As the calendar year draws to a close, attorneys are often caught up in a whirlwind of court dates, client meetings, and case preparations. Amidst this hustle and bustle, it's imperative not to lose sight of the year-end accounting tasks. This checklist serves as a handy tool to guide attorneys through their fiscal wrap-up, setting the stage for a successful new financial year.
1. Reconcile All Bank Accounts
Ensure that your firm's bank statement matches your internal records. This includes checking, savings, and especially IOLTA or trust accounts. Discrepancies must be investigated and resolved.
2. Review Client Trust Accounts
Ensure that individual client ledgers are accurate.
Refund any unused funds to clients.
Address any negative balances promptly.
3. Update and Review Accounts Receivable
Generate a list of outstanding invoices.
Send reminders to clients with unpaid bills.
Write off any uncollectible debts, if necessary.
4. Evaluate Fixed Assets and Depreciation
Review the asset ledger for any purchases or disposals during the year.
Calculate and record year-end depreciation.
Ensure you're compliant with the latest tax codes for asset deductions.
5. Verify Vendor Accounts and Outstanding Bills
Confirm all vendor invoices have been recorded.
Schedule payments for any outstanding amounts.
Review for potential year-end tax deductions.
6. Organize and Review Expense Reports
Ensure all business expenses are appropriately categorized.
Reimburse any staff out-of-pocket expenses.
Review for tax-deductible items.
7. Prepare for Tax Filings
Collect necessary documents like W-9s from vendors or contractors.
Ensure all payroll taxes have been appropriately remitted.
Set aside funds for any anticipated tax liabilities.
8. Conduct an Inventory (if applicable)
While many law firms might not have substantial inventory, those with physical products (like law books for sale) should count and value their inventory at year-end.
9. Review Financial Statements
Generate and review your profit & loss statement, balance sheet, and cash flow statement. Look for anomalies or unexpected trends.
10. Plan for the Future
Assess the financial health of your practice.
Set budgeting goals for the upcoming year.
Consider consulting with a financial advisor to discuss potential growth strategies or investments.
11. Ensure Compliance with Local Regulations
Depending on your jurisdiction, there might be specific year-end reporting or compliance requirements, especially concerning client trust accounts.
12. Backup All Financial Data
Whether you're using physical ledgers or digital accounting software, ensure all financial data is backed up securely. Consider cloud storage solutions for added safety.
The end of the fiscal year might be hectic, but with a systematic approach and a comprehensive checklist, attorneys can ensure they're prepared and set for success in the coming year. Regularly consulting with an accountant or bookkeeper can further streamline this process and provide peace of mind.