The Importance Of Bookkeeping In Law Firms
Bookkeeping… it’s a frightening 11-letter word to lawyers everywhere. Why is that? It’s because a lawyer isn’t a bookkeeper. Their business is in the legal field, not the bookkeeping field. However, if they own and operate a law firm, then they must know about legal accounting. And, despite its importance, this can be a real challenge.
Now, you may be wondering why bookkeeping is imperative to a law firm. There are several reasons behind the importance but the most vital reasons are:
• Compliance – When it comes to legalities, compliance is a necessity. When attorneys aren’t compliant in their bookkeeping, they can be subjected to stringent penalties and potentially disbarred.
• Income – If a firm’s bookkeeping isn’t being properly maintained, it can mean a loss of income. This loss of income could be the result of undercharging clients due to the ineffective tracking of billable hours or billable expenses.
• Prosperity – A law firm’s continued success hinges on bookkeeping. When a firm can maintain accurate financial records, they start to develop important business intelligence that addresses their practice and earmark the right resources in order to increase the chances of the firm’s long-term success.