Content
Our accounting team is compliance-oriented, proactive, and we offer a personalized, consultative approach. Whether you are looking for accounting, bookkeeping, business advisory services, or tax ready financials, our professional and detail-oriented attention will save your law firm time and money. Trust accounts are one of the most common areas where legal accounting mistakes are made. Whether you mismanage the accounts, put funds in the wrong account, accidentally use funds, or fail to report correctly, trust accounting errors are a big deal in accounting for law firms. Trust accounting mistakes can lead to penalties, suspension, or even losing the right to practice law. 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.
You would note this in your reconciliation report and ensure your January 31 bank statement includes the deposit. Make one mistake when recording your debits and credits, and your entire balance won’t add up. Accounting software where you download transactions can help avoid this error, as can double-checking entries as you go. The most powerful solution to this problem is taking the time to update your books frequently (or outsourcing your bookkeeping to a team that will reconcile the numbers for you).
Find time to focus on clients
Cash accounting also gives you an easier way to see how much cash your business has at a glance. Simply look at your bank balance and you’ll know exactly what the situation is. Basically, cash accounting does not recognize accounts receivable or accounts law firm bookkeeping payable. Instead, revenue is recorded when cash is received, and expenses when they’re paid. Keeping all of your business expenses in your business account makes it way easier for your accountant to sort through transactions come tax season.
Better Bookkeepers is the ultimate solution to your law firm’s bookkeeping needs. Get in touch with us and schedule a consultation to find out more about our bookkeeping for attorneys. The accounting method you choose should be in place when your firm files its first tax return. It affects everything, including cash flow, bookkeeping, and tax filing. Many lawyers do this to solve problems like inadequate cash flow to deal with unexpected expenses. It’s easy to tell yourself that you’ll pay those fees back in time, but don’t do it.
Start by Hiring a Bookkeeper
The tax implications of this method also allow your firm to pay tax on income once it’s received and in the bank. While there are a lot of factors to balance, here are the essentials for law firm accounting and bookkeeping success that you should get a handle on ASAP. Legal bookkeepers and legal accountants work with your firm’s financials, with the shared goal of helping your firm financially grow and succeed. At The Legal Accountant, we go beyond just bookkeeping for law firms.
The Chart of Accounts is where you track transactions with your firm’s financial accounting information. Typically, the accounts’ chart will have five core categories of assets, liabilities, owners equity, revenue, and expenses—along with numerous subcategories. Being a professional and maintaining a good reputation is everything in the world of law. Making mistakes on compliance, making accounting mistakes, or losing your firm money, will make you look unprofessional. If you lack professionalism, you will lose clients, referrals, and opportunities to grow your firm.