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By Jennifer Ramovs, Esq.
What you should be doing to close out your firm's fiscal year 2022.When people tell us there are only twelve more Saturdays until New Year’s or a certain number of "shopping days till Christmas" it often makes us gasp. How is this year almost over?!? We go into holiday planning mode, making (tentative, perhaps) travel plans, gift buying, holiday parties (either small or vaxxed, or both), and hopefully we look at how we can volunteer our time giving back to our community during the season.
The reality is that the year is almost over for your business, too. Your law firm has end-of-year obligations that you should tend to, so that you are in the best position to start 2023. Here are some things you should be looking at.
Budgets. If you have a budget for 2022, how are you doing? If you don't have a budget for 2023, now is the time to get started on one. And don't just create a budget by looking at last year's expenses - plan for any personnel changes, equipment purchases, lease renewals or office moves, conference attendance, etc. Make sure your accounting system is properly configured to track expenses in a way that makes reporting easy and that can provide you with real insight as to where your money goes each month.
WIP. Review your aged Work in Progress (WIP, unbilled time). Your time and billing system should be able to report WIP by responsible attorney so that you can bill out any files that can be billed. If there are files with time that should be written off and closed, do that now. No sense carrying over WIP or balances you will never collect to the new year.
Accounts receivable. What does your 30-60-90 day aging report show you? Are there receivables older than 90 days? Is it truly uncollectable, and if so, why? Maybe you need to employ stronger collection efforts? Of particular importance here are the costs advanced that you may need to write off - and don't forget to use the
IRS Attorney Audit Technique Guide to understand the implications of writing these types of things off. And of course, consult with your CPA!
Stale bank items. Review any stale items on your bank reconciliations - no uncleared deposits and no stale uncashed checks greater than six months old. Review and balance your unallocated payments or credit balances. Make sure any money that should have been refunded or moved to trust has been appropriately handled.
Trust account. Review your trust account to be certain that you transferred any amounts to operating that you have rightfully earned and can transfer and confirm there are no amounts due to be returned to a client or sent to the New Jersey Clerk of the Superior Court – Trust Fund Unit. You should do this every month - but make sure you do it before the year's end.
Data entry. Finish any data entry for the year - make sure all client payments are posted, all bills are finalized, accounts payable are handled, and payroll is posted. Reconcile all of your bank accounts, including the three-way reconciliation for your trust accounts.
Tax forms. Review your list of vendors and send W-9s as needed. Review the requirements (basically anyone who is not incorporated should get a W-9). LLCs require 1099s unless filing as a corporation (if filing as partnership they are required to get them), so best to send W-9s to them too if uncertain. When in doubt, put the onus back on the vendor by sending them a W-9, or ask your CPA about the rules.
If you struggled to take care of the end-of-year items in 2022 - make sure you start 2023 by putting the right people, process, and technology in place to make year-end preparation a holiday treat! And for a more-detailed information about preparing for year end, visit the
Money section of the bar’s PracticeHQ.Jennifer Ramovs, Esq., is director of practice management for Affinity Consulting Group.
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