Accounting For Legal Firms & Solicitors

Accounting For Legal Firms & Solicitors

If you run a law firm, you will know the importance of attention to detail. After all, it can make all the difference when you are fighting clients’ legal cases. However, one other aspect of running a thriving law business is, quite simply, the business itself.

As a lawyer or solicitor, you might cover various aspects of the law, such as:

  • Criminal law
  • Family law
  • Real estate law
  • Corporate law
  • Patent law
  • Tax law

Alternatively, you might specialise in just some of these areas. Either way, at law school, you will not have been taught about bookkeeping and accounting.

For this reason, you might not necessarily know how best to keep financial accounts in order or identify ways to streamline your company’s financial outgoings.

It would therefore be convenient for you to hire a trained accountant. That way, you would be able to benefit from their specialist expertise while freeing up time in your doubtless busy schedule.

Here at ST Accountancy, we have our own team of accountants who are capable of serving law firms across Ipswich and surrounding areas. We can work closely with such legal professionals as lawyers, solicitors, and barristers — and help them navigate otherwise tricky financial obstacles.

Accounting considerations for law firms

We know how crucial it is for legal professionals to routinely adhere to the law. They are, for example, required to make detailed and complex reports about how they hold, maintain, and control client monies. However, obligations in this area of legal practice have changed over time.

Law firms therefore need to keep pace with updates to the relevant legislation. Solicitors are expected to adhere to an array of rules to keep client accounts compliant. If any of these rules are breached, the violation could be reported to the Solicitors Regulation Authority (SRA).

You can rest assured that here at ST Accountancy, we keep ourselves updated on the SRA Accounts Rules so that we can prevent our clients from breaching them. We can be proactive in protecting your law firm’s reputation.

What if your law firm works as a partnership, such as a regular partnership or limited liability partnership? When we start a relationship with your law firm partnership, we will familiarise ourselves with exactly how it is run — and the implications for your company’s prospects.

All in all, we can implement accounting systems to help ensure your accounts contain all of the required details, come with the right supporting paperwork, and are filed in a timely fashion.

Role of accountants in the legal industry

The right accountants in Ipswich can be trusted with safeguarding not only your law firm’s financial integrity, but also that of its clients and stakeholders. We offer all the following services here at ST Accountancy:

  • Maintaining accurate financial records: After calculating your company’s income and expenses, we can pour this information into balance sheets and on the basis of these, put together accurate financial statements.
  • Tax planning: A law firm can minimise its tax liabilities through various means, including adopting a tax-efficient business structure and taking advantage of tax deductions and credits. These are all opportunities that our accountants can identify.
  • Financial reporting: How can you time-effectively garner reliable insights into your company’s financial health and performance? The answer: by looking at financial statements that our team would be able to put together for you.
  • Risk management: What financial risks does your company face, and how can you manage them? We can develop risk management strategies — like insurance and contingency planning — on your behalf, as well as continually monitor risk exposure.
  • Supporting overall operations: When you have ready access to a wealth of financial information about your company, you can make wiser decisions about its future direction. For example, it will become easier for you to develop initiatives and budgets.

Importance of bookkeeping and accounting for law firms

What’s the difference between bookkeeping and accounting? Although you might sometimes see these terms used interchangeably, bookkeeping is about recording financial transactions in accounts, while accounting involves analysing and interpreting this data.

Ultimately, your law firm needs both bookkeeping and accounting — for the following reasons:

  • Compliance: Your company must comply with ethics regulations lest you risk incurring financial penalties. Since keeping track of these regulations and any changes to them can drain precious time, why not let us handle these duties on your behalf?
  • Commercial growth: We offer accountancy services for businesses from many different fields — and in many instances, much the same financial principles apply. You need an accurate picture of what is coming in and going out so that you can avoid overspending.
  • Brand image: If your company fails to keep on top of its accounting, you could come across as unprofessional. A law firm with a damaged reputation is likely to struggle to attract new clients — and as a result, could run into major financial difficulties over the long term.

Best practices for legal accounting

You might remain keen to handle many of your law firm’s accounting obligations directly. If you do take this hands-on approach, you should keep in mind that staying organised — right from the start — is key to getting legal accounting right. Here are several tips worth heeding:

  • Set a budget: This will be easier to do once you have established where your firm’s revenue levels, expenses, and cash flow should be.
  • Automate data entry: Manually inputting data can often result in mistakes, such as numbers being duplicated.
  • Stay consistent: Make a habit of reviewing financial statements monthly or weekly rather than only sporadically.
  • Check financial reports carefully: In doing so, you could spot worthwhile opportunities, such as to rein in your overhead or mine promising new sources of financial growth.

However, in much the same way as individuals and companies turn to your law firm because they lack expertise with the legal system, you may ultimately need to seek the services of accounting professionals if there is too much about accounting that you simply don’t know.

This is why, if you need local accountants in Ipswich, we would be happy to be at your beck and call. To enquire about the accountancy packages (including the bespoke package) we have available, please reach out to us by phoning 01473 561035 or emailing [email protected].

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