Attorney bookkeeping why use cloud based software

Hi there, Linda Ardasani, Ardasani Accounting. Wanted to do a short video just to explain the pros and the cons of using— well, for attorneys to be using cloud-based software. It's a question I get asked quite often, mostly by solo lawyers, like lawyers that are on their own or maybe have just solo plus one, they have that one extra attorney. And this kind of came up in a discovery call with a person who reached out to me, like, why do I need the software? And it's a question I get asked a lot because, you know, most of the time, especially the newer attorneys starting out on their own, they're trying to keep their costs at a minimum and they don't want to spend a lot of money on apps that aren't necessary. I can tell you the best practice is to start right away and just abandon the spreadsheet and really consider adding the legal software to your repertoire of tools. If you're going the route— I mean, you can actually do everything in Excel if you want. I see attorneys do that all the time. But as they start to build their practice and grow, it's hard to manage and track all the individual accounts. And for compliance purposes, if you have a need for trust accounting, you really have a need for outside legal software, that extra app. And especially if you're using an application like QuickBooks. So I see a lot of attorneys when they start out, they'll grab Simple Start just to kind of track their bank feed and keep track of their expenses and then their income. And it tends to end up as a cash basis scenario where they're tracking the expenses as they come in. As, you know, they write a check, but they're tracking it as an expense. They're writing Or they're using a credit card and they're tracking the expense that way, but then they're depositing their— all their income that goes into the operating as legal income, and they're not tracking the trust movement, which is really the reason why you want that software. You, you want a software that will track from the beginning process of the receipt of the retainer through the whole life cycle with the client of moving the funds over as you earn the income. And if you return any funds, if you have expenses maybe you're paying for the expenses out of IOLTA, or maybe you're upfronting them as like a loan to the client as an advanced client cost. You want to track all of that in some kind of software instead of Excel, because when you do it in Excel, it's manageable at first, but it's also very manual, and there's where errors can come into play. So it's really crucial to track it and validate it back to the source, which is your bank, so you can make all those transactions in Excel, but then if you don't move the funds over from trust to operating, you're not actually showing the revenue. It's just sitting in the client trust account. A lot of the software— and you know, we recommend too, I highly recommend LeanLaw. It's my favorite. It will help you not overstate the trust or even pull funds out. It's going to keep you from taking funds out. that maybe if you start to move the funds around a lot and you start to create multiple invoices as you earn the income, you don't want to overstate it. You want to track it to the penny, and then you want to be able to reach out to the client, say, hey, your retainer is expired. You'll— and you'll see that on the invoice. I need a retainer replenishment. So that's one of the reasons you want to keep track of the trust, just in a pure Very transparent way. The other software we do recommend at our firm is Clio. Same thing, it just costs a little bit more, but I know the Bar Association does recommend that you get a discount through the bar. If you're looking into LeanLaw, you will get a discount from me. So if you want to reach out, we can set you up and help you get going in the software. It's a lot less money than Clio, and it has a little bit less bells and whistles, but usually when you're starting out, you might not need all those extra pieces. And then you can start to store your documents in Box or wherever you like to keep them. And then just maybe create some of the forms yourself as you start out. I love really helping a lot of the attorneys that are just starting. And I'm really appreciative when I get a call like I did last week from somebody who's just started, literally just started last month, and she's already proactively taking that time and effort to look towards the future and knowing that I'm going to build here. I want it to be perfect. There's nothing better than for us accountants to work with somebody who's so invested in that piece of perfection when it comes to trust accounting. So on that note, if you are just starting out, please reach out. We'd love to help set you up. Maybe you'll do the work after. Maybe we'll assist in that regard. Reach out. That's the work that we do. If you're a bookkeeper, an accountant, or an accountant that's starting to work with the legal industry and wants to learn more, we have a fun group called the Accountants Law Lab, and I'll provide links in the article that goes along with this. So cloud accounting, yes, big yes, worth the effort to have everything in the cloud where you can reach it on any device at any time. Thanks for watching, and don't forget, forget to hit the subscribe button so that you can follow me on future videos. Bye now.