Law school may have taught you how to be a great lawyer but it didn’t teach you how to evaluate and understand your financials. Why is this important?
Let’s face it, you went to law school to practice law, not to do accounting. Accounting for law firms can seem overwhelming and time consuming. Actual it is both of those, but it’s a requirement and there are standards to follow if you want to keep your license and ability to practice law.
When growing a business, one of the most important things you can do is understand what your financial statements are telling you.
Understanding your financials will help you spot trends, make decisions, and be more profitable because you will be more proactive in making changes.
MESSY BOOKKEEPING IS A COMMON OCCURRENCE WE SEE IN BUSINESS. USUALLY THE BUSINESS OWNER HAS ATTEMPTED TO DO THE BOOKKEEPING THEMSELVES OR THEY’VE HIRED AN UNQUALIFIED BOOKKEEPER.
No matter how it happened, it’s good to realize the current state of your accounting and get it on track.
If you are a service business, measuring and monitoring your Key Performance Indicators (KPIs) will help you determine if you will hit your business goals. By tracking KPIs you know well ahead of time if you're on target.
Guess what gets pushed to the back? Accounting.
I see this a lot in business. The owner thinks “I’ll get to that later”, but there always seems to be something more important. Some immediate fire to put out. After a while it becomes a bigger project than you have time for so you continue to ignore it until it’s tax time or your banker needs a financial statement.