Every year ends. Don’t miss your opportunity this year to focus on the tasks that can deliver a better financial position next year.
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The end of the year is upon us, which means it is time to prepare for the upcoming year. While it can be easy to put aside finances and accounting in favor of client work, failing to put your firm’s financial health first can be a costly mistake. To set your law firm up for success in the new year, make time to prepare your finances now. And make sure you’re targeting the right tasks by using our Year-End Law Practice Checklist available for download here. (RELATED: 2019 Year-End Financial Close Checklist, Cosmolex Video)
Critical Tasks to Remember at Year-End
The year-end soon gives way to tax time and the beginning of the race to meet the goals you’ve set for next year. To make sure you’re ready to go on January 1st, don’t forget these critical year-end tasks.
Review Your Financial Information. Look at your current financial information to ensure you’re tracking everything correctly. Forecasting for the new year requires up-to-date, accurate financials, including:
- Revenue. You should do an overview of your current year revenue and last year’s revenue. Check to see if you met your financial goals and what might need to change to meet next year’s goals.
- Budget. Go over your budget for the year and your current revenue and expense reports. You’ll want to look for your current standings, whether in the red or the black. Changes to your budget for next year should be prepared for ahead of time.
- Expenses. Compare your expenses with those in previous years. Identify areas where you could be overspending or losing profit.
Collect on Outstanding Payments. Always be diligent in collecting outstanding payments. Run an accounts receivable report to see which accounts remain unpaid. If collected by the end of December, you’ll save yourself the headache of collections in the year to come and a potential accounting nightmare. (RELATED: Our blog posts on billing)
Prepare for Tax Time. Review your quarterly tax payments to determine whether you owe any additional payments, which can help you an underpayment penalty. Also, look at your expense report and take note of any missing entries. Search for any missing receipts and reimburse yourself for expenses taken from your personal account. (RELATED: 2018 Tax Reform Essentials for Lawyers)
Set Yourself Up for a Successful New Year. If you’re consistently seeing a loss, take some time to see where you might be leaking necessary profit. Start by checking your vendor pricing such as your office space rent or internet service to see if it’s still the best choice. It’s also a great idea to analyze your firm’s pricing strategy to ensure you’re offering competitive pricing while remaining true to your bottom line.
The best way to set yourself up for a financially successful new year is to start with a strategy. If you’re a solo lawyer or a small firm, consider hiring a professional to help you with financial forecasting. By forecasting, you’ll understand your current financial standing and how to best reach your goals for the new year. (RELATED: Best Practices on Finance in our Startup Kit)
Continue to Grow by Improving Your Firm. A firm poised for growth is focused on more than just finances. In fact, a firm focused on growth is always finding places to improve. To discover where your firm could improve, take the Lawyerist Small Firm Scorecard(TM) assessment to find out.
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