Many lawyers are not fans of numbers. But accounting and bookkeeping, no matter how numbers are frowned upon by lawyers, are critical for every law practice and law firm. Proper bookkeeping for lawyers and/or law firms not only allows for critical evaluation of the practice’s performance but also paves the way to making informed business decisions for the law practice to push forward.
As a lawyer, you may have already tried your best to maintain your books on your own. And along the way, you may have been confronted with the reality that you simply cannot do the job with the amount of workload and your lack of expertise. Backlogs can snowball quickly, and waiting days would lead to unmanageable loads of work.
1. Commingling of personal and business expenses
Anyone running a legitimate business enterprise should never combine personal and business expenses. Intermingling them would result in a situation where it is nearly impossible to track and claim your business expenses as deductions from the business income.
To ensure that commingling is avoided, a lawyer must keep separate accounts for the legal practice and personal finances. With bookkeeping, transactions that are directly related to the law practice can be tracked and be prepared easily for end period balances and tax filing computation
2. Losing track of business expenses
Because of the demands of lawyering, many attorneys are guilty of losing track of business expenses. Ideally, expenses should be recorded daily, or on the same day they have been incurred. By doing bookkeeping by themselves, lawyers might sometimes forget to do it regularly and thus, leading to lost receipts or invoices.
With a professional bookkeeper, lawyers are assured of detailed and chronological recording. Thus, lawyers no longer need to acquaint themselves with the basic accounting principles, the concept of debit and credit, and deal with the intricacies of numbers.
3. Making Journal Entry Mistakes
One mistake in a lawyer’s book of accounts can cause a series of errors that may lead to unbalanced financial statements. Thus, it is crucial that in bookkeeping, the one doing the recording does not only double-check the entries but also understands the essence of the double-entry method and the nature of the transactions.
While the recording of the transactions can be learned by lawyers, sometimes administrative work could be unbearable, stealing precious time that could instead be used to handle work for clients. As such, bookkeeping experts are needed to do the job to free more time to allow lawyers to focus on the more critical aspects of their legal practice.
4. Messing Bank Reconciliation
Reconciling a lawyer’s books and that bank statements could be a daunting task, especially for someone who is not trained in accounting. It could be more prudent for a lawyer to defer to the expertise of bookkeepers to ensure the accuracy and quality of work.
Before hiring a professional to help maintain a lawyer’s books, a couple of things should be considered. Would it be better to hire an employee to do it or just pay a contractor for bookkeeping? How can data and information remain confidential if a contractor is a bookkeeper?
How to find the right bookkeeper for you?
If a lawyer is ready to find a bookkeeper, how can he make sure he chooses the right one? One, there is word of mouth. Colleagues in the legal profession may refer to some trusted names that can attest that your bookkeeping will be handled efficiently. Friends and family can also refer to a name or two.
You can also check the service provider’s years of experience and reputation from its online presence and customer feedback. You can also scour social media for reputable bookkeeping services in your locality.
Solid bookkeeping service from Davao Accountants
Our bookkeeping and accounting services are both innovative and abreast with technological advancements. But more than using the latest accounting and bookkeeping software, our bookkeepers are seasoned and skilled, dedicated to keeping track of your transactions, and more than ready to provide you with the most updated snapshot of your legal practice.