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Without a trusted bookkeeper for attorneys, a legal accountant won’t have any data work off of. And while you learned the ins and outs of the legal system in law school, they didn’t teach you about accounting and bookkeeping. You can try MyCase today risk-free with a 10-day free trial, which includes access to MyCase Accounting. Plus, no commitment or credit card is required, and you can cancel anytime.
You can go with an accrual or cash accounting method in the US, and the difference is mostly about timing. Poor accounting practices, such as struggling to track billable hours or sending out invoices late, can lead to money leakage. The firm could face compliance issues, and their books will be inaccurate (skewing the value of any accounting data derived from them). When looking at the importance of solid accounting, you’re really talking about looking at financial data on a regular basis.
Take Advantage of Accounting Software & Tools
First things first, bookkeeping and accounting aren’t the same things. Although they share a common goal, they occur at different stages of managing your firm’s finances. Bookkeeping happens first and relates to the administrative side of tracking your cash. Modern economic circumstances have meant clients are less willing (or sometimes able) to part with their money. Law firms have to better at managing money than ever in order to grow their business.
Grow your law firm with a platform that simplifies document management and your law practice’s accounting. QuickBooks tracks every dollar coming in and going out of the firm. You can instantly run financial statements to see how business is doing. Generate statements such as cash flow, profit and loss, balance sheets, etc. Email reports directly to clients, banks, partners, or equity members. Sync your legal accounting software to apps that organize clients, billing, and documents in one place.
Law Firm Accounting 101
Your bookkeeper can also run routine financial reports for you, including the income statement and balance sheet described in Chapter 1. As a solo attorney, managing your books law firm bookkeeping via accounting software may get you started. Yet, if you own a small firm with multiple attorneys, employees, or contractors, hiring a bookkeeper is more than worth it.
Thankfully, good bookkeeping can also result in accurate reports on demand, make billing easier and improve the way you view your finances. While you could hire permanent accounting help as your firm grows, most firms find working with an independent contractor who provides these services is a great way to get started. The tax professionals at O’Connor CPA Firm, LLC are well versed in the new tax regulations and how they can affect your legal practice. With our business advisory services, we will regularly engage in strategic tax planning to ensure that your practice is structured appropriately to work with every tax savings tool. We have a team of legal accounting experts
ready to help you with your bookkeeping, onboarding, or trust reconciliation projects. FreshBooks Select is a custom plan built to save time and money, and ensure your growing legal business has the accounting solution it needs.
Accounting Considerations for Law Firms
No matter what size legal practice they own, it doesn’t make financial sense for lawyers to handle their own accounting and bookkeeping. If a sole proprietor spends time on his books he’s losing an opportunity to work with a client for billable hours. For larger law firms, the time and expense of managing an on-site accounting staff is still more costly and much more difficult than outsourcing the accounting to us. We’ll gladly oversee your finances, so you’re free to devote more time working with clients and increasing revenues for your firm. When your accounting processes are in our hands, you’ll still be in control of your money because we’ll supply usable financial data to help you monitor expenses and regulate cash flow. In other industries, it is allowed to keep clients’ prepayments in your operating account and use the money to fund client projects.
ProFix is your trusted advisor when envisioning and implementing your business goals. Ensure your finances, operations, and processes are in order with a leader in legal accounting. Accelerate invoicing to avoid a cash flow problem where you’re spending money on your client’s behalf without getting it back from them.
What Is a Legal Assistant? Explaining Their Role in a Law Firm
Generate financial statements like cash flow, profit and loss, or balance sheets. Send reports instantly to the bank, partners, or equity members. We offer a full range of billing and accounting products, services, training, and technical support for the legal industry. Monitor and manage Trust/IOLTA accounts and client trust liabilities to meet strict state bar regulations.