The end of the year is always a busy time for law firms. On top of preparing annual budgets, coordinating department reviews, and planning end-of-year holiday parties, many law practices also have to contend with an increased workload in the final month or two of the calendar year. In fact, accounting for your law firm can often feel like one big never-ending cycle – lots of tracking and updating and revising and rechecking until every last detail is just so. And don’t even get us started on what happens when you start thinking about all that paperwork you need to file and taxes you need to pay at year’s end—yikes! But although keeping track of everything can seem like quite the Herculean task, it doesn’t necessarily have to be a mountain of work. Will your accounting year end on a positive note? If not, this checklist will help you fix everything from the first day of work to the last bell of the night.
If you’re like many law firm managers, you spend as much time (and energy) as possible planning for the future. With that in mind, you’ll be happy to know that there are a number of great things you can do this year to ensure a smooth and successful end to your accounting year. Here are a few takeaways from our blog post that may come in handy as you plan your annual review:
Analyze your legal billing process
Your end-of-the-year bookkeeping agenda can be pivotal to putting yourself in a good financial position by December 31 and for the year to come. By checking on fundamental financial reports, similar to your cost and income articulations or your records receivable, you can guarantee your law firm’s financial performance is where you figure it ought to be.
Utilizing legal billing software allows you to audit and create financial reports quickly and without any problem. That implies less time searching through the books and additional time running your training. With robotized instruments to help you receive and oversee exchanges, you don’t have considerably more to do to oversee your bills & payments.
360 review of law firm trust accounting
If you’re a law firm or legal business, you need to be using legal billing software to manage and track your billing and accounting. This is essential for ensuring accuracy and compliance with legal billing standards. There are a number of great legal billing software options available on the market, so it’s important to review them carefully to find the best one for your needs.
One of the most important features of legal billing software is its ability to generate accurate invoices. This is important because it ensures that you’re actually receiving the money you’re owed by your clients. Other important features of good legal billing software include its ability to track expenses, generate reports, and manage client files. When choosing law firm billing software, it’s important to consider all of its features and decide which ones are best for your business.
Get more financial clarity
Think about how you measure your firm’s success. It can vary by law firm operations and various other aspects. These could be vital to building an extraordinary law office. However, imagine a scenario in which your case volume is enduring, or your clients express more disappointment than typical.
It may very well be an ideal opportunity to get an in-depth view of your law office’s profits. You can take a gander at key execution pointers to quantify the monetary position of your firm. In doing as such, you might begin to see examples of profits and losses. When analyzed together you have a clear view of your financial clarity.
CaseFox offers highlights like custom labels, improved revealing usefulness, and expense tracking to help you precisely catch your company’s cash flow over time.
The tax year may be over, but the IRS is not. Be sure to keep up with your tax filings, including paying any outstanding taxes and filing any new ones.
Payment due date for clients: Dec 31st
Prepare for end-of-year audit: If you have not yet filed your annual return, now is the time to do so. If there are deficiencies in your returns, get them resolved before they become a problem.
If you have not yet filed your annual return, now is the time to do so. If there are deficiencies in your returns, get them resolved before they become a problem.
Understanding of the entire year’s performance
Performance KPIs let you measure all the center elements of your business — which can assist you with better anticipating your future and exploring any difficulties.
Financial Reports: Your monetary information could incorporate your month-to-month charged and gathered income, your number of exceptional records, or the contrast between your net gain and your income.
Efficiency Reports: Gather and survey information on efficiency markers, which could incorporate the proportion of your billable to non-billable hours, or the contrast between the number of billable hours worked versus the number of hours invoiced.
Client connections: You can gauge everything from client procurement to fulfillment. Measure the income age from new cases, your lead-to-client transformation rate, or your client degrees of consistency.
Simplify your law firm accounting
Setting up a legal billing system is one of the most important tasks for any law firm. The right legal billing software can streamline your accounting processes, which will save you time and make your job easier.
According to Bloomberg Law, nearly 80% of firms use billing software — the top type of technology employed by firms.
The following steps outline how to set up a legal billing system in your law firm
Decide what type of software you would like to use. There are many different options available, including desktop and cloud-based solutions. Do some research and weigh the pros and cons of each option before making your decision.
Choose a legal account management system that integrates with your existing accounting software and integrates with other systems such as credit card processing companies or payroll services providers. You may want to consider setting up a separate CRM (customer relationship management) system for managing customer relationships on top of your accounting system for managing financial data about customers, clients, or prospects.
Plan your law firm accounting for a successful year ahead
As you wrap up the year, it’s important to look back and see how you did financially. It’s also a good idea to take a step back and evaluate the overall financial health of your law firm.
Here are some tips for planning your law firm accounting for a successful year ahead:
Organize a meeting with your bookkeeper or accountant to review the year’s numbers.
Review your income statements and expense reports to determine whether you’re in a good position financially or need help with cash flow issues.
Make sure that all of your taxes are filed on time, including state and local taxes if applicable.
If there are any outstanding invoices or other expenses that need to be paid before the end of December, make sure you have enough funds available for them when they come due (this is especially important for purchases made during the year).
Set up a legal billing system so that each month you can easily track what money is available in each account at any given time. This will help ensure that there are no surprises around tax time next year or if something goes wrong with an invoice or credit card payment during December 31st or January 1st.
The end of the year is always a busy time for law firms. On top of preparing annual budgets, coordinating department reviews, and planning end-of-year holiday parties, many law practices also have to contend with an increased workload in the final month or two of the calendar year. In fact, accounting for your law firm can often feel like one big never-ending cycle—lots of tracking and updating and revising and rechecking until every last detail are just so. And don’t even get us started on what happens when you start thinking about all that paperwork you need to file and taxes you need to pay at year’s end—yikes!
But although keeping track of everything can seem like quite the Herculean task, it doesn’t necessarily have to be a mountain of work. Will your accounting year end on a positive note? If not, this checklist will help you fix everything from the first day of work to the last bell of the night.
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