Most lawyers are not accountants, and you shall have a legal accounting department, no matter if it is a small or a big law firm. While many small businesses can handle the books themselves and get away with hiring a part-time bookkeeper, your business should use quality accounting software and move to effective legal accounting methods.
Why Is Legal Accounting So Important?
A trained professional legal accountant/account department is what every law firm, small or large, requires to manage many different expenses to cover and hold money in trust and make sure all transactions are ethically and correctly handled. The involvement comes while settling a ‘client’s case.
Legal accountants have their challenges with so much involvement in operating a law firm. It’sIt’s essential to observe precisely why all law firms require a solidified legal accounting department.
To direct payroll and keep the books balanced is crucial to hire a bookkeeper or an accountant. The accounts can accidentally mismanage statements, money, and financial records. Systematic procedures can be planned and executed by employing the services by accounting for law firms, which will save to the thousands and even millions of dollars. The current records that law firms handle can be appropriately recorded daily, weekly, monthly, and yearly by the professional bookkeeper or accountant that you’ve hired.
Legal accountants have their challenges, along with the involvement of running a law firm. Hence, it is essential to consider the reasons why all law firms require a rigid legal accounting department.
Compliance
The first goal for all law firms is compliant on all levels, which is a crucial component of success. They would run the risk of incurring harsh penalties if law firms are not obedient, and some lawyers could be impaired, making legal accountants an absolute necessity.
Revenue
Due to poor accounting practices, the law firm can end up losing money to their service providers and clients. Hence, law firms must record and manage their accounting systematically. The firm must have an accounting tea that would help in achieving and maintaining the firm’s accounts and revenue.
Continued Success
The firm shall start having a hard reputation for running a compliant and ethical practice if it has stable legal accounting staff managing their accounts and revenue. Building some intelligence around the workforce and allocating the resources to relevant and appropriate areas would ensure the firm has to succeed continuously.
Let’s discuss the six reasons why law firms need legal accountants in detail:
- Expense Tracking
You shall have a detailed knowledge of where your money is being spent. Otherwise, you cannot have a successful law practice. You need to continually maintain an accurate record of costs; From the company’s overhead costs to miscellaneous expenses and amounts incurred on behalf of a client. Your staff and attorneys may attempt to track the costs by writing payments in a ledger or saving receipts, where there is no adequate legal accounting software in place.
2. Accurate Trust Accounting
The significant responsibility for attorneys is to trust accounting as clients rely on their lawyers to keep funds in trust. There are a number of rules and regulations that come with trust accounting. Hence, it is crucial to keep the records accurately and follow your state guidelines. Failing, which would lead to severe problems with your clients.
3. Legal Specifics
One of the most broadly used accounting software packages among businesses across the board in the UAE is Jaxa Chartered Accountants. It includes the legal profession with many lawyers who choose to use the software for handling their firm accounting needs.
4. Invoicing
Without the right legal accounting software, the law firm invoicing process can be extremely time-consuming. The reviewing of client matter tasks has to be looked at by your attorneys, which is again a large and outdated accounting system to create invoices.
You shall opt for the right legal accounting software that provides your staff with a quick and efficient manner of creating customized and detailed invoices. The process can be customized as per your requirements and ‘firm’s needs.
5. Reporting Options
The ability to review your firm’s financial health regularly plays a significant role in the part of accounting, i.e., through identifying areas for potential improvements. Accounting software that lawyers need to run numerous reports about the firm’s billing practices, expenses, realization, and accounts receivables.
6. Time Tracking
To keep track, according to the time, is crucial to the success of your law firm, and that is the essential reason why you need the right legal accounting software. By following the proper legal accounting software will give your staff the tools they require to track the time they spend on client tasks efficiently.
What Legal Accountants Do
While this is not an extensive list of what legal accountants typically do, it is easy to see how valuable they indeed are in the legal field.
- Client Trust Fund Accounting
- Accounting of Case Costs
- Separating Revenue from Income
The workforce in JAXA Chartered Accountants is professionals who specifically deal with accounting for law firms that can help to alleviate stress on a law firm, the law ‘firm’s employees, owners, and partners. We will also help ensure that if an issue or audit does come up with the law firm’s tax, you will have an expert to be able to handle the situation and get your law firm’s business back on track. Contact us today- we’d be happy to assist.
