In a business firm so many legal formalities are to be fulfilled to follow the legal procedures. It is very difficult for a business firm to employ the permanent and professionally qualified employee for different type of professional works. Therefore, the services are taken from outside from the experienced and qualified professionals. These professionals  charge the fees from the business firm for their services. This fees paid to the professionals, is booked under legal and professional charges account. There are certain expenses in respect of legal formalities like court fees, license fees and stamp paper etc. These expenses are also debited to legal and professional fees account.

Accounting Treatment of Legal and Professional Expenses

a) In case of payment in cash or by bank

Type of voucher to be prepared :- Cash or Bank payment voucher

Entry to be made

Debit:-    Legal and Professional Expenses Account

Credit:-  Cash Account


Bank Account

b) In case of unpaid professional fees:-

Type of voucher to be prepared:- Journal Voucher

Entry to be made

Debit:-        Legal and Professional Expenses Account

Credit:-     Expenses Payable Account


Outstanding Expenses Account


Professional’s Personal Account

Treatment of Legal & Professional Expenses in Final Accounts

Legal and professional expenses are indirect expenses and are shown in expenses side of profit and loss account. Unpaid professional fees is added to legal and professional expenses account and is shown in liabilities side of balance sheet.