Whether you’re launching out to start a new practice on your own, or perhaps you’re a seasoned partner in a multi-lawyer firm; ensuring your bookkeeping is properly managed is fundamental to your practice. However, after spending countless hours studying law, most lawyers would rather not be burdened with the meticulous numbers driven aspects of recordkeeping – for some, this can bring about the feeling of a return to post-secondary studies, with accounting as their new major.
A good analogy I’ve heard is that wanting a lawyer to regularly maintain their books, which takes them away from their practice, is akin to a husband having to mow his lawn during his favorite sporting event – you know it has to be done but you’d much rather be inside doing what you enjoy!
In order to lessen the burden (including the financial one), below is a list of useful bookkeeping tips.
Six Useful Bookkeeping Tips
1. Decide Who Will Do What
When deciding who will do what, the first “who” in this equation is the lawyer. Some lawyers prefer to be more hands-on while disinclination curtails the approach of others. Once you gain an understanding on your firm’s bookkeeping needs, decide which aspects you are willing to tackle yourself, the rest will become delegated. Delegation can be to in-house staff or to an outside bookkeeping company.
2. Self-Docketing
The one area where delegation is NEVER recommended is docketing. Docketing is the lifeblood of the business and many lawyers leave dollars on the table by not maximizing on their billable time. Docketing directly into your software is the most effective means of keeping track of billable time. Input of time contemporaneously will ensure your six or twelve minute dockets are captured. Trying to piece together a week’s worth of dockets tends to leave dollars on the table instead of in your pocket.
3. Credit/Debit Card Use
Limit credit cards and debit cards to one of each. Multiple cards mean multiple reports and more time and expense creating them. Along these same lines, it would be beneficial if only business expenses went through these accounts. Also, consider pre-authorized payments for reoccurring transactions.
4. Use Your Software
Don’t just own the software, use it! Robust programs like PCLaw have many layers of features and functionalities; all of which are designed to assist your firm with productivity, efficiency and in some instances, corporate presentation. If you are unfamiliar with certain aspects of the program of your choice, consider hiring an expert to provide training.
5. Manual Paperwork
Keep detailed legible records of deposits, cheques and other manually recorded documents. Unintelligible or incomplete documentation means being interrupted by your bookkeeper for clarification and longer time spent updating your books – both of which affect your bottom line.
6. Backup and Storage
As with all computer software programs, backing up your data is vital. Backup options range from conventional external hard-drives to cloud-based storage. Regardless of your means, backing up regularly is imperative. Also, paper documentation should be stored appropriately for a time period as outlined by the Law Society of Upper Canada.
Stepping Over Dollars to Pick Up Dimes
While considering all of the above, keep in mind the cost-benefit. For instance, hiring an outside bookkeeper may be an added expense but their expertise can provide a “financial peace of mind” for lawyers. Or the cost of a cloud-based storage provider may not seem necessary but the benefits can outweigh the costs in many instances.
As the old adage goes, “don’t step over dollars to pick up dimes”. This saying is particularly true in the business of law where time is literally money. Hence, the common denominator in this list is not about limiting your expenses per se; the emphasis is on finding ways to effectively and efficiently manage your bookkeeping in a way that maximizes the input and capture of your billable time.
Did you find this post useful? If so, please comment below with your thoughts!
By: Keith Hill, Jr.
Keith Hill, Jr. is a Certified Independent Consultant (CIC) in PCLaw Practice Management Software and is a Sr. Associate at Accounting for Law, Inc. For 15 years Accounting for Law has been satisfying bookkeeping needs for lawyers throughout the GTA and parts of Ontario. Keith can be contacted at: keith.hill@forlaw.ca / 647-459-4LAW / www.forLAW.ca
Disclaimer: Any accounting, business or tax advice contained in this article, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. If desired, I would be pleased to perform the requisite research and provide you with a detailed written analysis. Such an engagement may be the subject of a separate engagement letter that would define the scope and limits of the desired consultation services.
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An interesting read! This reminds me to consolidate my business credit cards and to get my bookkeeping stuff organized for the end of the year. Thanks for sharing 🙂
Thanks for your comment Juliana! I’m glad that you found the article useful.