Keeping track of your firm’s financial position should not be time-consuming or a confusing stressful proposition. Your time is valuable and should not be wasted trying to keep track of day-to-day finances and tax obligations. It should be spent advancing your own dreams – career and hobbies. Most small firms use Quickbooks to track their income and expenses, either on their own or with the aid of a part-time accountant that comes to their office once a week or a couple times a month. However, with the advent of the cloud and Quickbooks Online (“QBO”) – life should move even easier with immediate communications and up-to-date financial peace of mind. You set up QBO (with help, if needed), and then invite your accountant to connect – giving both of you 24/7, real-time access.
Using QBO allows you to automatically feed banking information. YOU authorize the bank feed into QBO. There is no other access or authorization by other parties to your accounts. This helps keep your bank and credit card accounts currently reconciled and you (or your accountant) can then easily classify the “fed-in” transactions to post to your books. You and your accountant can even communicate and exchange source documents (receipts, invoices, bills) directly through QBO, where these same source documents (hint–necessary tax receipts) can even be stored electronically.
The data is secure (128 bit encryption – the same used by many financial institutions) and continuously backed-up and up-graded as improvements are made (no need to buy, install and transfer data as new versions are released). In fact, even experimental upgrades or app syncs are available. Multiple users can be invited, but limited to what they have access to – such as reports only, customers or vendors-only, time tracking only or full usage.
QBO can track your time and billing by multiple, differing segments of your business for as much detail reporting as you wish. Each time you invoice a customer; you’ll be reminded of billable time through a “pop-out” drawer. However, if you wish, other time-tracking apps or software can be easily synced. QBO can even handle your payroll in various manners. Directly in QBO, you can process your own payroll, review and timely file your own reports or have Intuit (QBO Software Developer) take responsibility to timely and accurately file your payroll reports for you. Time can be entered daily or weekly directly into QBO, including the customer you would like to charge, as well as a billable rate to charge.
Instead of mailing paper copies or waiting for your accountant to come for a visit, expense receipts can be scanned. As mentioned earlier, these can then be sent to your accountant through email, directly through QBO (another form of email communication) or merely uploaded to QBO as an un-matched expense receipt for your accountant to create the related accounting entries. Any procedure that you find most convenient results in the same end result – your expenses are now digitally documented for tax purposes.
These same paid expenses can be marked (check-marked) in QBO as billable to a customer, so you will be automatically reminded the next time you invoice your customer that there are outstanding billable expenses to include in the current invoice. Initial estimates for services or other delayed charges can also be created that do NOT affect your books, but QBO will remind you to create invoices or charge the customer later on an already-created invoice. However, if you decide that the most convenient procedure is transferring paper receipts to an accountant, QBO has made even that much easier for your accountant to code the various receipts, regardless of how the expense was paid – paper check, credit card, bank transfer, etc.
Data can easily be imported and exported back and forth from Microsoft Excel if you wish to create or track anything in that manner. There is a free Sample Company within QBO where you can even try out transactions and methods for “hoped-for” outcomes before applying the procedure in “real-time” on your own company. 1099’s can also be quickly prepared using QBO. QBO may even help track some potential conflicts of interest.
As for Trust Accounting – Subaccounts for each client (and for initial firm funds deposited and IOLTA interest earned) can be created in QBO and reports generated to track activity. Accepting CC payments into trust, however, requires a separate merchant account and there must be sufficient firm funds to cover processing fees.
Taking the time to find and employ reliable accounting practices is just one of many ways to reduce stress and free up your schedule for pursuits that you truly enjoy. For more information on practical approaches to managing stress, call (800-527-1233) or email (firstname.lastname@example.org) the Lawyers’ Assistance Program today.
Whether you are in solo practice, a member of a firm, a judge, or a law student, LAP’s free and confidential services are available to you. You can also confidentially call LAP if you are concerned about a colleague, a friend or a family member who is experiencing problems. LAP also offers presentations at law firms, law schools, and bar associations to help raise awareness about managing stress, anxiety and other issues. For more information, visit our website at www.illinoislap.org. Don’t ignore the problem. LAP is here to help.
(Jeffrey Lange is a Certified Public Accountant and licenses Illinois Tax Attorney…..)