For a fraction of the cost of a full-time controller, we will take the pain out of your accounting and free you up to focus on practicing law. Every state has an IOLTA program, and it’s likely that the bank where you opened your regular business checking account also offers IOLTA accounts. But rules do vary by state, so consult your State Bar Association and a professional accountant before finalizing your accounting setup. Making the jump from an attorney to running a law firm can bring a ton of new intimidating challenges.

• And we know what it’s like to face strict regulatory standards, and carry the fiduciary responsibility when managing Trust/IOLTA accounts.
• Law firm accounting is more complex than plain business accounting.
• Accounting is a world of numbers, and, for law practices, it helps efficiently manage the money flowing in and out of business.
• One (or more) of these professionals can greatly assist with your law firm accounting.
• See what strategic opportunities you have for reinvestment and plug those into your budget.
• Legal bookkeeping takes place before any accounting can occur and is an important administrative task for any law firm.

Accounting for law firms becomes so much easier when you work with an accounting professional from the beginning. Accounting for law firms lets you collect and analyze information, and make data-driven decisions based on what money comes in and leaves your firm, so it’s worth it to pay attention. Legal bookkeepers and legal accountants work with your firm’s financials, with the shared goal of helping your firm financially grow and succeed. The goal of bookkeeping is to have an accurate picture of your current financial standing. For example, you might think you have plenty of money in the bank and buy a new computer before realizing you forgot to record that check to the court reporter.

Top Law Firm Practice Management Software Solutions

The IRS doesn’t require you to keep records of certain expenses under $75, but we still recommend that to be safe, you keep digital copies of all records. The IRS accepts digital copies of receipts, and apps and online services make it relatively easy to scan and save them. Ask a CPA to help you determine which accounting method is best for your business, and stick with it.

Others go the in-house route, serving as corporate counsel within a particular company—especially if they think that they would like to transition into business management. And some work for the government or for nonprofit organizations. The tax professionals at O’Connor CPA Firm, LLC are well versed in the new tax regulations and how they can affect your legal practice. With our business advisory services, we will regularly engage in strategic tax planning to ensure that your practice is structured appropriately to work with every tax savings tool. Practice Management Software, beyond what QuickBooks can offer, will propel you to another level such that your practice can grow without need additional personnel to support that growth.

Accounting and Bookkeeping Best Practices for Law Firms

And when you commingle your personal and business finances, the following problems can arise. Manage business revenue in your checking account, and set aside money you’ll need at a later date (for emergencies, to pay taxes, etc.) in a savings account. Even though interest rates on business accounts are traditionally low, law firm bookkeeping having a cash surplus in a business savings account can improve your likelihood of being approved for a loan. It’s also a good place to store money you’re setting aside for taxes and emergencies. As an attorney, you may be aware of state bar requirements for trust accounts, but that doesn’t prevent you make mistakes.

• The reality is that there is no scenario where it’s okay to use your IOLTA in this way.
• Our legal and accounting professionals are ready to discuss your business needs and answer any questions you may have.
• ProFix is your trusted advisor when envisioning and implementing your business goals.
• QuickBooks is the ideal software for lawyers to spend less time on busywork, and more on real work.

Your COA will look different depending on your jurisdiction, law firm’s size, and practice area, but will always have these categories. Before the IOLTA, lawyers would store this money in a non-interest-bearing checking account, as they are not allowed to benefit financially from storing a client’s money. When a lawyer holds onto a client’s money, they store it in a trust account. Legal bookkeepers manage your finances on a transaction-by-transaction level while ensuring the books are balanced.