Maximum Lawyer Law Firm Owners and Accounting with Jessica Gonifas
Watch the YouTube version of this episode HERE
Are you a law firm owner who needs help with managing finances? In this podcast episode, Jim and Tyson converse with Jessica, a CPA from Silver Peaks Accounting Service, who specializes in accounting for law firms. They discuss common accounting mistakes that law firms make.
As a CPA who works with attorneys, Jessica shares things that lawyers should not be doing when it comes to keeping their books straight and finances in order. One thing is not having accurate trust accounts. It is so important to ensure accounting firms specialize in law firms because if not, the numbers will not be accurate. Getting monthly reports will allow for law firms to stay on top of what is happening and ensure their numbers match. Another thing that many people fall behind on is creating a system to keep and log receipts for expenses. It can be as simple as taking a photo of a receipt and sending it to an assistant or adding it to a folder on your phone. Find a system that works for you!
Jim, Tyson and Jessica discuss what law firm owners need to do when it comes to profit. Jessica emphasizes the importance of ensuring expenses are not higher than the profit a firm is bringing in. To find this out, law firm owners can look at their profit margin percentage over time. Understanding this will also help decide if a firm can afford to bring in more employees to help the profit margin increase. The profit margin will also show if it is time to cut expenses. With that said, it is important to have a good balance when it comes to focusing on the profit margin. Jessica shares an example of a client who was so focused on cutting expenses for their firm, that the firm made less profit that year because the focus was not on making money.
Finding a tax professional that shares the same goals and morals as you is key to having great finances. Think about the kind of business owner you are. Are you conservative, aggressive or frugal? It is best to find a tax professional that shares those same ideals. The worst thing a law firm owner can do is find an aggressive tax professional when the firm is looking to save money. The business relationship will not last long if both sides don't agree.
Take a listen to learn more financial tips from Jessica!
2:57 The common trust account issues that law firm owners have
7:57 Practical tips for managing expenses and receipts
10:15 The importance of profit margin and tracking financial metrics
11:40 Exploration of being overly focused on cutting expenses
13:07 The concern of adding employees and the need to develop a plan
Jim's Hack: Write down on a notepad what he wants to change about the direction of his firm. Spending 15 minutes everyday has brought more insight to bring change.
Jessica’s Tip: Keep things simple. Do what works for you and what will bring you happiness and success.
Tyson's Tip: Watch this Youtube video where Chris Williamson interviews Alex Hermosa. There are some great and valuable insights given.
Tune in to today’s episode and checkout the full show notes here.
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