Is the health of your Accounts Receivable on life support? 

Many law firms and small businesses have an ill-managed accounts receivable system. Attorneys especially solo attorneys or small firms wear many hats: 

🎩 Attorney hat
🎩 Paralegal hat
🎩 Receptionist hat
🎩 Handy man hat
🎩 Secretary hat
🎩 Bookkeeper hat
While wearing all these hats can save you money, some of these hats can actually cost you a lot of money in time and potential disputes with your clients and has the potential to wreak havoc on the financial side of your practice, not to mention the sleepless nights as April 15 gets closer and closer. Every legal firm should have an accounting management system in place. Your Chart of Accounts is not a simple thing to just set up it will need a lot of special consideration when it comes to details. 

The chart of accounts should consist of both balance sheet accounts (such as assets, liabilities, and stockholders’ equity) and income statement accounts (like revenues, expenses, gains, and losses).

In addition to all of this you must reconcile regularly and not be exhausted 😴 when you do so, or costly errors can easily be made which will cause your CPA to be calling you about this or that because your books are a disaster. You also need to be watchful of how you handle your Client Trust Accounting as well. Avoid mixing funds not just personal from business that is a no brainer 🤯but you MUST keep client funds sperate from firm operating funds within trust account, failure to do so could lead to inaccurate financial reporting, ethical violations, and potential client disputes. 

Attorneys do not usually have time for all these hats but if you do that’s awesome 👏your CPA will be extremely happy if you ensure your records are concise and handled appropriately.

Make sure to stay up to date with any new IOLTA guidelines, which is state specific rules that govern where an attorney practices law and where they are licensed. You also need to stay abreast of any new updates or amendments to the CTA. You can also do your annual reporting electronically through the FinCEN