I can never stress enough how important accounting is to solopreneurs and small business law firms. It’s more than making sure all the I’s are dotted and T’s are crossed. It’s about getting it right the first time and keeping it right. I spoke to Scott Brenner, the managing partner of Dylewsky Goldberg and Brenner, a Stamford based accounting firm. DG&B specializes in the auditing of municipalities, manufacturing companies, and not-for-profit organizations.
Working with clients directly, Scott has found more often than not, they have a tendency to buy a software package as great and easy to use as Quickbooks, yet really mess it up. There is a desire to control everything, but not the expertise to handle it all. He feels a lawyer’s time is better spent making more money an hour, and that would easily cover the cost of a bookkeeper and fewer headaches down the road. It costs more to unravel bad bookkeeping than it does to do it right the first time.
“Being a professional is knowing when to hire another professional to do something for you.”
When looking for a bookkeeper, you should look for the following:
- First you should have an accountant (CPA) to do your taxes. Talk to them about the expertise you will need and the software you want to use to manage your books.
- Understand your industry. There are a few quirky things about running the books of a law firm, like having the Trust account in order, accounting for items properly, and tracking the different pieces of the trust account. The bookkeeper should be skilled in this area.
- The software. The most common for small businesses is QuickBooks, therefore your bookkeeper must have the expertise to know this software so they can make it work for you, the owner. The data drives the reports, and if it isn’t accurate, then your reports will be useless.
- To find a bookkeeper. QuickBooks is the most widely used business software out there for small, closely held businesses. They have a pro advisor network that you can go onto the QuickBooks website, or there’s the National Association of Bookkeepers as well. Talk to colleagues, or other business owners you know and trust in your community, and ask “Who do you use? Are they good? What do they charge? Are they doing things”
- Books are often not done right
- Mixing personal and business is another mistake made by small business owners
- Only having one credit card for personal and business purchases/expenses
- Not having separate checking accounts
- Not being aware of financial position relative to Accounts Receivables/Payables
- Lack of internal controls, and mismanagement of money.
- Whether you have someone internal or external from your firm, hire someone who not only knows what they are doing, but knows how to run the software.
- You just can’t mix your personal and business finances. What’s yours is yours, but by not keeping things separated can lead to disaster down the road. It also doesn’t bode well at tax time.
- You have to have two credit cards, one for business and one for personal. It keeps things clearer in the end. Check those credit card statements monthly. Ask your bookkeeper questions.
- Must have separate checking accounts as well, and a third for the Trust Account. Review bank statements & reconciliations on a monthly basis. If something doesn’t look right ASK about it.
- Get controls in place. Keeping an eye on what is yours so there is no opportunity for mismanagement of funds & credit cards, and/or fraud. Regular reporting requests and asking appropriate questions keeps employees on their toes when managing your money.
- Know your financial position at all times relative to payables and receivables. You are ultimately responsible for paying the bills, and paying yourself.
“…internal controls and fraud prevention is nine-tenths perception”
Lastly, Scott touched on retainer fees. He felt communication with the client is always key. They know where you stand, what their role is, and the how and when payments are expected. If you cannot come to a mutual agreement on this simple fact, there will be no working relationship, period.
His advice to young, budding lawyers and entrepreneurs out there? Stop trying to be everything and be what you’re good at. Hire those people, specifically in the financial business to do your accounting & tax, and/or bookkeeping & tax, for you. If you don’t and try doing it yourself, you’re losing the opportunity to make money at what you do best, and you’re then creating a potentially bigger mess that will cost you more money to clean up in the future. So not only are you losing the opportunity to bill, you’re then going have to pay somebody more money to clean it up.
This is a transcript of a recorded live presentation. It is in spoken-word format. While we have cleaned up the transcript a bit for easier reading, it’s not in edited written-word format.