Legal Bookkeeping: #1 Bookkeeping Services for Law Firms or Attorneys

This blog accounts receivable turnover ratio will introduce you to the basics of AR turnover ratio and how you can use it to better your balance sheet. The Federal Unemployment Tax Act (FUTA) tax provides payments of unemployment compensation to workers who have lost https://thebossmagazine.com/post/how-bookkeeping-for-law-firms-strengthens-their-finances/ their jobs. If you’re going to hire employees, you will need to set up payroll.

Trust Account Management & Compliance

• Although the roles of bookkeeping and accounting are different, there is a thin line to distinguish between them.
• Remember it is all about finding the right law firm bookkeeping service that meets the needs of your business, now and in the future.
• Trust account management involves keeping track of client funds that are held in trust accounts.
• Lawyers spend years honing their legal skills, but they often have little knowledge of accounting practices.

Whether you charge hourly or by project, TimeSolv gives you the tools to track time and bill confidently. Use secure client portals, mobile time tracking, and easy reporting to work smarter and grow faster. To learn more about tracking KPIs and billable hours in a law firm, click here. To learn more about managing IOLTA/Trust Accounts for law firms click here. Law firms find outsourcing to be a cost effective accounting solution that provides a quick win when needing to cut costs, gain access to expertise, focus on core competencies and mitigate risk. When it comes to our record-keeping, the handling of our Trust account was and continues to be most important.

How should I record my business transactions?

• However, the partnership must still register for corporate tax, file returns, and provide partners with the information needed for their individual tax obligations.
• Everyone from your bookkeeper to your CPA and the IRS needs you to keep documents proving the income, credits, and deductions you put on your tax return.
• This is essentially FICA and Medicare, only your payment covers both a withholding from your wage and the matching contribution from your company.
• Some firms will also intentionally use their IOLTA accounts to hide assets, or will leave funds in their IOLTA even after they’ve been earned, using it as a savings account.
• After a spot audit your law office may receive correspondence which requires a detailed reply.

Even though interest rates on business accounts are traditionally low, 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. Make one mistake when recording your debits and credits, and your entire balance won’t add up.

Be prepared to perform a three-way trust reconciliation

Get access to a team of experienced CAs (CPA equivalent), CFOs and payroll executives at a fraction of the cost of a full-time generalist. The cornerstone of our service involves providing a comprehensive Legal bookkeeping service for sole practitioners, partnerships and small to medium sized legal firms. After having the same bookkeeper for our firm many years, we were very worried about finding someone new. It was a seamless transition and for the past 9 years we have been extremely happy with the services provided by AFL. Now you cross off law bookkeeping out of your to-do list and feel stress-free about the financial aspect. As a result, you take comfort in allowing yourself to offload financial tasks and turn your attention exclusively to business development and legal cases.

• Now that you understand that bookkeeping happens first, I suggest you figure out the best way to handle bookkeeping before we move on to legal accounting.
• We understand the intricacies of law firm accounting, from managing trust accounts to handling partner distributions, ensuring your firm’s finances are in expert hands.
• Their team is really responsive; they assist with any complicated accounting concerns.
• Track time from anywhere and recover lost billable hours instantly.
• With all the options available, we know it’s difficult to choose which software is the best choice for your firm.

Our Services

You can also use LawPay dashboards for invoices, payments, and trust accounts to spot discrepancies early. According to the 8am™ 2025 Legal Industry Report, 59% of firms found that integrating online payment processing with billing software led to faster collections. Explore how 1099 works for lawyers, the rules that matter most, and the best practices that simplify compliance and collections. We specialize in trust accounting and ensure compliance with all IOLTA and bar association regulations, keeping your firm audit-ready and compliant.