How We Work with Law Firms

The general ledger will also be the basis for your double-entry bookkeeping system. The double-entry accounting method tracks where a lawyer’s money is coming from and where it’s going. IOLTA (Integrated Online Taxation and Accounting) is a software platform that helps law firms manage their finances and keep records of their transactions. IOLTA can be used to track billable hours, expenses, client payments, and trust accounting. A bookkeeper can be hired to help with accounting tasks, such as billing clients and monitoring expenses. Bookkeeping is a vital task for law firms, as it helps them to record and monitor financial transactions and keep accounts in balance.

QuickBooks is the ideal software for lawyers to spend less time on busywork, and more on real work. We recommend choosing one or the other to prevent confusion and for the most accurate overview of your firm’s finances. Withum was the perfect culture fit for my career, it was more than just a place to work! Managers and partners spent time working with me, training and teaching me to learn and develop so I could move to the next level. Withum has supported my career growth as well as supporting me as a full-time working mom. Withum offers many benefits such as flexible work arrangements, paid maternity leave and reimbursement of childcare costs which shows they truly support working moms.

Differentiating income from revenue

Accountants and bookkeepers can provide advice on best practices to prevent costly mistakes while keeping accurate financial records. It also integrates with Clio, making it easy to log client invoices and expenses. Additionally, there is a free trial available so users can test it before they buy. When it comes to accounting for law firms, there’s no one “right” method law firm bookkeeping (though you may be required to take on the accrual method). Some software platforms allow you to use accrual-based books for monthly management of the firm while also creating cash-basis statements for preparing tax returns. Look into the pros and cons of both methods for your firm, then be consistent going forward to ensure your records are accurate and easy to track.

A well-organized budget should include both personal and business goals and be tracked with reliable software such as Deskera. Having a clear budget will help you track expenses, revenue, and goals so that you can make sure that you have the necessary resources available for major expenses. The FUTA tax rate is 6%, which taxes wages up to the first $7,000 earned by the employee during the year. There are also state and sometimes municipal payroll taxes to be collected. Speak to your accountant to make sure you are correctly withholding each payroll tax. Also, ask if you are eligible to receive a tax credit for paying timely state unemployment taxes.

Manage money correctly and stay in compliance

Ultimately, by having an effective bookkeeping system in place, law firms can better manage their finances and create more opportunities for growth. In addition, it is important to select an accountant or bookkeeper who is familiar with the software and systems used by the firm. This will make it easier for the accountant or bookkeeper to manage the firm’s financial data and produce accurate reports. The double-entry accounting system is the most effective way to do bookkeeping for a law firm. This system sorts all transactions into two categories, assets and liabilities. All transactions are then recorded in a ledger, which is a record of all financial transactions.

• Putting time and effort into your accounting and bookkeeping will help you keep track of what money is coming in, how you’re spending it, and who it belongs to.
• Many law firms use legal accounting software, which often comes with reports and other tools to assist you with planning for the future.
• 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.
• Here are the top three issues to look for in your practice, along with proven solutions to consider.
• For example,
  If your law firm has multiple partners, you may want to consider hiring a bookkeeper to help keep track of the finances.
• We’ll dive more into the specifics of why you need a CPA later on in this piece, but trust us when we say hiring one will make your life much easier.
• So, many lawyers go into the field without knowing the best practice surrounding trust accounts and how to manage them.

Soluno’s complete set of financial and matter management features and best-in-class trust accounting puts all your firm’s essential functions in one place – no need for additional accounting packages. We recommend you reach out to a professional, like a legal accountant or bookkeeper, to assist with your business’ accounting. These are trained professionals who can keep you on track, ensure you’re always compliant and find ways to optimize your finances for future success. Opposite of cash accounting, accrual accounting records revenues the money they’re earned (likewise with expenses), not when the money hits your bank account. Putting time and effort into your accounting and bookkeeping will help you keep track of what money is coming in, how you’re spending it, and who it belongs to.

Learn More About Law Firm Bookkeeping From the Supporting Strategies Team

By keeping up with your records and hiring a professional, you can avoid any potential problems and keep your finances in order. Maintaining your books on a regular basis ensures that all of your financial transactions are accurately recorded and organized. This makes it much easier for your accountant to prepare financial statements and tax returns.