If you sign up using the links on this page, you’ll get 20% off your first six months of bookkeeping with Bench. I’ve been so happy with the experience that I’m on the annual plan and my guess is that after six months of working with them, you’ll be on the annual plan too. Anyone who has started a business has been guilty of this mistake. Intermingling expenses isn’t a fatal mistake but it causes problems for your business when it comes to claiming expenses and tracking the financial health of your business.

• 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.
• 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.
• When implementing a legal accounting strategy in your firm, there is plenty to consider.
• Committing to accounting for law firms will allow you to be better equipped to identify growth opportunities.
• Uptime Practice can help you streamline your merchant processing, automated invoicing, and even your payroll, all from the cloud.
• Plus, you’ll save yourself the headache of dealing with accounting issues, and you’ll always have accurate financial statements available.

Quickbooks is still the leader in accounting software, making it a reasonable first choice for lawyers. Quickbooks is also the leading software for integrating with practice management software, so I can see why many lawyers would choose it. The Quickbooks pricing model is still a “software as a service” though, so you can expect to pay a monthly fee. Accrual accounting is a more sophisticated method that records revenue and expenses at the time they are earned or incurred, regardless of when you receive the money.

Choose an accounting method

We recommend scheduling a time to track your finances at least weekly. Bookkeeping requires dedication and attention just like everything else in your firm. We understand what law firm bookkeeping 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.

An accountant who specializes in accounting for law firms is beneficial. Your best bet is likely to hire both a legal bookkeeper and a legal accountant. Just as your clients rely on your expertise with the law, there comes a point when you need to call in accounting professionals. 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. Whenever a client pays an invoice, you must allocate the payment to the incurred costs of a matter first. This portion is not income, so it should be logged separately.

Use financial reporting to identify opportunities

Having a bookkeeping and accounting system in place will ensure that the payments to yourself are recorded appropriately as salary. 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.

• We recommend you reach out to a professional, like a legal accountant or bookkeeper, to assist with your business’ accounting.
• In 1981, this money started being stored in an IOLTA, which is an interest-bearing account.
• Simply look at your bank balance and you’ll know exactly what the situation is.
• It involves a ton of inefficient, manual work—involving a lot of spreadsheets, paper invoices, inputting data entry, and struggles with collections.
• This can cause serious issues and stunt your firm’s growth (more on that later).