Bookkeeping Best Practices for Law Firms

If you have a small business, you can handle your bookkeeping in the beginning. But as soon as you start hiring other people, or you are getting more clients, you need a professional’s help. As a business owner, there are many other things that require your attention. You shouldn’t need to lose time and energy to do something that someone else could. Also, bookkeeping can be quite complicated, and one mistake can lead to an avalanche. The income and the expenses must be recorded accurately and organized accordingly. Think of all of the money that comes and goes through your business. Every cent must be recorded. Otherwise, tax season will be very scary!

While generic accounting software like QuickBooks can still get the job done, with law firms, the work is slightly different. A software that is more powerful, and that can integrate accounting tools, while also allowing users to check for compliance with the legal industry standards. There are a few popular software programs that your bookkeeper might use:

• Clio – Trust accounting tools with IOLTA compliance, and has incredible customer support.
• LEAP – Best for small to mid-size firms, it integrates time recording and case management.
• CosmoLex – Handles financial reports and general ledgers, and has unlimited document storage.
• TimeSolv – With a time tracking feature that works on phone, desktop, and offline, it’s a great choice.
• Zola Suite – It has a full accounting suite built in and really advanced reporting.

These software programs are better and more useful than classical programs because they allow the user to manage the funds of clients in separate trust accounts and to connect with legal practice management software programs. You can also track bills and generate invoices, and all other kinds of financial reports. The software programs that were just listed have different features that you can use. But the main purpose of each of them is to help with law firm bookkeeping. As you can probably tell, not everyone has access or knows how to use these software programs. That’s why you need bookkeeping for attorneys. We, at Proledge, offer bookkeeping services for you and your law firm.

This article by Investopedia discusses the idea of double-entry accounting. It’s a bookkeeping principle that says that every financial transaction can be both a liability and an asset. Therefore, it must be recorded in two different places. Every entry requires a corresponding and an opposite entry in different accounts. The whole purpose of double-entry is to detect financial errors. Don’t worry if it sounds complicated, a professional will know exactly what to do. This type of principle ensures that your data is accurate because you can easily catch any inconsistencies. Also, it improves cash flow management and simplifies financial reporting.