Best Legal Billing Software Of 2023

Being a professional and maintaining a good reputation is everything in the world of law. Making mistakes on compliance, making accounting mistakes, or losing your firm money, will make you look unprofessional. If you lack professionalism, you will lose clients, referrals, and opportunities to grow your firm. While A/R is used to identify pending yet inaccessible cash, cash on hand is a KPI used to determine the amount of accessible law firm bookkeeping money available to a law firm after all costs have been paid. Understanding where your cash-on-hand KPI stands empowers your law firm to make more responsible business spending decisions, especially for non-essential expenses. With this guide, you’ll understand key financial concepts, financial levers affecting your business, best practices for billing and collecting money, and how to manage and outsource financial work.

Even solo practitioners and small firms have to track and allocate hours to clients, account for retainers and manage a variety of rates and billing options. And lawyers have to comply with strict legal and ethical requirements. You can use manual or electronic systems to track your time and chargeable expenses.

Time Matters Support – How to Get Help for Time Matters

If you aspire to be a practicing attorney with your own law office, you need to understand what records you need to maintain. You may be an expert in the practice of the law, but you may not feel as confident in your accounting knowledge. Understanding the fundamentals and using specialized accounting software can keep your practice secure. As lawyers, we didn’t want to focus on the day-to-day of our firm’s accounting. They check-in with us weekly or more, and they maintain and upgrade our financial systems as our firm continues to grow. They always give us good folks to work with; we enjoy working with them.

When you incorporate your business, you essentially separate yourself from the business entity. It’s called the “corporate veil,” and it protects business owners and their personal assets from legal action taken against the company. To do so, https://goodmenproject.com/business-ethics-2/navigating-law-firm-bookkeeping-exploring-industry-specific-insights/ you’d first need to transfer that money into your business account. 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.

Best Law Practice Management Software for 2023

You recognize revenue when cash is received and expenses when money is paid. This method doesn’t use more complicated concepts like accounts receivable or accounts payable because you only count the cash as it moves into and out of your financial accounts. Consider whether your firm would be best suited for combined practice management / accounting software (or separate software for each), and consider the specific features your law firm needs. A common point of confusion are the different types of law firm accounting software. There is a good deal of invoicing features, on top of expense tracking, online payments, sales tax, time tracking, and profitability tracking.

In particular, most of these applications will help you manage your time tracking. IOLTA reconciliations will still need to be managed, and this is something your accountant or bookkeeper can help you do. Regardless of the growth of electronic and online payments, attorneys have to be careful when deciding on a merchant processor for their firm. It’s worth noting that an average payment processor charges a percentage per transaction as a payment fee, which increases the risk of breaking some trust accounting laws. So pick a payment processor that is law firm-friendly, and most certainly, rules-compliant.

Pick a lawyer-friendly merchant processor

Finances are one of the most critical areas of your law firm, and you should be involved with them. A standard report can tell you the first piece of information but not the second one. Remember earlier when we discussed setting up a Chart of Accounts in Chapter 1? Your bookkeeper goes into your accounting software regularly (at least weekly) and records all the money coming in and all the money going out so that it appears in the correct place.

• Bookkeeping refers to the administrative task of recording financial transactions and balancing financial accounts.
• They check-in with us weekly or more, and they maintain and upgrade our financial systems as our firm continues to grow.
• There are at least three main bank accounts that you should open for your law firm.
• They can also set up a system of internal controls to help protect your firm’s assets from misappropriation or embezzlement.