CohnReznick: Advisory, Assurance, Tax Firm
Content What are the key steps of bookkeeping for a law firm? How We Work with Law Firms Legal Case Management We understand what it’s like to have everything fall on your shoulders. That’s also why we recommend eventually hiring a professional bookkeeper to ensure nothing falls through the cracks. By now, you know you […]
We understand what it’s like to have everything fall on your shoulders. That’s also why we recommend eventually hiring a professional bookkeeper to ensure nothing falls through the cracks. By now, you know you can’t simply create a financial strategy and budget and sit back and relax.
To open any kind of business bank account, your practice needs to be registered with the state in which you are operating, have a registered business name and have an Employer Identification Number (EIN). Once you’ve chosen a bank to work with, you’ll want to open a business checking account, a savings account, and an IOLTA (Interest on Lawyers Trust Account). Many states or jurisdictions now require 150 semester hours of education to obtain the CPA license—even to sit for the exam. Colleges and universities in these states/jurisdictions determine the curriculum for pre-licensure education of CPAs; it typically features a good balance of accounting, business, and general education. But every payment provider has a different fee structure (for example, credit card payments often come with a fee) so look into that beforehand.
What are the key steps of bookkeeping for a law firm?
Sometimes these fees can become hard to track, causing you to charge the wrong client’s account. To prevent misappropriating funds from other clients, remember to only charge your clients for fees directly relating to their trust account. With the accrual method, you record revenue when it’s earned and expenses when they’re incurred—whether they’re paid right away or not. This creates a better matching of costs to the revenues earned in a given month or year.
The software should also include a mileage tracker, the ability to offer online payments, timekeeping tools, and the ability for multiple users to access the tools. Recent technological advancements have made accounting easier for firms. Spreadsheet software and software that helps manage financial records are some of the tools available to help with accounting.
How We Work with Law Firms
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. Help you process and send invoices, process your accounts payable, and run your payroll. Your bookkeeper can also run routine financial reports for you, including the income statement and balance sheet described in Chapter 1. Once you have a strategy and budget in place, the work of day-to-day management sets in. Reviewing your finances is not an annual event completed at tax time!
Each of these records should be kept for a specific length of time—some for 10 years, some for as few as three. You can learn more about record retention periods in our guide to business recordkeeping. Bookkeeping is the process of recording daily transactions in a consistent way and is a key component of building long-term financial success. Putting it off means having to catch up at the end of the year—the more stressful and time consuming approach. Recording them as anything but that could land you in hot water with regulators and mess up your taxes. But if you’re confident that you can strategically use a credit card to grow your business and pay off your bill in full each month, having a business credit card can be helpful.
Legal Case Management
For further assistance with the setup process of QuickBooks Online for lawyers in your office setting, the author is happy to come onsite if necessary. For example, if a law firm were to use Xero for bookkeeping, they would be able to see real-time law firm bookkeeping insights into their finances and integrate it with Clio. This would make bookkeeping and accounting much simpler and more efficient for the law firm. When choosing an accountant for a law firm, it is important to consider several qualities.