Important Accounting Principles All Lawyers Need to Know

accounting ledger

When most people think of lawyers, they are often focused on their ability to represent people in a court of law. Whether you are using a family law attorney, or someone for a civil suit, their expertise in these areas of law can help people resolve tough situations. However, from a lawyer’s perspective, they need not only to be aware of the different laws in their state but also aware of how to properly account for all of the money that they have received. Here is an overview of crucial accounting principles lawyers need to know if you happen to be an attorney that would like to prepare adequately for paying taxes at the end of the year.

Accounting Principles Lawyers Use

If you are a lawyer that would like to have all of your accounting in order, there are several things that you need to know to have your financial information ready for your taxes. For example, the accounting system that you use should take into account the money that you accrue, the cash that you are given, and how much of it is taxable. There are also different types of financial transactions that you need to be aware of and use on a regular basis. For example, you need to have an accounting system record that will include a double entry spreadsheet, debits and credits listed, and a complete record of all transactions that were made. The accounting cycle is also something that needs to be accounted for which includes trial balances and financial statements. Trial balances are unique to what lawyers are paid to do, and all of this information must be kept in conjunction with all of your tax information.

Financial Statements And Tax Preparation Tips

To begin with, you must have a balance sheet which can show all of your earnings and expenses. There has to be a statement of operations, a statement of retained earnings, and a spreadsheet showing the amount of cash flow that you have. By presenting everything to your accountant, they can take these spreadsheets and quickly prepare your taxes within a few days. If you are not handling that many cases, and may only take them a few hours to get all in order so that you can pay taxes on the money that you have earned.

Software You Should Use

microsoft excel logointuit quickbooksIf you’re going to prepare for your taxes, the software that you ought to use will include Microsoft Excel on a very basic level. However, you should upgrade to something that is related to the preparation of taxes. Some of the software can cost several hundred dollars such as Quick Books which you can either download online or only pick up a local store that has software available by using this software which is specially designed to work with attorneys; you can set up everything all at once and just enter your information and. The software will allow you to print a spreadsheet that the accountant will need to do your taxes, making the entire process is simple as possible.

Although some lawyers will be able to use very basic spreadsheets to show how much they have earned, it is always better to use professional grade software that is designed for law firms so that everything can be kept track of in the easiest possible way. Lawyers may have excellent skills in representing their clients, but sometimes the accounting portion of their business can be difficult. These software programs will make it much easier for practicing attorneys to keep track of their earnings, expenditures, and how much taxes they will need to pay by the end of the year.

Marie Noren