The financial world can be a confusing place for the average person. New tax laws come and go with little warning, leaving people wondering what will impact them in their personal lives or business decisions like selling investments property or claiming deductions on taxes due to home offices? Accounting firms stay up-to-date regarding these changes so that when clients come into contact, they can provide guidance based on current information rather than outdated rules which may no longer apply due to recent alterations made.
You can be sure that you’ll make the right decision if you ask some preliminary questions when hiring someone. This way, not only will your law firm always have an accountant on hand for whatever it needs at any given time but also your taxes are handled professionally so there is less risk of errors or miscommunication about important matters like filed forms with federal agents who may charge hefty penalties should they miss. Pitfalls such as these usually hinge around failing to give attention during interviews which could lead one down the wrong path later once work begins.
Hiring a professional accountant for your law firm saves you headaches from figuring out your financial situation. It also protects your reputation from committing costly mistakes that involve your firm or client. When looking for an accountant for your firm, consider the unique set of needs and regulations that you need your business to meet in terms of accounting. Hiring accountants that don’t have legal accounting experience isn’t a wise idea. It’s like going to a general physician with a heart problem when you can consult with a cardiologist. Before hiring a legal accountant, consider these tips and factors first:
Assess their Industry Experience
Do they approach a legal client like they would a business in a different industry? If the answer is yes, then it’s time to reconsider. A legal firm is an entirely different beast that requires a unique approach. Lots of things are needed to be taken into consideration to prevent harming your reputation or worse having your firm disbarred. This is why your prospect account should treat your firm differently than their other clients. Check how long have they been practicing as a legal accountant. Their industry experience will help you determine if they are fit for the role.
Consider the extent of your control
Accounting fees differ depending on a law firm’s need. Some accountants charge a fixed rate for each task they perform while others charge per hour. Tasks include preparing payrolls, profit, and loss statements or compiling a statement of net worth. Those who charge per hour involves phone call consultation or meetings.
Before hiring a legal accountant, ask yourself which financial tasks do you want to offload from your firm. What level of service do you want your accountant to take over? How much control over your bookkeeping do you wish them to work on? Ensure that you find a full-service accounting firm if you want a comprehensive service. They will handle your bookkeeping and accounting so you don’t have to stress over these parts of your firm.
Tracking matter costs
Matter costs aren’t the same and can be tricky. They are incurred when practicing law and then charged to clients although overhead for firm operations are billed differently. Ask your prospect how they track matter costs as hard and soft matter costs have a different approach for tax purposes. Your prospect should know how to differentiate hard and soft matter costs.
Figure out if they offer audit support
It’s comforting to know you can rely on your accountant when IRS comes knocking at your firm. IRS audits are common to many businesses and your law firm isn’t different. Some accounting firms offer their own offices during audits and provide a representative on your behalf. An audit involves reviewing your financial data. A great legal accountant can provide feedback for improvement, generate growth, minimize costs and determine opportunities to improve your firm’s revenue.
Level of service they provide
An accounting firm will charge you more if a certified accountant handles your bookkeeping tasks. If you need a comprehensive bookkeeping service, go for a full-service firm as they already have an in-house accountant. More so, you need to figure out their availability and how frequently you need them. Some law firms are good with meeting their legal accountant at least once a year for taxes while others insist on meeting regularly to discuss finances.
Determine if your accountant is available for a phone call or if you need to set up an appointment to talk in person. Also, consider your financial knowledge and experience. You may need further advice on your financial status. Some legal accountants only compile data and offer little advice while others are generous when offering advice about keeping your financial records, etc.
Benefits of legal accountant for law firms
Not only do law firm accounting professionals help you with payrolls and bookkeeping, but they can also help you run your firm more efficiently. They can help you get a better grasp of the financial side of your firm. These include your cash flow, revenues, staff efficiency, and attorney compensation in compliance with your local state’s rules and regulations. A legal accountant collects and interprets financial data to help drive your law firm’s growth and stay adherent to rules and regulations. With a legal accountant, they can:
- Complete payroll
-
- Record costs
- Accomplish tax returns
- Oversee financial data
- Account for case costs
- Differentiate income and expenses
-
Hiring a legal accountant allows you to systemize workflows in your law firm including tracking billable hours. You should consider fees and see which setup you can benefit from the most in terms of the type of services you need. You would want to create flexibility for your clients and help your lawyers in billing clients more efficiently and profitably.
Legal accountants can also help you choose the right accounting method for your law firm. They help maintain your financial information, process payable and receivable, reconcile ledger and prepare all financial statements. Despite what others believe, accounting can involve far more diverse work than filing taxes. They can save you headaches, maximize your resources and improve your reputation in the legal industry.
