For example, an accountant who is also a bookkeeper can help with the organization and categorization of expenses. This is important because it can save time when preparing tax returns or other financial reports. Furthermore, the accountant can offer suggestions on how to improve the bookkeeping system. The purpose of bookkeeping is to provide an accurate record of financial transactions so that informed decisions can be made and business compliance with rules and regulations is maintained. Although you may be just getting started in legal accounting, it does not have to be a foreign language.
Anyone who has started a business has been guilty of this mistake. Intermingling expenses isn’t a fatal mistake but it causes problems for your business when it comes to claiming expenses and tracking the financial health of your business. While this primarily applies to new law firms, ensuring that the basics are determined and set up correctly is critical.
Mismanaging trust accounts
Many lawyers assume their bookkeeper can or should help them with their financial analysis and get frustrated when they don’t. If you understand the different roles and skillsets each position has, you’ll be able to assess what type of help they can provide to you. As a solo attorney, managing your books 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. With those items in place, we can tackle what to monitor and when.
Speaking of expenses, one of the most common mistakes attorneys make is losing track of business expenses. It’s best to capture and record your business expenses on the daily, so you don’t lose those receipts or invoices. Then, set aside a time each week to make sure they are coded properly in your books. We know that lazy bookkeeping practices law firm bookkeeping will cost you real money and time, result in sweaty nightmares, and put your license and firm at risk. Thankfully, good bookkeeping can also result in accurate reports on demand, make billing easier and improve the way you view your finances. A controller can help you set up and oversee your financial system and accounting infrastructure.
Gain an Edge Over Your Firm’s Biggest Rivals
We will introduce the basics of accounting and bookkeeping as it pertains to law firms. We will cover the best practices to follow and common mistakes you should avoid. We’ll take care of your finances for you so you can do the job you were meant to do – growing your firm and ensuring client success.
Additionally, lawyers are not allowed to keep any interest earned from their trust account; instead, they must surrender it to the client. Many business owners think that they will hire an accountant but not a bookkeeper. However, for the sake of your firm’s finances and the accuracy of those finances, it is probably better to use someone with experience working in bookkeeping and accounting. Recording financial transactions and balancing financial accounts for a law firm is done by bookkeeping. Before any accounting, there needs to be legal bookkeeping performed as an administrative task for all law firms. Using automation to simplify billing lets you get client invoices out faster for prompt payment.