A general understanding of basic business accounting may help you evaluate your law firm from a business management perspective. Knowing about law firm bookkeeping and tax planning, and may give you insight into your firm’s banking relationships. If you wish to initiate a partnership, buy out another firm, or sell your firm, understanding law firm bookkeeping may help you evaluate the worth of your firm. QuickBooks is a powerful comprehensive software that may help you make sense of complicated processes related to bookkeeping.
A general ledger is a record-keeping system that you or your law firm's CPA should use to track financial data, be it credits or debits. This ledger is a record of all the financial transactions your law firm makes during its operating life. Your general ledger will include the following.
•assets - what your law firm owns
• liabilities - what your law firm owes others
• equity - assets minus liability
•income - revenue you have earned over a pre-defined period
• expenses - what you spent over a pre-defined period
How To Create A Balance Sheet
Traditionally, having an accurate balance sheet is a key part of law firm tax planning. Your balance sheet should represent your law firm’s financial position at the end of a specific date. It’s like a screenshot of your law firm’s financial position at a specific point in time. QuickBooks makes it easy for your law firm accountant to prepare and update your balance sheet. First, you or your law firm accountant should determine the balance sheet they want QuickBooks to generate. The five options are as follows.
• previous year comparison
The next step is opening QuickBooks and selecting the account from the “File” menu. This account will generate the balance sheet. Select “Reports.” Choose “Company & Financial” using the drop-down menu.Do you have questions about balance sheets? Don’t worry. Fusion CPA’s financial advisers can help you determine the balance sheet that is right for your law firm’s needs.
Using QuickBooks to Manage Your Law Firm
QuickBooks has tools designed to help track time, bill clients, and manage costs, be them in the office or on the go. Using QuickBooks may help minimize manual data entry by allowing you to connect QuickBooks to your bank. Payments from clients are automatically reported, and you can connect expenses to specific cases or clients. QuickBooks may also help you manage your billing by assigning hourly rates for different legal services. Custom fees can be created for your associates, assistants, paralegals, and partners. When billable hours get added to an invoice, QuickBooks automatically does the math for you.
Take Advantage of Tax Strategies
QuickBooks is a comprehensive tool that may help give you insight into your law firm’s finances. However, raw data is not enough. You need to know how to apply that data to improve your law firm’s profitability. This is where we come in at Fusion CPA. We have a team of seasoned financial advisers. We can manage tax filings with the IRS, create individualized tax planning for partners, and help design the most advantageous structure to yield optimal tax results. We have experience providing real-time cash flow and accounting information, preparing detailed monthly financial reports, and helping our clients enjoy a virtually painless tax session, knowing that their accounts are being handled by professionals. Our goal is to help you gain insights into your law firm’s current financial situation and strategies to promote growth. You can learn more about our services by clicking the button below to schedule a complimentary discovery call today!
This blog article is not intended to be the rendering of legal, accounting, tax advice or other professional services. Articles are based on current or proposed tax rules at the time they are written and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive.