Another smart decision that I made when I set up my law firm that I absolutely encourage everyone else to do is to make sure that you’ve got somebody else preparing your books for you, doing the bookkeeping for you. This was not on my radar. When I was working at the big law firm, I didn’t know anything other than expense reports and that sort of thing. But somebody is going to have to look at every transaction, every debit, every credit, all the money that moves in and out of your law firm and is going to have to characterize it if you’re going to have a reasonable shot of being able to prepare your taxes and do planning. Every month, my bookkeeper prepares for me a balance sheet and a profit and loss statement. I get them quarterly. I get them yearly. I also get assistance with my IOLTA account from bookkeeping.

And these financials that my bookkeeper prepares for me, and this is a different function than your accounting firm, your CPA firm, bookkeeping is a little bit lower level. It’s a little bit more of a, I don’t want to call it grunt work, but grunt work. If they’re not tracking, what are you spending on different categories of spend? I mean, what are your liabilities? What are your payroll liabilities? What do you spend on medical insurance and retirement? What are your fixed assets? And how much have you spent on marketing and advertising? And what can be depreciated? If you don’t have this information, it’s almost impossible for you to prepare your taxes. And so my bookkeeper will prepare all this stuff for me and I’ll get to see it monthly. And if there’s something aberrant, my bookkeeper’s helped me a number of times when there has been some unauthorized transactions and I was able to get them reversed right away.

They flag those for me. Sometimes they will notice that an invoice that I am showing in my practice management software is being unpaid. I’ll get an email that says it looks to me like this one was paid based on the time that you got this ACH and the amount. And so it’s very helpful to have somebody else do your books for you. And I think that probably more than anything is just the philosophy that if you are an experienced lawyer, your time is worth hundreds of dollars per hour, but a bookkeeper’s time is worth 20 or 30 bucks per hour. And if you are seriously going to spend any considerable time each month in your QuickBooks looking at, oh, this is a marketing expense or this is an insurance expense or this is some kind of asset that I purchased that’s depreciable. You’re really not planning to win in terms of running a law firm that’s going to be effective in the long term.

Anything that you can pay someone to do that is going to cost you less per hour than what you make, it is a no brainer. And there is nothing that leaps out in my mind except for maybe having your phone answered by somebody else. Bookkeeping is way up at the top of the list of something that is labor intensive. It is important. It is easy to screw up. It is boring. It is something that can be done at an extremely low expense by people who will be able to do all sorts of great things for you. They can see certain information out of the backside of your practice management software. They can be given certain access to your bank accounts, obviously not to make debits or changes or buy things, but they can get read authorization and they’re able to reconcile retainer accounts and to do just a whole variety of things.

And so up there with the virtual assistants that I pay to help me out there and up there with the people who I pay to answer my phones and some of the other people that I pay to do things that wouldn’t make sense for me as an attorney that can come in a high hourly rate to do myself at the very top of the list of people who you want to hire to free up your time so that you can focus on doing the things that are the best use of your time is a bookkeeper. So you want to come out of the gate with somebody who’s going to be able to do your bookkeeping for you on a monthly basis to track all the credits, the debits, everything that you’ve bought, all of the money that you’ve received, the outstanding invoices, not just because if you don’t have the profit and loss statements and the balance sheets, you’re going to really miss something that is important for managing your firm and understanding where you’re going to make your bets and where your spend has changed from this year to last year.

It’s going to make your tax time easier, but there’s no way to not do your books and to run a business. And it is simply too labor intensive to justify really any lawyer out there doing it themselves. So one of your first hires should be some sort of a remote bookkeeper. Obviously, I’m not talking about an employee. There are services out there that do this for you, but highly recommend that you come out of the gate with a few different levels of support and bookkeeping is certainly one of them.