We know how important this is; our CEO, Devon Thurtle Anderson, is an attorney licensed in three states, with over 10 years of experience in complex commercial litigation and business law. We understand the challenges, and solutions, of running a law firm, because we’ve lived it. Time is the most precious asset a lawyer possesses, and we’re here to ensure you have the tools to maximize your law firm accounting efficiency. And the security in your ability to satisfy Trust/IOLTA compliance, along with the financial reporting to make informed decisions. You need an accounting partner with industry expertise and applied knowledge, and at Lescault and Walderman, your satisfaction is our benchmark for success. Attorney trust accounting can be the source of significant needless stress for you and your law firm.
Before adding anyone to your payroll, make sure your workers are categorized correctly as either employees or independent contractors. Before you commit, make sure you do the math to determine the impact a provider’s fees will have on your bottom line. Whatever the reason, borrowing from an IOLTA is one of the most common ways to get disbarred. Once you’ve chosen an accountant to work with, use these questions to guide your initial conversation. A CPA can also help you make long-term, big picture budgeting decisions about the future of your business.
Don’t borrow money from an IOLTA
For example, if you were using LawPay to collect payments and invoice clients, you could easily sync all your transactions into QuickBooks for easy reporting and reconciliation. Cash accounting recognizes revenues when cash is received, as well as expenses when paid. However, this method does not recognize accounts receivable law firm bookkeeping services or accounts payable. Most law firms use cash basis accounting because it’s simple to maintain. While it’s essential to understand the fundamentals of accounting for law firms, you still aren’t an accountant or bookkeeper. Hiring professionals is common for law firms, and it’s an easy route to peace of mind.
Legal accountants look at the bigger picture, using the data your bookkeeper provides to determine how your firm can improve its financial health. Without a trusted bookkeeper for attorneys, a legal accountant won’t have any data work off of. Both general accounting and trust accounting are necessary for your firm’s success—and https://www.bookstime.com/ integrations seamlessly tie the two areas together. With this guide, you’ll understand key financial concepts, financial levers affecting your business, best practices for billing and collecting money, and how to manage and outsource financial work. And, you’ll have tools to tackle business insurance and taxes.
Financial Statements & Reporting
Cash accounting recognizes revenues when cash is received, and expenses when they are paid. This method does not recognize accounts receivable or accounts payable. You can’t, for example, pay for your firm’s operating expenses directly out of an IOLTA account.
- Focus on on your clients and we will focus on what we love, bookkeeping.
- Even though interest rates on business accounts are traditionally low, having a cash surplus in a business savings account can improve your likelihood of being approved for a loan.
- With all the options available, we know it’s difficult to choose which software is the best choice for your firm.
- It will be much easier to pick a few numbers and keep those top of mind.
- When you’re just starting out, you can keep costs low by recording all income and expenses in a spreadsheet, like our Excel Income Statement Template.
When used for that much data, Excel becomes clunky and lacks features you could use to improve your reporting. There are plenty of tools available that can help get you started. For over a decade, she has been working with law firms to design websites and develop comprehensive Search Engine Optimization (SEO) and Google Adwords Marketing campaigns. Ask a question or schedule a free 30-minute consultation today.
Stay on top of your accounting
Your budget is a vital tool for keeping you in control of expenditure and making sure you’re not overspending. These best practices all come back to one idea — staying organized. You want to pay attention to the ABA’s rules, as not doing so could lead to some severe consequences. With that said, there are some basic regulations that you’ll want to abide by regardless of where you’re practicing.
Do I need a bookkeeper if I have an accountant?
You do not need a bookkeeper if your accountant does your bookkeeping for you every month and goes through your figures with you at least every quarter. There are a lot of accountants out there that will be in contact with you on a regular basis and this is fantastic.
We have years of experience in delivering the best accounting services for all kinds of law firms and attorneys. Each month, a team of professional bookkeepers with experience in legal accounting gathers your data for you and turns it into accurate financial statements. You also get smart software to help you monitor your finances and stay in control of cash flow. The advantages of legal accounting software multiply with today’s cloud-based solutions.
FUSION LEGAL & TAX
Ask around to see if other attorneys have a recommendation, or ask your State Bar for referrals. Whether you need just a little bit of hand holding or more, we are here to help your law practice! My name is Brandy Derrick and I am the owner of Legal Ease Bookkeeping, LLC. I started doing the bookkeeping for a group of small businesses that are all owned or part owned by the same person in 2001.
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.
Actively Manage Your Finances and Financial KPIs
Even though interest rates on business accounts are traditionally low, having a cash surplus in a business savings account can improve your likelihood of being approved for a loan. It’s also a good place to store money you’re setting aside for taxes and emergencies. From sending payment requests and tracking them to integrating with your go-to legal software products, LawPay will fit your needs. LawPay also ensures your law firm accepts payments that comply with your state bar’s regulations surrounding trust (IOLTA) accounts and the American Bar Association (ABA) guidelines.
Additionally, you should promptly respond to questions and concerns so your clients know they can rely on you. When clients know they can trust you, they’re more likely to choose your business over a competitor’s. With Fusion Legal & Tax, you no longer have to worry about the inefficiencies of having a bookkeeper, CPA, and tax attorney in separate locations, using you as the go-between.