduction limit is 480,000 dollars per person. An entity at or under the threshold owes no tax and does not file a No Tax Due Report. It still files a Public Information Report or an Ownership Information Report unless another instruction removes that filing. The rate on most entities is 0.75 percent. Name the entity type before that report is prepared.
The franchise report is a different filing from the information return. Do not let a 1099 question swallow the May report, and do not let the May report decide which information return a settlement used. They share a year. They do not share a form. The franchise election is a different May question. It carries the 2026 revenue threshold, and it does not pick the information return. Clio's 2025 benchmarks are national averages, not a Texas bar survey and not a client of this practice. No Texas only margin was on that page.
Bring the Texas month.
Name the paper, the entity type, or the form a settlement used.