As the cliche goes, “Garbage in, garbage out.”
For non-law firms, the consequences of inaccurate accounting could result in bad business decisions and over-paying on taxes; for attorneys, however, the stakes are even higher, with poorly managed trust accounting potentially leading to sanctions, disbarment, or worse.
On the other hand, when a law firm has accurate and up-to-date records, things look different – you know how business is performing, you are empowered to make business decisions, you are on top of your collections, you can give any client an accurate accounting of their trust balances in a timely manner, and of course, you’re paying only what you owe in taxes.
With diligent, timely, and professional accounting, you can run a more insight-driven business while having confidence that you are in compliance!
“As soon as you can afford to, hire your weaknesses.”
Client Trust Account management and Three-way Reconciliation Trust Account reporting
As every attorney knows, just because you understand how client trust accounting works at a theoretical level doesn’t mean you know how to accurately track and comply with Bar trust requirements. Fortunately for you, KORE does! Through our years of experience helping keep law firms compliant with their client trust accounting obligations, we have developed a deep understanding of the client trust accounting process, relevant interactions between legal practice management and accounting systems, and the associated reporting. For all of our customers for whom we do three-way reconciliations, we provide a monthly reconciliation report that includes a summary page as well as all supporting documentation attached. Not only will you have clear and consistent records in the off chance your firm is audited, but you will also be in a position to easily and quickly provide all of your clients accurate statements of their trust account balances.
Transaction categorization, management, and business account reconciliation
At a fundamental level, your accounting is only as good as the data you put in, which is why the foundation of all business accounting is accurate categorization of transactions and regular account reconciliations, often referred to as bookkeeping. Through an understanding of the specifics of how your firm operates, as well as our knowledge of general legal accounting best-practices, we think critically about each of your transactions to make sure they are recorded in the way that makes the most sense for your business and is in line with GAAP (generally accepted accounting principles). Then, after all of your transactions are categorized, we reconcile each of your bank and credit card accounts to make sure that QBO matches the bank. Making sure your accounting is accurate and up-to-date has multiple benefits, including having a more accurate understanding of how your business is performing and minimizing your tax liability.
One of the operating tasks many of our customers opt to have us take off their plates is bill payment (accounts payable). Through our simple bill-pay process, all you have to do is upload your approved bills to-be-paid to our secure portal, and we take it from there – creating the bills in QBO, issuing the payments to your vendors via ACH, credit card, or paper check, and correctly recording the payments. We make sure your vendors are happy while making you look good!
Standard financial reporting
Once the transactions are booked and we are confident the financial data is accurate, we prepare each of our customers a standard suite of business reports – Profit & Loss (sometimes called an Income Statement), a Balance Sheet, and for some customers, a Cash Flow Statement. Through these reports and our accompanying notes, our customers are given a clear and timely picture of how their business is performing, as well as the tools they need to identify things that may not look as they expected. Furthermore, for customers that have questions or want to dive into their finances in more detail, we are always happy to connect for a phone or video call to review anything they have questions on.
On top of requiring the standard business reports that all of our customers get, many of our clients have unique, law firm-specific reporting needs, such as partner distribution reports or reports that show revenue by practice area. If you have a report that is essential for how you run your business, we can likely custom design and prepare it for you. Likewise, if you have information that you’d like to see and you’re just not quite sure how to get there, we are happy to work with you on that as well!
Budgeting and cash flow analysis
If you have growth aspirations for your firm, one of the best things you can do is create a budget, regularly review it, and update it as needed. Using your historical records in conjunction with some logical assumptions, you can create a roadmap that will help guide your business’s strategy and growth. On the flip side, a budget can be equally, if not more helpful if you have been struggling to maintain your financial obligations and would benefit from a bit more structure. Through an understanding of their goals, challenges, and priorities, along with their financial records and our knowledge of the industry, we help our budgeting customers develop budgets that are realistic and functional. Then, depending on the frequency they’re looking for, we reconnect regularly to review their progress and make updates.