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Mixing up the two can give you a false picture of your firm’s financial health. QuickBooks is an industry leader and one of the oldest accounting software options. Countless law firms have used the features QuickBooks offers to handle their financial and legal concerns. Although it can benefit law firms of any size, QuickBooks tends to work well with smaller and midsize firms. If your law firm doesn’t already have business bank accounts, it’s time to open them. Most firms will need three business bank accounts at a minimum—checking, savings, and a separate IOLTA or trust account.

These transactions are recorded on equal sides, known as debits and credits. Debits and credits combine to form a balance sheet comprising assets, liabilities, and equity. Many lawyers have no idea how much money they are making or how the firm is doing. (Really!) At best, they have financial information but it’s too late to do anything. When looking at the importance of solid accounting, you’re really talking about looking at financial data on a regular basis. And you can’t do that if you’re not gathering and sorting it on a regular basis.

What are the most common types of billing methods in a law firm?

From that point on, you will receive monthly reports, including cash flow, profit and loss, and balance sheet statements. For an additional fee, Bench offers catch-up bookkeeping if you’re behind on your financials. It also offers limited support for business taxes by preparing a year-end financial package for your CPA. You can pay for additional tax services by adding BenchTax to your bookkeeping services. Founded in 1999 by two former members of Price Waterhouse, 1-800Accountant is one of the more established online accounting firms. It combines personal support from a nationwide team of experts with the convenience of digital technology for a flat rate, which is why we selected it as the best accounting firm for a basic plan.

Xero is substantially cheaper than Quickbooks, so it might make sense if you’re just getting started. Quickbooks is still the leader in accounting software, making it a reasonable first choice for lawyers. Quickbooks is also the leading software for integrating with practice management software, so I can see why many lawyers would choose it.

The Best Law Firm Accounting and Bookkeeping Software

Integrating self-serve payment options with legal accounting software is an easy way to create better relationships and stay relevant against competitors. However, beyond making the payment and reconciliation process easier, the ability to easily create customized invoices and flexible payment schedules can also lower the chances of non-payment. Legal accounting solutions that support digital payment integration can even help eliminate uncomfortable conversations law firm bookkeeping by automating follow ups and other parts of the A/R process. Beyond general journal and ledger bookkeeping, an accounting firm also can perform account reconciliation, payroll processing, cash flow management, monthly statement preparation, and tax services. It also can provide additional layers of accounting functions to accommodate a growing business’s expanding needs. Relying on memory is never a good way to keep track of your billable hours.

• In all cases, it’s important to crunch the numbers to see what rate or form of billing makes sense for your business.
• Law firms have to better at managing money than ever in order to grow their business.
• It takes years to build a strong attorney reputation and one second to destroy it.
• Law firm accounting helps you keep your firm’s name reputable and clean.
• Reconciliation protects against financial issues and uncertainty for both clients and law firms.

Some programs offer only accounting features, while others will allow you to accept credit card payments online, manage your payroll, and more. I helped switch us from Quicken (the PERSONAL accounting software) to QuickBooks Online. I have worked with several CPAs to get the taxes filed for the different companies and learned how they like to receive information and what can make filing taxes easier. I also learned what the owner needs to see in regards to financial reports to run his companies so he can figure out what to change and how to make them grow. As you’ll find with some of the firms in this review, billing methods can vary beyond a monthly fee, such as an hourly, pay-for-performance fee, or rates based on the number of monthly transactions.

What are some benefits of legal billing software?

However, taking on tasks above and beyond your duties is never a good idea, especially accounting and financial management tasks. As with the law, too much can go wrong if you don’t have the right professional in charge. Let a competent, experienced professional or company handle things is always better. With financial data, legal accountants present big-picture information and give comprehensive and specific reports of a firm’s financial health.