Sure, you’ve been running your law firm quite successfully for some time now, including mastering some of the legal accounting basics: the projection of gross receipts, overhead and expenses, billing and tracking hours worked, figuring out the perfect marketing plan, and everything in between. You’re ready for your firm take the next step towards future growth, but how do you get there?
Legal accounting goes beyond the basic financial business planning that you have rocked until now. It’s about taking all of the transactional numbers and turning them into something truly exceptional – from maximizing profits to growth development and expense analysis to heightened customer service. But, how do you truly know when your firm is ready for a legal accountant?
Here are five signs your law firm is ready for a legal accountant:
1. You realize that you’re not utilizing your accounting software to its full extent.
A law firm can reap benefits from having someone with the know-how to customize the accounting software to fit the business and client needs. Doing so is likely to save you both time and money, and ensure that all other legal and financial operations run more smoothly. A legal accountant is perfect for taking your financial management to the next level, because they have the understanding and expertise to properly manage IOLTAs on a daily and weekly basis, ensuring that client retainers are current and accurate at all times, while also performing other time-sucking CFO services.
2. You need more time to focus on client cases and less time crunching numbers.
The accounting aspect of your law firm may simply be a part of the business to you, but it also takes up a great deal of time and can pull your focus away from practicing law. As your law firm continues to grow, you will need to use more time and resources to take on new client cases. While you should still be involved in the accounting aspects of the work, it is important to have a legal accountant handy who has a strong understanding of how to handle accounts for multiple clients and multiple trust ledgers, in addition to managing all of your firm’s general finances. Having the ability to pass off such work will give you more time and energy to focus on your clients and their cases. This will feel amazing! Why? Because your daily work life will look a WHOLE lot more like you dreamed and envisioned in law school!
3. With client growth, comes greater responsibility.
Managing the financial systems of a law firm is a lot of work and can become very complex as the firm continues to grow its client base. As you know, this can include effectively maintaining the secure cash flow of every client under their own accounts, properly managing the financial outcomes of personal injury settlements, keeping track of all allocated revenue receipts and correlating invoices, and ensuring that all accounts can be easily audited at a moment’s notice. That can be a lot to take in! It can be even more difficult to manage on top of working client cases and running a business in itself (which we know is what you really want to do!).
4. You want to learn which practice areas bring your firm the most financial success.
While you may be one of the few firms that specialize in only a single practice area of law, the majority of firms today have at least a few areas of expertise, which we call revenue streams. A legal accountant will be able to take that data to the next level by analyzing those revenue streams, thus helping you make more effective financial decisions for your business. Upon review, this could mean that you decide to no longer serve certain practice areas, or you decide to add more growth to one part of your firm over another, or branch out into something new.
5. End of the year taxes start to become a greater burden than necessary.
Beyond accounting, a legal accountant can be your answer to more strategic and efficient tax planning and compliance, especially if they already know the ins and outs of your financial management system. They will ensure that everything is in order for your business to run smoothly and legally, and reduce the stress of having to deal with any of the confusion and disorder of tax season. Plus, you can ensure that there will be fewer surprises at the end of each year, and you may even find yourself gaining more money back.
Want to spend more time winning cases for your clients and less time on legal accounting? Accounting Girl is your expert in all things legal accounting, and is here to help you find the potential growth in your business. Check out our website and give us a call!