Firm Finances: Bookkeeping, Accounting, and KPIs 2023

law firm bookkeeping services

Learn more about SLC Bookkeeping’s law firm accounting service and contact us to schedule a free consultation. You undoubtedly have more pressing matters than organizing your financial statements or monitoring your books. When you partner with Lescault & Walderman, enjoy the luxury of accruing more billable hours and scaling your law firm and less time worrying about your financial data. Our law firm accounting services are designed to automate your bookkeeping capabilities, manage your IOLTA accounting, and provide analytical insight to reduce overhead and increase profits. While bookkeeping is more transactional and administrative, accounting is more subjective, giving you insights into your law firm’s financial health based on legal bookkeeping information. One key part of the accounting process is analyzing financial reports that provide you with a better understanding of actual profitability and awareness of cash flow in your business.

  • I helped switch us from Quicken (the PERSONAL accounting software) to QuickBooks Online.
  • Hiring myself as a bookkeeper would be an expensive waste of resources.
  • First, let’s review typical accounting and bookkeeping functions that need to happen regularly so you can make sure you’ve got these covered.
  • We recommend you hire a legal bookkeeper and accountant to help keep you and your firm on track.
  • Achieve a clear insight around your firm’s working capital, financial projections, and requirements for future expansion.
  • During that time, you likely did not learn anything about legal accounting or bookkeeping.

The firm could face compliance issues, and their books will be inaccurate (skewing the value of any accounting data derived from them). IOLTA accounts are designed to keep client funds separate from your typical business or operating account—where you are allowed to accrue interest. This is a list of all your firm’s financial accounts, giving you a framework for where to record every transaction. Without proper attorney bookkeeping, it’s impossible to track what money is coming (and leaving your firm). This can cause serious issues and stunt your firm’s growth (more on that later).

Errors in data entry

When you don’t collect funds that you’re owed, you miss out on revenue and are essentially working for free. And when you’re missing out on 12% of your billable hours, that’s 4.8 hours in a standard 40-hour workweek. If you sent your client an invoice, that is immediately counted as revenue if you don’t receive the money for weeks. If you commingle your personal and business funds, you’re “piercing the veil,” and courts will ignore the legal protection that comes with incorporating. Plus, the more time and effort your accountant has to put into organizing your transactions, the more you pay them.

Again, you should also be spending time daily recording your firm’s transactions. Are you confident that your trust account is being managed properly? Do you have monthly financials that truly let you know how your law practice is doing? Are you certain that all of your advanced client costs are being billed back to clients? Do you have a “fire drill” at the beginning of each month when it’s time to prepare bills and some timekeepers don’t have their time in?

Managing Firm Finances: Bookkeeping, Accounting, and KPIs

If you’re the owner of a small law firm, you need to know the essentials of bookkeeping and accounting for law firms. This way, your firm can stay compliant with ethics rules—and you can ensure you aren’t leaving money on the table. Handling client funds is a significant responsibility and you must remember a large number of rules to conduct your role ethically and responsibly. However, it’s easy to make attorney bookkeeping and data entry mistakes when you have to maintain and complete your day-to-day transactions manually. Only a small mistake or duplicated data entry may result in wasted time, mismatched records, billing complications, and even compliance violations.

  • Learn more about SLC Bookkeeping’s law firm accounting service and contact us to schedule a free consultation.
  • For example, you might have an operating account, lawyers trust accounts, accounts receivables, and fixed assets within the assets category.
  • With a CFO handling your firm’s cash, you have a professional to rely on for help and advice at any time.
  • Produce clean, detailed, and informative financial statements on a monthly basis, including the balance sheet, income statement, and statement of cash flows.
  • Freelancers need the best expense management and reporting software to thrive.
  • Do you have monthly financials that truly let you know how your law practice is doing?
  • For bookkeeping purposes, ensure you’re only tracking transactions that occur within your law firm’s accounts.

Finally, we’ll go over some common financial mistakes and how to avoid them. Installing the software and getting to a point where it’s working for you at an optimal level can be challenging. Here at Better Bookkeepers, we’ve installed QuickBooks with countless clients. Not only can you ensure a seamless installation process by hiring us, but we’ll set it up to serve your business optimally and ensure you have a good understanding of how it works. To ensure you can use QuickBooks to its fullest potential, we’ll also train you on the intricacies of the software. Do you have an existing bookkeeping system that has been making errors or takes more time than you’d like?

Commingle operating and Client Trust Account funds

Whether you need just a little bit of hand holding or more, we are here to help your law practice! When you’re looking for bookkeeping and QuickBooks training nearby, Better Bookkeepers is the best choice. In addition to the scope of our services and the tailored approach we take to bookkeeping, there are several other factors that make us the right choice. Under Dennis’ leadership, Uptime Legal has grown organically and through acquisitions to become the nationally-recognized legal technology company it is today. With the knowledge you’ve gained, you’re well on your way to better financial health. The hope is that, by knowing where your money is coming and going, you can spend more wisely and capitalize on valuable opportunities.

law firm bookkeeping services

Something critical to every law firm’s success is practical legal accounting. To make sure your firm’s financial statements are up-to-date, accurate, and complete, you must use a good bookkeeper. A transparent accounting system will bring your firm a clear financial picture, clients, and more. Finding the right accounting services for your law firm is critical in today’s legal arena.

Interest on Lawyer Trust Accounts, also known as IOLTA accounts, are bank accounts used to hold client retainers, settlement funds, and other money that belongs to clients. Typical accounting tasks are (1) preparing monthly income and balance sheet statements; (2) preparing and completing tax returns; and (3) forecasting future cash flow. If your law firm doesn’t already have business bank accounts, it’s time to open them. Most firms will need three business bank accounts at a minimum—checking, savings, and a separate IOLTA or trust account. Without the proper business bank accounts, you risk inaccurate bookkeeping, messy records, and potential compliance violations regarding trust funds.

We are also Profit First certified, which is a financial management strategy designed to ensure that your firm is more profitable. Lawyers spend years honing their legal skills, but they often have little knowledge of accounting practices. The following tips can help you get a law firm bookkeeping better handle on your finances. Hiring myself as a bookkeeper would be an expensive waste of resources. Would you hire someone who has mediocre recordkeeping skills to manage your books for $300/hour? If that’s your billable rate, then that’s what you’re effectively doing.

SHARE
About Author

Carla Sofia Guerreo Sanchez

Leave a Reply

Your email address will not be published. Required fields are marked *