A law firm needs a specialized CPA to ensure the legal practice can run smoothly. Law firm accountants are accustomed to the law firm’s business structure, method of business, services, and highest risks. Having someone already well-versed in the field allows partners and attorneys to focus on their firm’s growth and client base rather than the financial side of things.
Managing the Financial Data
A law firm CPA can keep track of invoices, bill payments and payroll transactions, in addition to tax information. They will also be able to prepare financial statements to help law firms know how much money they’re making on a monthly basis. If you run your own law firm, then you know how much time this saves.
Official Representative of Your Firm
Another way law-focused accountants can help is by acting as an official representative of the firm when meeting with lenders, investors and tax authorities. Since they have first hand knowledge of the law firm’s financial records, they will be able to better explain financial information so that the law firm can get funding for expansion, get partners and negotiate tax payments.
This is an obvious benefit, but worth mentioning nonetheless. As (most) businesses need to pay taxes, a law firm in particular will always be better off with an accountant. An accounting firm that specializes in legal practices will be able to prepare all of the necessary tax forms and file the returns at the proper deadlines. The accounting firm will be able to make sure that the law firm avoids costly penalties as well as save them the hassle of filing and preparing tax returns themselves. It will also make sure that a law firm files its tax returns properly and accurately as well.
Provide Financial Advice
Law CPAs are aware of the unique financial matters of a law firm, and can advise accordingly. They can provide guidance on how to cut costs, increase revenues, ensure profitability and engage in more effective tax planning. This way, your firm will be secure in the financial health of their organization.
The Payroll Process
There are many components to a law firm and calculating and cutting checks for all involved is a time-consuming practice — what’s more, it can’t wait. People need to be paid on time and while this is not the most important part of building or running a law firm practice, it always takes priority. Having an accounting firm that handles this aspect of your business will keep your employees happy and enable you to focus on what matters: your business.
Law firms need to stay on top of their financial affairs in order to avoid hassles with the IRS, turnover or becoming a stagnate business. One of the best ways to better manage financial affairs is to hire an accounting firm that specializes in working with law firms. With an accounting firm that works with legal practices, a law firm will be in position to receive numerous benefits. These benefits include specific expertise, qualified representation, assistance with filing tax returns, managing financial information and providing general financial advice. With all of these benefits, a law firm will be in position to stay profitable and in compliance with the tax authorities at all times.