Congratulations on setting up a new law firm! Clients will be greatly helped by your passion and services for them. People are glad to pay for professional, friendly attorneys when they need legal help. Many attorneys are able to make a very good living doing what they love, but it does take careful setup in the beginning stages. Money will be coming in, being held, distributed, allocated, and spent faster than the blink of an eye. Keeping track of all the proper places the money needs to go is a very important, often very stressful job. Mishandling the money or losing track of the figures can lead to disaster, both financially and legally.
The very first step in setting up your law firm’s bookkeeping is to RUN… to a professional who specializes in that very thing. You have enough going on with the business decisions, client mining, and office space searches to not need the added load of the bookkeeping. Go ahead and seek out a bookkeeper you can trust, enjoy interactions with, and obviously, who is competent in attorney-based bookkeeping.
Your bookkeeper will do much of the setup work, but there are still a few tasks that will fall to you as the boss of the business to perform. Stay in close contact with your bookkeeper, and make her requests a priority to keep things moving quickly. She will need to set up a customized chart of accounts to keep records for you, which will include all of the expected expenses and income types you will need. You will have to give her a list of all of the business assets, as you acquire them, including office equipment, furniture, the building mortgage (if you are buying the office space), and also any loans or grants you received as you raised capital.
The next thing to do when getting set up will be to open correct bank accounts, if you have not already done so. Attorneys need special accounts including trust accounts and IOLTA accounts to run their practice according to the law. Each of these accounts should also be assigned with read-only access to the bookkeeper, so that she can check their balances often and categorize the money that goes in and out of them.
It wouldn’t be a successful law practice without some money coming in, so you will have to set up the best ways to receive those hard earned dollars. Decide with your bookkeeper the best, fastest, most cost-effective ways of receiving income, and then get those methods activated through your bank and bookkeeping software. Most of this work can also be done by your bookkeeper, saving you time and stress.
Be sure you have safeguards and proper protection against bounced checks or canceled transactions. Clients need to know that they face steep fines if their payment fails. With many payment methods moving to mobile and computer, you may also consider opening easy payment methods such as Paypal and Zelle. Just keep in mind the fees these methods may charge, and decide if the convenience to your customers is worth the expense.
Another vital part of setting up your law firm books is connecting your payroll provider to the bookkeeping software. Whether you use an in-house payroll, a local payroll company, or an online payroll provider, those payroll reports need to make their way to your bookkeeper on a regular basis if you want to have your books up to date. You may also need to transfer funds to your payroll bank account often, and you’ll need the correct numbers to do that. Payroll taxes are not paid right away in some cases, so your books can reflect the money being set aside until the proper time to pay it out.
If you don’t have payroll set up yet, your bookkeeper can probably help with that, as well. You’ll need to gather several forms and pieces of information for every employee you hire. Then the payroll frequency must be decided, and whether the employee should be salaried or hourly. You can offer holiday pay, sick leave, paid time off, and a host of other extras, and all of that should be set up from the beginning, if possible. Again, your payroll provider and/or bookkeeper can quickly set up all of these items, and let you know any other information you should decide on.
Setting up a new business with accurate, understandable books sounds daunting, but with some good communication between the attorney and the bookkeeper, it can be a smooth process. Many bookkeepers would much rather set up a brand new company than to try to untangle the messy books of a company several years in business. Get yourself a professional from the beginning and you will save time, stress, and worry, knowing the bookkeeping is being done right.
