Law Firm Bookkeeping 101: Choosing The Best Accountant for Your Firm

As the name implies, TaxSlayer is a powerful software for all things tax-related. It allows firms to execute a variety of tax actions, as well as create and send important financial and tax documents. Millions rely on TaxSlayer to ensure they comply with all of the necessary tax regulations and adequately fulfill their tax duties. Data entry errors lead to wasted time, as you comb through records to figure out what the error is, as well as billing complications and compliance violations in the worst cases. Everyone makes mistakes, including lawyers (and bookkeepers, and accountants).

At its core, you must always know who’s entitled to the funds in your trust account and give it to that person. Knowing the fundamentals will enable you to be aware of your overall financial health, but trained accountants can still provide peace of mind and offer invaluable help. Whether you need just a little bit of hand holding or more, we are here to help your law practice!

QuickBooks Online: For streamlined legal accounting

It’s easy for your personal expenses to creep onto your balance sheets. You could easily pay for your car wash with your business credit card. You pick up coffee for the office staff before work and use the corporate card. Before you know it, you’re paying for groceries and the cable bill at home on the firm’s dime. Knowing where you stop and your firm begins sometimes has a fuzzy line.

While you’ve spent years honing your skills to become a great lawyer, you didn’t learn about accounting or bookkeeping for attorneys at law school. Legal bookkeepers provide reliable legal bookkeeping services to help lawyers stay focus on law practice. With a team of highly skilled professionals, we provide meticulous financial management to ensure accuracy and efficiency for your law practice.

Best Law Firm Accounting and Bookkeeping Services

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. Critical legal thinking takes a distraction-free environment, and we’ll give that to you. In many law firms, one employee handles all the law firm bookkeeping bookkeeping and other back-office functions, leaving the company vulnerable during instances of illness, sick leave, or vacation. When you take funds out of your business for personal use, it can either be classified as a capital withdrawal or as a payment for salary.

However, if a firm fails to separate revenue that covers incurred costs from actual revenue, their records will be off. Embracing our specialized accounting legal bookkeeping solutions enables lawyers and law firms to leverage expert financial guidance without the burden of a full-time, in-house accountant. It’s a practical approach that ensures financial stability and empowers firms to focus on their core competencies. Your legal fees are coming from many different places, and not always the client’s wallet. Sometimes attorneys collect their fees from a case settlement or favorable judgment.

Next Up: A Certified Public Accountant

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. MyCase three-way trust reconciliation tools enable you to stay in compliance with bar regulations. Many lawyers have no idea how much money they are making or how the firm is doing. (Really!) At best, they have financial information but it’s too late to do anything. Some firms will even use accrual for their monthly reports but then submit their year-end tax return as the cash method.

• For example, if a business owner is not keeping accurate records of expenses, they may be overpaying taxes or missing out on deductions that could save the business money.
• They mustn’t deposit client funds in accounts that do not bear interests, or in their business accounts.
• Law firms will hire legal accountants to prepare financial statements, provide financial forecasting, and capture expenses to give your business a clearer picture.
• Accountants rely on bookkeepers to keep accurate and timely financial statements.

These listed services are in addition to most accounting software’s standard features, including expense tracking, calendar management, and report generation. TimeSolv excels at project tracking, but project tracking isn’t all this software option does. It allows you to efficiently and easily manage your firm’s billing aspects and the other important financial transactions you engage in, from expense tracking to automatic payment processing. TimeSolv can also take care of your firm’s tax calculation and filing needs. Understanding these terms and how they relate will help law firms properly manage their finances. Additionally, maintaining accurate books helps ensure that all financial information is correct and up-to-date.

What tools are available to help with efficient legal bookkeeping?

By keeping your money separate at all times from your clients’ and strictly following trust administration rules and guidelines, you’ll sidestep a whole host of problems down the line. The right budget management software is essential for law firms. Clio Manage and other programs help firms organize their financial activities, from the expense and revenue tracking to managing billables. Trust accounting is the bookkeeping of clients’ income and expenses that are held in trust. This type of accounting may include assets from settlements or retainers fees. These funds held in a trust are not the law firm’s property but are individuals or institutions known as trustees.

• In fact, some basic rules dictate how you must handle this money to ensure compliance.
• Speak to your accountant to make sure you are correctly withholding each payroll tax.
• Additionally, keep your financial records in check by syncing to a system for accounting for law firms like QuickBooks Online.
• Accounting for law firms becomes so much easier when you work with an accounting professional from the beginning.
• In fact, you can’t even afford to wait a week until you make time to enter your transactions.
• Working from our review, we’ll provide clear and actionable recommendations for improvement related to your particular processes, software, and systems.