best bookkeeping help for small law firm

As an attorney, you’re aware that when you receive money that belongs to a client, you must place those funds in a trust account separate from your own money. These funds are stored in IOLTA or “interest on lawyers trust accounts” accounts. Here, you will find the typical offerings of law firm accounting software, and be able to compare the features of each. 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. This creates a better matching of costs to the revenues earned in a given month or year.

But every payment provider has a different fee structure (for example, credit card payments often come with a fee) so look into that beforehand. If you sent your client an invoice, that is immediately counted as revenue if you don’t receive the money for weeks. 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. If you make purchases for your business on your personal account, you can easily lose track and forget all about them.

Common mistakes in law firm bookkeeping

Once you understand the basics, consider hiring an accountant, either as a contractor or as an employee. They can help level up your firm and make the legal accounting process even smoother by adding legal accounting and legal practice management software to your firm’s toolkit. Using legal technology can ease the workload of manual tasks while helping your firm meet its goals—avoiding errors, ensuring compliance, and staying organized. law firm bookkeeping LeanLaw is mostly a legal billing software, but one of its biggest strengths is that it reconciles trust accounts automatically. On top of its deep QuickBooks integration, it comes with a comprehensive time tracking tool that allows you to capture time using any device. Time entries are converted into invoices automatically through QuickBooks, and electronic payments can be processed through the Intuit Payment Network.

  • We hope this information will help you make the right decision for your business.
  • Many law firms use legal accounting software, which often comes with reports and other tools to assist you with planning for the future.
  • Double-entry accounting is a system of bookkeeping where every entry to an account (i.e., every financial transaction) requires a corresponding and opposite entry to a different account.
  • At its core, the best accounting software for law firms makes it easier to follow accounting and bookkeeping best practices.

With those distinctions in mind, it becomes easier to see which type of professional help you might need. Legal product reviews and business guidance from industry experts. This means that the product allows your firm not only to track where a file came from but also to allocate a percentage of the origination to individual users.

Choose your accounting method

Your bookkeeper can also run routine financial reports for you, including the income statement and balance sheet described in Chapter 1. This means the product allows you to differentiate between client trust accounts and track them individually. It also means that the product helps you manage your three-way reconciliation. This means the ability to accept credit card or echeck payments within your accounting software, either through its own payment portal or via a third-party integration like PayPal or Square. Interestingly, tax deductions can ease the burden when used correctly—yet not all lawyers are up-to-date on their tax deductions.

best bookkeeping help for small law firm

As such, you might want to enlist the help of a professional bookkeeper or accountant who is familiar with the program. If you’re looking for accounting software for your law firm, it’s essential to find a solution that is user-friendly enough to meet the needs of your firm’s users. Look for software that is easy to navigate and offers personalized customer support. With FreshBooks, you can easily track expenses, send invoices, and accept online payments. Plus, with FreshBooks’ easy-to-use interface, you’ll be able to get up and running in no time. Contacts, invoices, financial information, trust transactions, and disbursements can all be synchronized between QuickBooks Online and Clio’s practice management software.

PracticePanther Promotes Process Productivity with New Features

And when you commingle your personal and business finances, the following problems can arise. Many attorneys prefer to get paid by credit card (online or in-person), which incur their own special fees. Sometimes these fees can become hard to track, causing you to charge the wrong client’s account. To prevent misappropriating funds from other clients, remember to only charge your clients for fees directly relating to their trust account. The best legal accounting software also saves you time while reducing errors and unlocking easy, useful financial reporting capabilities. This is where accounting software that integrates with your legal practice management software can prove especially useful.