The legal profession can be an unusual one as far as accountancy goes, so it’s important to engage with an accountancy firm that understands the sector, as well as your particular business. We’ll go over a few things to consider when shopping around for a new accountant.
How is your legal firm structured?
Are you a solicitor working by yourself, or a member of a multi-partner law firm? This is important because the business structure you use affects the way that you report income information to HMRC, as well as your other record-keeping and reporting obligations.
In turn, this might impact the type of accountancy services you might need, and the level of support you get from your accountant! For instance, a general partnership is one of the most common business structures used by the legal industry. The partners must submit a tax return for the partnership itself, as well as submitting their own tax returns for any personal income, so it can get a bit complicated.
What accountancy services do legal professionals need?
Again, a solicitor working as a sole trader might have fairly different needs compared to those of a larger law firm operating as a limited company with directors, shareholders and investors to think about.
As well as any specialist support you might want, helping you to be more tax-efficient, and managing your tax returns, a good accountant will normally also be able to provide the type of accounting services you need on a day-to-day basis.
For instance, bookkeeping to help you stay on top of your record-keeping duties and follow up on unpaid bills, or payroll services to deal with paying staff wages correctly, PAYE, and pensions. Even if you work by yourself as the sole director of your own limited company, you might still need payroll support to pay yourself using a tax-efficient salary!
Partnership accountancy services
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Do solicitors have to have an accountant?
Not necessarily, but hiring an accountant can be extremely useful, helping you meet your obligations as a business, not just as a legal professional – regardless of the structure or the industry that you work in.
It’s not all about compliance though! Just like you get to see the nitty-gritty of what’s going on with your clients, we see behind the scenes of lots of different types of businesses, and can use this experience and knowledge to help you be as efficient as possible.
The accounting services that your law firm needs are very likely to change as your business develops. If you’re considering your long-term options, look at accounting practices offering ‘room to grow’, so you can add (or remove) additional services as needed.
How do I choose an accountant to work with my law firm?
Like any big purchase that you make, shop around and do your research! Hiring an accountant who specialises in the legal industry will help in some respects, but it’s just as valuable to make sure they have experience working with a wide range of businesses.
Although it may be tempting to choose a tiny practice where you’re a major client, it also pays to make sure there’s cover if someone goes on holiday or becomes unwell. The accountancy firm you go with should have enough qualified accountants to provide a pool of experience for you to tap into.
Which leads us to our next point. It makes life much easier if your accountant can provide all of the services that you need! Things get confusing if one firm takes care of your VAT return, whilst another deals with payroll.
How do I background-check an accountant?
It goes without saying that the accountant you choose must be appropriately qualified. Given that in the UK, anyone can call themselves an ‘accountant’, make sure you check their references!
Your accountant should be an accredited member of one of the big professional accountancy bodies such as ACCA, ICEAW or CIMA. These impose strict rules around practice management and ethics.
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About The Author
I'm an experienced and fully AAT and ACCA qualified accountant, who is enthusiastic about helping business owners succeed. I also love cooking and needlepoint (at different times!). Learn more about Beth.