It’s 2014. We’re one year away from hoverboards and flying cars, and you’re still using spreadsheets and shoeboxes full of receipts to track your finances? Doesn’t that seem a little archaic to you? How much time could you save each month just by having an accounting system in place for your firm?
The answer: a lot. While the prospect of firms doing their own accounting can be daunting (there is, after all, an entire profession based around the fact that people hate accounting), there are a number of simple and intuitive technological tools that have emerged to make establishing an in-house accounting system easier than ever before. So where to start? There are five easy steps law firms of any size can use to get an accounting system in place:
- Creating a chart of accounts
- Selecting the right accounting tool
- Determining firm profitability and revenue
- Implementing best practices for trust accounting
- Scheduling reviews of time entry, billing and accounting
Getting started is of course the hardest part. And the most fundamental. A solid foundation sets you up for stability, and success. So, let’s elaborate a bit on the first two steps.
Step 1: Creating a chart of accounts
A chart of accounts is a listing of the accounts available in the accounting system in which to record entries. The chart of accounts consists of both balance sheet accounts (assets, liabilities, stockholders’ equity) and income statement accounts (revenues, expenses, gains, losses). Gathering all of your various accounts is necessary to begin getting the full value from your accounting tools.
Step 2: Selecting the right accounting tool
Now that you have a chart of accounts, pick a tool to use for tracking your firm’s finances.
There are many considerations that should impact your decision. Ease of use, integration with your practice management system, and ease of information sharing with your accountant should all be weighed.
Once you pick a tool, enter your chart of accounts and you’ll be on your way to a better understanding of your firm’s financial position.
Want to learn more about these and the other three steps? Check out Clio’s Legal Accounting webinar, hosted by Clio’s Lawyer-In-Residence Joshua Lenon with Carla Caldwell of Xero and Omar Ha-Redye, Adjunct Faculty at Ryerson University. They go over all five steps in detail, providing real-world examples of accounting systems in place, and focusing on new technological tools for law firm accounting. They also cover best practices to ensure your firm’s finances are kept up-to-date.
This webinar will help firms of any size get an accurate image of their finances. Not only will this save you time in the long run, but knowing what’s coming and going can actually make your firm more profitable.
Watch the completely free webinar and learn the simple steps you can use to ensure your firm has a simple, accurate and foolproof system for accounting practices for years to come.