Law Firm Bookkeeping 101 Bench Accounting

Make sure whatever tool you use integrates properly or choose an all-in-one software for both. An attorney is required to reconcile their trust bank statement to their client’s individual balance on a quarterly, or even monthly basis. 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 recommend you reach out to a professional, like a legal accountant or bookkeeper, to assist with your business’ accounting.

As a result, you’re left with multiple platforms and an accounting system that is not tailored specifically for law firms. 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.

Best bookkeeping services for lawyers

Offload your firm’s day-to-day legal bookkeeping needs so you can focus on what really matters. In fact, some basic rules dictate how you must handle this money to ensure compliance. It’s also a great practice to record the details of each expense. For example, if you’re expensing a meal, you might record who you were with and what you discussed. After all, if the IRS audits you (shudder), you’ll want these records to prove your expenses were for business purposes.

• MyCase helps increase accuracy and peace of mind by providing you with all financial data (billing, payments, expenses, banking) under a single platform.
• From creating a budget, choosing the right bank, hiring the correct advisors, and deciding on which type of accounting your firm will do—it all can feel overwhelming.
• With those items in place, we can tackle what to monitor and when.
• Have access to CPA-level insight into your bookkeeping practices.
• 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.

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. Accounting for law firms becomes so much easier when you work with an accounting professional from the beginning.

You Can’t Do It Alone: It’s Time to Hire Professional Bookkeeping, Accounting, and Tax Help

You must follow the ethics regulations governing law firms in your area. A fundamental concept in accounting and bookkeeping, double-entry accounting states that all financial transactions have equal and opposite effects in two different accounts. Even if you master the basic principles of legal accounting, you’re law firm bookkeeping still not an accountant or bookkeeper at the end of the day. Xero is designed to provide small businesses and their advisors with an easy-to-use platform that offers real-time insights into a firm’s finances. Furthermore, Xero integrates with Clio which makes bookkeeping and reconciliation tasks simpler.

There are also financial reports that go beyond following best practices for accounting and identifying growth opportunities. Of course, no one will expect you to be a CPA, but any firm owner should understand how accounting can impact the law firm. Becoming familiar with these terms will help you know your accountant and bring you up to date with accounting terminology in general.

Bookkeeper / Staff Accountant

The ideal candidate understands that you cannot manage what you do not measure – and can help us figure out how to build systems to ensure we can measure and manage effectively. It will be much easier to pick a few numbers and keep those top of mind. With those distinctions in mind, it becomes easier to see which type of professional help you might need. Uptime Legal continues to innovate and disrupt the legal tech industry. There are other types of deductions you need to keep track of that incur while doing business. Check out Bench’s guide to recordkeeping to see record retention periods.