Be sure to classify direct costs (any amount paid as an expense to a vendor on behalf of a client) and indirect costs (in-house expenses associated with a matter like postage and long distance calls). Failing to properly record direct costs impacts the net income and can cause increased tax liability. If audited, inaccurate tracking can also present a compliance issue. Learn more about tracking direct and indirect costs.
Tech Tip #228: Why Firms Should Separate Their Direct and Indirect Costs
![Law-Firms-Should-Separate-Their-Direct-and-Indirect-Costs](https://www.cosmolex.com/wp-content/uploads/2020/02/shutterstock_387617167.jpg)
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