When a law firm provides services and issues an invoice for those services, the law firm is essentially extending credit to the client. Your firm’s accounts receivable (A/R) tracks the amount each client owes for services rendered in the past, e.g. the amount of credit your firm has extended to each client.[1] (Attorneys can avoid […]

Law firms, like all businesses, need to produce [simple_tooltip content=’Financial statements are reports prepared by a company management to present the financial performance and position at a point in time. A general-purpose set of financial statements usually includes a balance sheet, income statements, statement of owners equity, and statement of cash flows.’]financial statements[/simple_tooltip] in order […]

A law firm is like any other business in that it must have a system for recording its financial transactions in order to generate the reports that the owners and officers can use to evaluate the company’s financial health. General accounting programs meet most companies’ needs because they allow the business to record financial transactions […]

[simple_tooltip content=’A single entry system records each accounting transaction with a single entry to the accounting records, rather than the vastly more widespread double entry system.’]Single-entry[/simple_tooltip] bookkeeping is a simple type of financial recordkeeping used by individuals and businesses that don’t carry unpaid client balances, have only a few employees, and don’t owe people money.[1] […]

Accountants use your law firm’s [simple_tooltip content=’A statement of all debits and credits in a double-entry account book, with any disagreement indicating an error.’]trial balance[/simple_tooltip], to generate the balance sheet and profit & loss (income) statement. The trial balance contains all general ledger accounts and shows the balances in those accounts. Debits appear on the […]

Most general accounting and billing programs do not have the ability to apply complex rate structures and non-traditional fee arrangements when creating invoices. Quickbooks, for example, will allow your law firm to set up different billing rates for each employee or for specific matters or tasks, but only in the Professional or Accountant versions of […]

Law firms use standard accounting methods and rely on [simple_tooltip content=’Double-entry bookkeeping, in accounting, is a system of bookkeeping so named because every entry to an account requires a corresponding and opposite entry to a different account.’]double-entry[/simple_tooltip] bookkeeping to ensure the accuracy of their financial records.[1] Double-entry bookkeeping systems use journal entries that contain at […]

There are two types of reimbursable costs, [simple_tooltip content=’Soft costs typically are associated with nontangible items, such as project management, taxes and legal fees.’]soft costs[/simple_tooltip] and [simple_tooltip content=’Hard costs is a disbursement you pay directly to a vendor on behalf of a client. A hard cost would be for items such as filing fees, court […]

Even though general accounting programs such as Quickbooks were not specifically designed for legal billing, law firms can still use these programs to create legal bills that show the date, time spent, a description of services, the rate per hour, and calculate the total amount charged for each entry.[1] Some of the more sophisticated desktop […]

[simple_tooltip content=’A journal entry, in accounting, is the logging of a transaction in an accounting journal that shows a company debit and credit balances.’]Journal entries[/simple_tooltip] are used to record a law firm’s business transactions onto its books.[1] The term journal entry comes from the times before computers existed, when businesses recorded their business transactions in […]