Solicitors, barristers and others in the legal profession need accountants to ensure compliance with complex financial regulations, manage trust accounts accurately, handle tax obligations efficiently, and provide the financial clarity necessary to focus on delivering exceptional legal services.

Without cash, you cannot pay your bills! Not being able to pay your bills will inevitably lead to company failure, even if debts mount up slowly.

Understanding when cash is coming in and consequently required to go out is crucial to keeping your practise alive.

You need to keep track of who owes you money, and who you owe money to. Laying the proper groundwork with the help of startup accountants will prepare you for managing cash flow efficiently and effectively, including systems for:

• Issuing and receipting invoices
• Chasing late payments
• Paying bills

Budgeting in the legal profession is particularly challenging due to the unpredictable nature of case outcomes, fluctuating workloads, and the need to account for variable expenses like court fees, expert witness costs, and client disbursements. 

We can help by creating detailed financial forecasts, identifying cost-saving opportunities, and implementing robust cash flow management strategies. Their expertise ensures that legal professionals maintain financial stability, comply with regulatory requirements, and allocate resources effectively to support both immediate needs and long-term growth.

If your business requires that you employ staff, then this is another area where you need to stay on top of your accounts.

You’ll have certain obligations regarding payroll and pensions, including National Insurance contributions and auto-enrolment.

This is yet another administrative burden, but it’s one you can easily lighten if you outsource your legal accounting.

The VAT threshold is £90,000, at which point you must register for VAT. But are there tax advantages for legal professionals if they register for VAT anyway?

• Registering for VAT can prepare you for growth and help to create a positive perception of your business – if you’re already VAT-registered, you don’t have to worry about hitting the threshold.
• You can reclaim any VAT you’re charged for goods and services, which may amount to more than the VAT you collect from your customers.

It all depends on where your business is at currently, and where you see it going. An accountant can offer you a fresh, impartial perspective to give you the clarity you need.

Unit economics form the business blocks of your business and they cover:

• Your customer acquisition costs, and
• The revenue you get from each customer over their lifetime.

The lifetime value (LTV) of your customer should be more than the customer acquisition cost (CAC) associated with them. This is what makes your business profitable.

Once you start trading, unit economics become your bread and butter – they’re essential to how your run your business and the decisions you make.