Operating accounting refers to the financial management of a law firm’s day-to-day business operations — separate from trust accounting. It includes tracking the firm’s income, expenses, payroll, overhead, and other financial activities related to running the business.
Unlike the onboarding process for trust accounting, there is one consolidated process to set up your firm for operating accounting. This will include all your operating bank accounts and credit cards.
To help ensure a smooth and accurate onboarding process, please gather the following information — all reflecting the same onboarding date:
A list of your Chart of Accounts, if available.
Bank statement for your operating bank accounts and credit cards that will be used to obtain your account balances.
The last reconciliation you performed for your operating bank accounts - to obtain a list of uncleared transactions.
The date of your last reconciliation.
A balance sheet as of your onboarding start date, to ensure accurate opening balances for your operating accounts.
You’ll be guided through the operating accounting setup, step by step, with real-time status updates to help you track your progress throughout the onboarding process.
If you need to pause the onboarding process you can save your work at any step and return to the onboarding page to continue.
Select the Operating option and choose Get Started on step 1.
Step 1 - Set up Chart of Accounts
Your Chart of Accounts organizes your firm’s finances into categories like fee income, client costs, and expenses. In this step, we recommend using our law-firm-specific default chart or you can import your own if you're coming from another system.
Click here to learn more about chart of accounts.
Create your chart of accounts using the following steps:
Choose whether you would like to use the Default chart of accounts or Import your own chart of accounts.
Default Chart of Accounts
The list of the default chart of accounts will be displayed. Review this list and uncheck any that are not relevant to your firm.
Click Continue.
Import Chart of Accounts
Click here for more details on importing your own Chart of Accounts.
Step 2 - Set Onboarding Date and Bank Balances
Choose a date you wish to start tracking your firm’s operating finances. In this step you will define your onboarding date and balances for all operating accounts and credit cards. We recommend using the end of a recent month or the date of your most recent bank reconciliation.
Set the Start Date.
A list of your operating bank accounts and credit cards in PracticePanther will be displayed. Using your bank and credit card statements, enter the balances as of the specified start date.
Note: If you have not set up your firm’s credit cards within PracticePanther, we recommend you save this step by choosing Save and Finish Later and create your firm credit cards in Accounting > Bank Accounts & Credit Cards > New Account. Once those are created, you can return to this step to continue your onboarding.
Once all balances have been entered, click Continue.
Step 3 - Define Chart of Account Starting Balances
In this step you will enter a starting balance for each account in your chart of accounts. Some accounts are pre-filled based on the balances you entered in Step 2 or from balances we calculate from your existing PracticePanther data.
For these balances, we recommend that you use your balance sheet from your previous accounting system, as of your selected start date.
For each account, enter the appropriate balance amount.
Once completed, click Continue.
Note: You do not need to enter a starting balance for the Credit Card Liability account if you are already managing your firm credit cards as accounts in PracticePanther. If you have not yet created accounts for these in PracticePanther we recommend you click Save and Finish Later and navigate to Accounting > Banks & Credit Cards to create these accounts then return to this step 2 of onboarding to enter your current statement balances.
Step 4 - Identify Uncleared Transactions
For each operating bank account, you will be presented with a list of your PracticePanther payments, dated through the Start Date entered on Step 2. The goal of this step is to select the withdrawals and deposits that have not cleared your bank statement as of the start date.
What is the difference between Withdrawals and Deposits?
Withdrawals are payments that represent money leaving your account. Common examples of withdrawals include refunds, transfers, or taking money out.
Deposits are payments that represent money coming into your account. Common examples of deposits are retainer and invoice payments received.
If you do not have any uncleared transactions or are not aware of any, you can click Continue to skip this step.
To select your Uncleared Transactions, follow these steps:
Select the Withdrawals tab and review the list of payments.
If you have your previous reconciliation, use this to search for uncleared payments.
Note: Use the filters, such as date or contact, to search for specific payments.
If you see a payment in the list of transactions (meaning the payment has been entered in PracticePanther) but you do not see that payment on your Bank Account (e.g. an uncleared check), then select the check box associated with that payment to move it to the Uncleared Transactions List. Click Add Selected.
This will add the unmatched transaction(s) to the Uncleared List, removing them from the initial reconciliation.
If a payment you need to mark as uncleared — such as a firm expense — isn't listed because it wasn't previously recorded in PracticePanther, you can pause onboarding and add it by first selecting Save and Finish Later.
In this case, enter the contact or firm payment in PracticePanther.
Return to Settings > Accounting to resume the Operating onboarding which will show as In Progress from the onboarding page.
Click Continue on step 4.
The new payment you created will be available from the appropriate Deposit or Withdrawal tab.
Select the checkbox and move it to the Uncleared Transactions List by choosing Add Selected.
Follow the same steps for the Deposits tab.
You can always view the payments you’ve marked as uncleared by viewing the uncleared list - see below for more information on viewing your uncleared list.
Once you’ve identified all of your uncleared payments, click Continue.
Note: You’ll repeat this step of selecting uncleared transactions for each of your operating bank accounts.
To view the transactions you’ve selected as Uncleared follow these steps:
Click View Uncleared List at the bottom of this page.
Here you will see all the payments you selected as Uncleared, organized by Withdrawals and Deposits, allowing you to verify that these transactions are not on your bank statement.
You can remove any payment by clicking the check box associated with the transaction and clicking the Remove Selected option.
Compare the list of payments displayed to your bank statement and previous reconciliation.
When you’re finished reviewing, click Save Changes to save your updates.
Step 5 - Review and Finalize
In this final step you will review your chart of accounts and their starting balances. Once you’ve finished reviewing, click Finalize Onboarding to complete the process.
At the end of the onboarding process, if any differences are found between your bank account balances and the balances recorded in PracticePanther, an adjusting journal entry will be created. This entry will update the appropriate accounts and offset the difference to your firm's Retained Earnings account.
What is an Adjusting Journal Entry?
An adjusting journal entry is a manual accounting entry used to correct or align your financial records.
In the context of onboarding operating accounting for a law firm, if your bank balance doesn’t match the balance recorded in PracticePanther, an adjusting journal entry is automatically created to account for the difference. This ensures that your books start off accurate and balanced.
Example:
If your bank statement shows $10,000 but PracticePanther shows $9,500, the system will create an adjusting entry for the $500 difference to bring your records in line.
What are Retained Earnings?
Retained earnings represent the portion of your law firm’s profits that have been kept in the business, rather than paid to partners or owners. It reflects the cumulative net income (or losses) from prior periods, minus any distributions.
In onboarding, if there’s a difference between your actual bank balance and PracticePanther’s records, the adjustment is posted to your Retained Earnings account — because it represents a historical correction rather than a current income or expense.
You can think of it as a catch-all account used to balance out past discrepancies in your firm’s financials without impacting current performance.
To accept the adjusting entry, click the Acknowledge button. This will enable you to save and finalize the reconciliation.
Click Finalize Onboarding.
What Happens Next?
A reconciliation for each bank account is created as a result of the onboarding process. You will be returned to the main onboarding page which will now include the list of your onboarded accounts and your onboarding summary if an adjusting journal entry was created. Your Operating Accounting onboarding is now complete!
If your trust accounts have not yet been onboarded you can click Trust to start or continue trust onboarding.
Viewing your Onboarding Summary
Once you have onboarded operating accounting the status will be displayed as Completed. If applicable, a link to the adjusting journal entry created as a result of the onboarding will be available.
What Happens Next?
Once onboarded, ensure your users can access all the PantherAccounting Plus capabilities. Click the link on the onboarding status page to manage user Permissions. Click here for more details on managing these permissions.