The invoicing software for law firms
The fee note carries withholding, the provisión de fondos may or may not carry VAT depending on what it is for, court fees and the procurador are suplidos that are not income of yours, and a matter can last three years. A Word template settles none of those four things.
What is particular about invoicing in a law firm
A firm does not invoice products: it invoices time and advances its clients' money. That is where its four particularities come from.
Every fee note carries withholding
When you invoice a company or another professional, they withhold 15% of IRPF. The reduced 7% applies in the tax year you register and in the two following ones — not “three years” counted from the date — only if you did not carry on a professional activity the previous year, and you have to tell the client in writing. It is money you do not receive and that your client pays over in your name on their form 111.
Suplidos and provisiones are not the same thing
The court fee or the procurador's invoice paid on your client's behalf are suplidos: they go on the fee note without VAT and outside the taxable base, provided you pay them in the client's name under their express instruction and can evidence the amount. In exchange, you do not deduct that VAT. An advance on account of fees, by contrast, does make VAT chargeable when you receive it.
The matter lasts longer than the financial year
A case opened in March gets billed in three fee notes spread over two years. Without treating the case file as a cost centre, there is no way to know what each matter left behind or how much of what was agreed has already been invoiced.
Retainers every month
Ongoing advice is charged with a monthly retainer that has to be issued on the right day, with its sequential numbering and its withholding. It is the firm's most predictable income and the one most often forgotten.
How it is done today, and how it looks with Cairos
In a small firm the bottleneck is not the law. It is the administration.
Without Cairos
- Fee notes are done in Word and the withholding is worked out by hand.
- Suplidos get entered as income and fatten the taxable base.
- Provisiones de fondos get recorded as loose payments received, with no VAT.
- Nobody knows how much has been invoiced on a long matter.
- Retainers get issued when somebody remembers.
With Cairos
- The withholding is applied on its own according to the client and the year you registered.
- Suplidos go on their own line, without VAT and outside the base.
- The advance is issued as it should be and deducted from the final fee note.
- Each case file carries what has been invoiced, what is outstanding and what it has cost.
- Retainers are issued on their own each month, on their date and with their number.
The fee note, line by line
A properly drawn fee note has up to four kinds of line, and each one is taxed differently. This is the difference between invoicing properly and invoicing too much.
| Item | How it is going | Why |
|---|---|---|
| Fees to a company | 21% VAT and −15% IRPF | The company is obliged to withhold and pay it over on its form 111. |
| Fees in the year you register and the two following years | 21% VAT and −7% IRPF | The reduced rate for someone starting a professional activity who did not carry it on in the previous year; you have to tell the client. |
| Fees to a private individual | 21% VAT, no withholding | A private individual does not withhold. That is why working for private individuals usually forces you into form 130. |
| Suplidos: court fees, the procurador, registries | No VAT and outside the taxable base | Art. 78.Tres.3º: paid in the client's name under express instruction, with a receipt, and without you deducting that VAT. |
| Provisión de fondos on account of fees | With VAT when it is received | It is an advance on your work: under art. 75.Dos, VAT becomes chargeable at that moment. |
| An advance to pay suplidos | No VAT | It pays for no service of yours. |
| Advice to a company in another EU country | Without Spanish VAT | The place of supply is where the customer is: you have to be on the ROI, put the reverse charge reference on the fee note and file form 349. |
Cairos leaves the withholding set on the client's record and allows suplido lines that add to the total but not to the taxable base, which is exactly how they have to go. The line between a suplido and an expense of your own is a narrow one and article 78.Tres.3º of the VAT Act draws it: if the receipt is in your name, it is not a suplido, it is an expense of yours that you pass on with VAT.
The modelos you end up filing
| Form | When | Why in your case |
|---|---|---|
| 303 | Quarterly | The VAT on the fee notes less the VAT on the firm's expenses. |
| 130 | Quarterly | Only if less than 70% of your income carries a withholding. Cairos checks it. |
| 111 | Quarterly | If you have staff or pay other professionals with a withholding. |
| 115 | Quarterly | The withholding on the office rent. |
| 349 | Quarterly or monthly | If you advise companies in other EU countries. It is monthly by default and it only goes quarterly if you do not exceed €50,000 in the quarter or in the four preceding ones. |
| 347 | February | Customers and suppliers above €3,005.06 a year. Fee notes with withholding are excluded: those already travel on your client's 190. |
What you will actually use
What a firm needs, with no warehouses and no bills of materials.
Fee notes with withholding and suplidos
Withholding set per client and suplido lines that do not add to the taxable base.
Case files
Every matter with what has been invoiced, what is outstanding and what it has cost.
Monthly retainers
They are issued on their own on their date, with their sequential numbering. Sending them to the client is still something you do.
Form 130
With the gastos de difícil justificación and depreciation, which almost nobody applies correctly.
Try it with your firm's invoices
Free plan with up to 30 documents a year, no card needed. And if it does not work for you, your data leaves with you.
Questions from law firms
Your firm invoices differently. So does the program.
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