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Bookkeeping & Accounting Services for Law Firms and Legal Offices

law firm bookkeeping service

Outsourcing your bookkeeping allows you to put more of your focus and time into improving your firm and providing exemplary service to your clients. The legal industry is ripe with competition—to maintain an advantage over your peers, you’ll want every second that you can get to go above and beyond with your service. Within each of those categories, you may have dozens of general ledger accounts. Navigating Law Firm Bookkeeping: Exploring Industry-Specific Insights For example, you might have an operating account, lawyers trust accounts, accounts receivables, and fixed assets within the assets category. Accounting for law firms becomes so much easier when you work with an accounting professional from the beginning. So, with double-entry accounting, every financial transaction gets sorted into a specific category (assets, liabilities, or equity).

One key part of the accounting process is analyzing financial reports that provide you with a better understanding of actual profitability and awareness of cash flow in your business. Lawyers and attorneys need bookkeeping to maintain accurate financial records of their legal practice. Bookkeeping helps them track income from legal services and expenses, manage client billing and payments, prepare for tax obligations, and comply with financial regulations. It also provides insights into their business’s financial health and profitability, facilitating informed decision-making. We’ve worked with many law firms over the years and have deep industry knowledge to ensure your law firm bookkeeping is handled accurately and in a timely manner.


Violating compliance regulations purposefully or through neglect can lead to significant repercussions. An example of a compliance regulation violation could be mishandling client funds. When you partner with WATSON™, https://investrecords.com/the-importance-of-accurate-bookkeeping-for-law-firms-a-comprehensive-guide/ you surround yourself with an experienced and highly-skilled, professional staff dedicated to your firm’s success. Giving our clients the financial support they need to succeed in their business is our only business.

law firm bookkeeping service

When it comes to law firm accounting, there are a lot of things that can go wrong. If you put your firm’s bookkeeping and accounting on the back burner, you will have issues with cash flow, getting paid, and more. Below, we outline common legal accounting mistakes for you to avoid. Something critical to every law firm’s success is practical legal accounting. To make sure your firm’s financial statements are up-to-date, accurate, and complete, you must use a good bookkeeper. A transparent accounting system will bring your firm a clear financial picture, clients, and more.

CFO Services and Legal Accounting for Law Firms

If you’re trending behind, it is better to know sooner rather than later so you can react accordingly. Understand your staff’s expenses, track spending, and automatically approve expenses without paperwork. Achieve a clear insight around your firm’s working capital, financial projections, and requirements for future expansion.

  • As a solo practitioner or small law firm owner, you have more important things to do with your time then manage your books.
  • Whether it means using legal accounting software to simplify and automate your accounting, hiring a professional legal accountant, or both—don’t be afraid to delegate when you need to.
  • Legal accounting and attorney bookkeeping mistakes have catastrophic consequences for your business, income taxes, and license.
  • Each month, take some time to reconcile your budget compared to your reality, making changes that benefit your bottom line.
  • There will come a point when you need to call in professionals for legal accounting, so don’t be afraid to delegate when you need help.

Accounting for law firms may be new or challenging to you, but it doesn’t have to be scary. What’s most important is that you get the details right so that you can stay compliant with ethics rules and help your firm grow to its full potential. While the chart of accounts is customized to your law firm’s size, jurisdiction, and practice area, it typically includes five core categories in addition to numerous subcategories. You’re busy providing legal services and developing business, so that Uber expense to meet a client sometimes falls through the cracks. It’s best to record these expenses as they happen, but realistically there will be times when you forget. When an invoice is paid, you must first allocate the payment to the incurred cost.

You Handle Your Business. We’ll Handle Your Books. Remote Books Online: Bookkeeping Services You Need

Busy attorneys know that billing clients accurately and maintaining CPA-ready books are essential in a well-run practice. As the practice grows, though, record-keeping becomes more complex. Staying abreast of payables and receivables grows more time-consuming.

law firm bookkeeping service

Every business gets busy, and it is easy to get distracted by the work you are doing for your clients. However, your law practice is still a business, so you will need to treat it as a business. Many new business owners view accounting and bookkeeping identically. Both are looking to help your firm grow and succeed financially.

Read Our Tips on How to Set Up Back Office Functions the Right Way

The benefit of this approach is that you have a more realistic understanding of your law firm’s income and expenses. Setting up and recording the chart of accounts for law firms isn’t just suggestions, they are requirements. State Bar association rules require law practices to record transactions meticulously so there is no impropriety when dealing with Interest on Lawyers Trust Accounts (IOLTA), or other trust accounts. IOLTA, accounts are formed to store your clients’ funds apart from your primary business or operating account. It can be most comfortable for law firms to have two or more bank accounts and credit cards to ensure that they keep their IOLTA separate from client money.

  • At CFO Strategies, we provide law firm accounting services, including virtual accounting and bookkeeping.
  • Being the leading outsource accounting firm our objective is to help manage your bookkeeping and accounting work so you can concentrate on your valuable clients and legal work.
  • Record all income generated from legal services and other sources.
  • In fact, you can’t even afford to wait a week until you make time to enter your transactions.
  • Your important client data is securely accessible anywhere – from your computer or your phone.
  • 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.

A trust account is a special bank account where client funds are kept safe and in a separate account from law firm operating funds. We had made huge investments on an accounting software tailored for law firms but failed to utilize it to its optimal level. Beyond knowing how to assign billable hours and ensuring that invoices are sent and paid on time, take advantage of budgeting and financial analysis services. Supporting Strategies can evaluate your day-to-day operations and suggest improvements that have the potential to transform the financial management of your law firm. Juris Bookkeeping is a premier bookkeeping service partnering with small and solo law firms to solve their accounting challenges.