The world of entertainment law can sound pretty exciting and glamorous when you're discussing what you do at a cocktail party. However, entertainment law firm bookkeeping doesn't feel very glamorous when you're the one stuck handling mountains of receipts and spreadsheets. You probably know the struggles of trying to track and reconcile numbers if you've been acting as your own default law firm accountant. Let's shine a light on what law firms are really looking at when it comes to the demands of modern law firm bookkeeping.
Why Is Good Bookkeeping The Bedrock Of An Entertainment Law Office?
Your books tell the story of where your law office stands. Your clients and employees are relying on you to keep your entertainment law firm bookkeeping practices impeccable. How are your peers in entertainment law achieving this? Let’s dissect what goes into creating longevity, room for growth and a sparkling reputation through good accounting strategies.
Law Office Bookkeeping In Action
Tracking cash is one of the most essential bookkeeping operations in any field. Entertainment law firms are tasked with managing client expenses, trust accounts, and revenue on a daily basis. Management of cash flow means monitoring all debits and credits. Other key cash-related tasks include creating, distributing and settling invoices. Unfortunately, the brakes come grinding to a halt if cash flow isn't managed with a careful eye.
Bookkeeping also requires law firms to capture any unexpected or unreported expenses that weren’t originally in the picture. Many lawyers begin to feel overwhelmed by the fact that just preparing financial statements and reports alone can take up a full day. What complicates matters is that accounts and invoices are often handled in "funnels" that don't overlap. This is a formula for blind spots.
Good bookkeeping isn't strictly concerned with short-term obligations. The records that are generated by your books can and should be used for forecasting and long-term financial decisions. Is this something you're already doing? Letting your books just be books instead of using what you have to create a full financial picture is like leaving money on the table. A business owner also has obligations to prepare financial statements and follow reporting requirements that satisfy the rules of federal, state and local governing bodies. Let's move on to discuss the mammoth — tax planning.
The Big Task Of Law Firm Tax Planning
Proper tax management is mandatory for any law firm. Lawyers may know better than just about anyone how relentless the IRS can be. This is why so many owners of law firms are persistent when it comes to making sure a law firm CPA is handling tax records and returns. Firm owners should think of tax planning as a continuous, circular carousel ride instead of a task that has a beginning and end.
The Many Layers of Law Firm Tax Planning
Are tax liabilities on your mind? Nobody wants to be surprised when they discover that they've been allocating funds incorrectly once taxes are due. Another big obligation is completing the very complicated tax returns that are associated with owning and operating a law firm. However, the tax story doesn't really begin and end at tax season. Things like quarterly payments and payroll taxes for your employees are always looming. Tax planning really needs to be fully synced with a firm's overall financial strategy to guarantee the level of accuracy that's needed to stay compliant with the IRS and avoid surprise costs.
Acing Bookkeeping & Tax Planning At Your Law Firm
Is simply making sure all of the invoices are paid on time enough? Satisfaction with the bare minimum is not the road to successful tax planning. A good bookkeeping strategy is cohesive, organized and teeming with insights. It's time to bring in law firm financial advisers if you feel like your firm isn't operating at the highest level possible.
Many owners of law firms struggle because they are using practice-management software, accounting software, and banking tools that are all on separate platforms. Getting everything as close to being synced up as possible reduces the amount of time it takes to manage finances. In addition, having uniformity reduces errors that cause bills to go unpaid. Furthermore, automation is something that's exceptionally useful when it comes to law firm accounting tools. Automating your financial strategy with the help of a law firm CFO advisory firm that specializes in helping law firms become "financially modern" means less time spent on data entry and quality control. Here at Fusion CPA, we provide full-scale law firm CPA, accounting, financial and tax services. Our law firm financial advisers can scale our services to fit the size and scope of your firm's needs. 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.