Law Firm Accounting is Nuanced and Specific
Law firm accounting is unique and complex – and there are plenty or rules to remember. From IOLTA to LEDES to tracking revenue by attorney, there are many legal specific workflows for your bookkeeper and tax professional to master. Compliance is not something you want to be cavalier about. And you don’t want to spend more than you need to. Having experts at the helm of your law firm’s finances is a prudent decision for the fiscal health of your law practice.
Hiring a legal-focused accounting/tax team will save your law firm time and money during the year. It will also save you from the worst kind of financial surprises. If you take on this task, you will always come out ahead because when you understand your firm’s real-time staff utilization, client WIP to trust, and profitability, you don’t have to be afraid of what’s in your books.
LeanLaw has an Accounting Pro program that matches law firms with legal-focused accounting professionals.
If you’re an attorney, imagine someone who is fluent in how law firms work (yes, they are all different but there is a core knowledge) – someone that you don’t have to explain LEDES to, or how law firm trust accounting works. Would you have a general surgeon operate on your brain? Of course not. By working with a law firm expert, you are putting yourself in a position where the books are right and you can spend less time on accounting.
When Rebecca and Sarah begin work with a law firm, they find it essential to advise on practical modifications while understanding key elements of workflow, billing, compliance, trust accounts and more. They believe their individual expertise and collaboration greatly benefits the client in the end: if Rebecca isn’t getting the data she needs for tax purposes, she can rely on Sarah’s knowledge of the day-to-day workflows within the law firm to make it happen.
With modern software and the right accounting support, you have the opportunity to make repetitive tasks less burdensome with automation.When you have a workflow that is streamlined and information that is reported in real time – everyone on the team (tax professional/accountant/financial planner/client) knows where the financials stand and can make decisions based on that information. Sarah’s model is to build strong accounting support so the law firm doesn’t have to worry about it. She wants lawyers to focus on lawyering, not accounting.
You need to complement your bookkeeping and tax team with the right software.
Your accounting professional(s) can help you choose what is right for your practice, and ensure you get the workflows and service you need. LeanLaw listens closely to Accounting Pros like Sarah because it is so critical for our product and service to meet the needs of the accounting professional as well as the law firm. We think this has something to do with why we are the #1 rated Legal App in the QuickBooks Online App Store. LeanLaw offers the customized legal features you need for your practice like professional timekeeping, trust accounting, expense management and legal-specific reporting to complement the power of QuickBooks Online.
When you have trusted advisers working with your law firm, you’ll find that their work goes beyond reconciliation of your books. They become trusted advisors you rely on to help you run a successful practice.
Law firms seeking to modernize their workflows need to be prepared for the entire accounting process.
Rebecca and Sarah have a law firm client that whose books required a complex setup and the bookkeeping was falling short for tax planning and overall transparency for the owners.
Working together, Rebecca told Sarah what data is necessary for tax prep and Sarah, knowing the workflows of legal accounting, established them and created the plan for the year. This meant no surprises as well as the opportunity to monitor for expected outcomes and intervene early if something goes awry.
Repeat: Not having this data would cost the law firm money when the tax bill came due, in addition to the time spent sorting it out, worrying about how to sort it out and ensuring accuracy. When looking at applications such as QuickBooks and LeanLaw, lawyers need to look beyond price and understand the value of what software + experts can provide in terms of peace of mind, transparency and real-time data. You will see this value in everything from expense tracking to trust accounting and reporting.
After the law firm spent time with Rebecca and Sarah upfront, the flow for the rest of the year was easy.
And when there was a bump in projected earnings, they could plan for that as well, since they were not only paying attention in real-time but also because they had a plan.
Every law firm is different: and having a small team on your side to guide your financial workflows and tax — which may mean a team with a bookkeeper and tax accountant working together — will propel your business forward and give you the freedom to make decisions based on abundance, rather than scarcity. Having those trusted advisors is a small change that has a big impact on growth and opportunity.
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