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Does Your Do-It-Yourself Accounting Have You On Course for An 18 Month Suspension?

Posted on | by Ruby Watt | Leave a Comment on Does Your Do-It-Yourself Accounting Have You On Course for An 18 Month Suspension?

Do-it-yourself bookkeeping is on the rise.  The promise of easy-to-use bookkeeping and time-saving sounds great, but often ends up not fully coming to fruition.  It becomes easy to miss some financial aspects since your expertise is law, not accounting or bookkeeping.  This issue has become so prevalent that, up to 60% of complaints against attorneys concern, either directly or indirectly, books and records violations.  The degree to which attorneys are punished varies, but in one case, “a solo practitioner was suspended for 18 months for a number of violations including the failure to safeguard client funds and maintain his law practice’s books and records as required by Rule 1.15.  He also violated Rule 8.4 by misrepresented the status of books and records.”1

The reality is that your bookkeeping must be fully comprehensive, absolutely consistent, and expertly competent.  There is too much at stake professionally and personally to fully trust your livelihood to a program or a bookkeeper who is part-time into bookkeeping and part-time into social media promotion.

Comprehensive
Your law firm books are either current or not current, thorough or incomplete, reconciled, or in a wreck.  The great truism in accounting is that it is black or white.  Partial completion of your books is at best misguided and at its worst, misleading.  Incorporating all aspects of your firm from advance payments to trust account payments is necessary to have confidence that your books can withstand an audit.

Consistency
Consistent bookkeeping is the habit that creates up-to-date, current, and accurate books.  The habitual practice of categorizing, inputting, reconciling, posting, and confirming is often the last “important” matter that receives our attention as business owners.  Implementing the time to learn and master the concepts and then aggregate all of the necessary records often takes more time than we expect.  Blocking more time from your schedule to then accurately update, maintain, and keep these records is often costly (in regard to your hourly cost) and just not practical.

Competency
The ability to do something well is generally regarded as a competency.  You went to law school, so it is reasonably assumed that you have a great deal of competency in regard to the practice of law.  The reality is that your competency doesn’t extend into the area of accounting and bookkeeping.   One in three small businesses, including law firms, hire a qualified bookkeeper and only 23% of all small businesses hire an accountant.  Competency is important because it takes no fewer than 40 credit hours of study to earn the opportunity to take the CPA exam.

The idea of competency goes both ways.  Some people hire a CPA and that’s a great first step to get your firm on track.

It’s only the first step.  If you have a CPA with no legal credentials, then you are only partially fulfilling the needs of your firm.  You need to get on the fast track to success and growth.

The reality is that you need a CPA firm who has competency in the field of law.  If not, you are only really getting a one-sided view of the bookkeeping and accounting that you need.  You truly need a firm that has an intricate familiarity and understanding of the practice of law and how that pertains to certain records and bookkeeping.  You need an accounting firm that is able to understand the many different practice management systems in use (Clio, PracticePanther, ActionStep, etc.).  You need an accounting firm that is able to understand and operate different bookkeeping programs (QuickBooks, Xero, etc.).

Three Simple Questions You Should Be Asking
If you currently are working with a bookkeeping and accounting firm, ask the following questions to see if their competencies match your needs:

Are you competent in the use of Clio, PracticePanther, or ActionStep?  To what degree have you used them?
Are you competent in the use of other bookkeeping software besides Quickbooks?  If so, which
ones?
Are you competent in compiling Key Performance Indicators (KPIs) to show me how my firm can make changes to focus on growth?

Is There A Better Way?
If your current bookkeeper or accountant also seems to be a part-time social media influencer, then you may want to reconsider.  You need a firm whose sole focus is analyzing your firm through the lens of law, bookkeeping, and accounting 100% of the time.  In fact, firmTRAK is the only bookkeeping and accounting firm founded by lawyers and accountants.  We are uniquely able to help put your firm on the fast track to success and growth.

We realize that you went to law school to become a lawyer, not to reconcile accounts and billing information.  We work seamlessly with PracticePanther, Clio, Xero, Quickbooks, firmTRAK KPI Reporting, and ActionStep to automate your business services.

An Industry First
In addition to bookkeeping and accounting, firmTRAK provides an industry-first Key Performance Indicator cloud-based platform called firmTRAK Visualize.  This gives you the ability to harness your practice management data to unlock the true potential of your law firm with instant, ready-made key performance indicator (KPI) reporting.  This will allow your firm to base decisions on accurate, real-time business reporting and easily maximize your strengths and make corrections in areas that need improvement.  You’ll be able to easily see your financial and practice trends with firmTRAK Visualize.

Maximize Your Time and Your Money
Instead of just looking at your firm through the lens of accounting and bookkeeping, we have a unique ability to analyze your needs through the additional lens of practicing attorneys.  Using firmTRAK will allow you to completely transform your law firm’s finances and performance starting at $499 per month for small firms.  firmTRAK is an automated accounting, bookkeeping, payroll, and reporting solution built to streamline your business and unlock your growth.

We’d love to prove our value to you with a quick 15 minute phone call.  Please fill out our questionnaire here (hyperlink will be inserted here) and we will call you to set up a time.  In this case 15 minutes could truly save you more than just money.  We can help save your firm time, money, and get you back peace of mind and a focus on what you went to law school to do – help people.

Upcoming Series
Three way trust reconciliation – we know that you didn’t go to law school to become a banker or money manager, but the fact is that if you agree to hold money in trust, you take on a non-delegable, personal fiduciary responsibility to account for the funds as long as they remain in your possession.  The legal and ethical obligation to account for those funds is yours alone, regardless of your lack of financial knowledge or how busy your practice is.  Failure to live up to this duty can result in personal monetary liability, fee disputes, loss of clients, and public discipline.

Wouldn’t it be helpful to have a system to help take this off your hands with guaranteed compliance?  firmTRAK is your solution to this state-mandated responsibility.  Keep an eye out for our upcoming three-part series on trust reconciliation.

Source: 

1“BOOKS AND RECORDS VIOLATIONS CONTINUE TO PLAGUE LAW FIRMS.” Books and Records Violations Continue to Plague Law Firms, 2016, virtualparalegalservices.com/blog-entries/books-and-records-violations-continue-to-plague-law-firms/.

 

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Don’t Step Over A Dollar to Pick Up A Penny

Posted on | by Ruby Watt | Leave a Comment on Don’t Step Over A Dollar to Pick Up A Penny

 

Perhaps you’ve heard the phrase, “don’t step over a dollar to pick up a penny.”  It refers to the idea of doing all you can to save money, yet costing yourself more in the end.  Unfortunately, this happens with many law firms regarding accounting and bookkeeping.  This can come crashing down in a hurry at tax time.  According to a Forbes.com article, “the IRS has long found lawyers to be a fruitful source of revenue and information.”  It goes on to detail a program that the IRS has called Project Esquire, which specifically focuses on prosecuting members of the bar.  The IRS did release guidelines for auditing members of the bar and highlighted some specific areas to work on.  The article goes on to say that the guidelines,  “direct agents to look for good internal accounting, billing software, and to pay special attention to the adjustment log that reconciles the output of the time and billing system to the appropriate accounts in the general ledger.  Lawyer trust accounts are also vital sources of information.”1

In order to alleviate this concern many attorneys seek to do the bookkeeping themselves, hire an in-house bookkeeper, or hire an outside company.  Let’s take a look at the true cost of each option and see if there is a better solution.

Do It Yourself
This option is usually done by smaller firms that have 1-4 attorneys in the firm.  The common thought is that you can just tabulate everything into QuickBooks for the low price of $83 for the Advanced level.  Seems like a great deal, right?  Let’s see what the true cost is.  In order for this option to work, you’ll need to spend about 5 hours per week inputting expenses and data.  If you figure the average hourly attorney rate of $250, you are spending $1250 per week on yourself to complete those tasks.  That equates to $5,000 per month that you are spending on your hourly rate to complete the tasks needed for the $83 program to do your bookkeeping.

Hire An In-House Bookkeeper
This option is pretty straightforward.  You simply hire an in-house bookkeeper.  According to Zip Recruiter 2 , the average yearly rate is $4,878 per month.  The advantage is that your person is in-house and will work 40 hours per week to reconcile accounts and make sure that billing is correct.  The downside is that you’ll then have to pay benefits and payroll taxes on this bookkeeper.  Additionally, it takes time to find the right person.  Again, take into account the fact that you’ll need to conduct a search and conduct interviews to find the right person.  So, if we are being conservative with a 10 hour estimate to conduct a search and interviews, then you’re really looking at an initial cost of $2,500 plus the extra employee salary.

Hire an Outside Bookkeeping Company
There are options that exist to hire outside companies to complete bookkeeping work for your firm.  The average cost on that can depend on the size of your firm, but most of the time, you’ll be looking at $1000-$2000 per month.  If you hire the right people, then that will also include the cost to prepare your taxes.

Is There A Better Way?
The aforementioned options all reference the idea of only bookkeeping and some accounting aspects.  Bookkeeping and accounting just scratch the surface of the technology and performance analytics tools available to law firms in 2020 and beyond.  What if there were a company that could provide bookkeeping and accounting and leverage those basics into your practice management system and then provide key data-driven insights that would show you how your law firm could be more successful?

There is.  It’s called firmTRAK.  We realize that you went to law school to become a lawyer, not to reconcile accounts and billing information.  Additionally, we work seamlessly with PracticePanther, Clio, Xero, Quickbooks, firmTRAK KPI Reporting, and ActionStep to automate your business services, plus give you the ability to harness your practice management data to unlock the true potential of your law firm with instant, ready-made key performance indicator (KPI) reporting.  This will allow your firm to base decisions on accurate, real-time business reporting and easily maximize your strengths and make corrections in areas that need improvement.

Maximize Your Time and Your Money
Remember the saying of stepping over a dollar to pick up the penny?  With firmTRAK, you can make more dollars for pennies compared to the other methods listed above.  Instead of just bookkeeping, using firmTRAK will allow you to completely transform your law firm’s finances and performance starting at $499 per month for small firms.  firmTRAK is an automated accounting, bookkeeping, payroll, and reporting solution built to streamline your business and unlock your growth.

We’d love to prove our value to you with a quick 15-minute phone call.  Please fill out our questionnaire and we will call you to set up a time.  In this case, 15 minutes could truly save you more than just money.  We can help save your firm time, money, and get you back peace of mind and a focus on what you went to law school to do – help people.

Upcoming Series
Three way trust reconciliation – we know that you didn’t go to law school to become a banker or money manager, but the fact is that if you agree to hold money in trust, you take on a non-delegable, personal fiduciary responsibility to account for the funds as long as they remain in your possession.  The legal and ethical obligation to account for those funds is yours alone, regardless of your lack of financial knowledge or how busy your practice is.  Failure to live up to this duty can result in personal monetary liability, fee disputes, loss of clients, and public discipline.

Wouldn’t it be helpful to have a system to help take this off your hands with guaranteed compliance?  firmTRAK is your solution to this state-mandated responsibility.  Keep an eye out for our upcoming three-part series on trust reconciliation.

Sources: 
1Wood, Robert W. “Dear Lawyers: Get Ready For IRS Audits!” Forbes, Forbes Magazine, 13 Sept. 2011, www.forbes.com/sites/robertwood/2011/08/26/dear-lawyers-get-ready-for-irs-audits/#51a2268e4747.
2“Q: How Much Do Work From Home Bookkeeper Jobs Pay per Month in 2020?” ZipRecruiter, www.ziprecruiter.com/Salaries/How-Much-Does-a-Work-From-Home-Bookkeeper-Make-a-Month.

 

FTSBlog

Using Smart Goals to Achieve More

Posted on | by Ruby Watt | Leave a Comment on Using Smart Goals to Achieve More
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As a small business owner, you’re likely always looking for ways to achieve more. Maybe you made a New Year’s resolution about it. You might have resolved to make more money, find more clients, or grow your business. It’s fantastic to have an idea of what you want to do, but how will you know whether or not you’re successful?

That’s where SMART goals come in. SMART goals help you identify what you want to do, when you want to do it by, and how you’ll get it done. They give you a systematic way of deciding what goals are important—and realistic—and evaluating whether or not you’ve attained them.

SMART goals help you plan for success. They turn your resolution into action.

What are SMART goals?

SMART goals stand for goals that are Specific, Measurable, Achievable, Realistic, and Timely.

Here’s an example of a goal that is not SMART: “I want to grow my business.”

Why isn’t it SMART? It says nothing about how the business will grow, how long growth will take, how it will be attained, or how success will be measured. It’s vague, so you have no idea if you’ve been successful.

Growing your business is a great starting point for a SMART goal because you know there is something you want to achieve.

Now you need to use SMART goal setting to lay out your plan.

How to use SMART goals

To use SMART goal setting you need to ask yourself important questions. Let’s take the above example of growing a business.

Specific: Ask yourself how you want your business to grow. Do you want more clients? More revenue? More employees? What does “growth” mean?

Measurable: How many more clients do you want? How much more money do you want to earn? How many more employees do you want? Numbers work best here.

Achievable: How do you plan to reach your goal? Do you have the resources to make it happen?

Realistic: Do you currently have one client but want 100 within a week? It’s great to have goals that challenge you but asking yourself to do the impossible sets you up for failure.

Timely: How long will you give yourself to find new clients or employees? Be specific with deadlines. Don’t just say you want something done ASAP or within the year. Set a reasonable, firm deadline that gives you a chance to review your goals and determine how successful you’ve been.

Here’s the same thought above, but written from a SMART perspective:

By March 31, I will have signed three new clients for my services by purchasing advertising in the local newspaper, attending networking events, and posting on my blog once a week.

As your deadline approaches, you’ll know to review your client list and see if you’ve signed three new clients. If you have, great! If not, review your action plan and see where changes could be made.

Final thoughts

It’s great to have an idea of what you want to do, but without SMART goals all you have is an idea.

The great thing about SMART goals is you’re not limited to one goal at a time. Let’s say you want to grow your business both in terms of clients and employee size. You can set SMART goals for both those areas and work toward both at the same time.

Once you’ve achieved your goals, you can look forward to setting additional successful goals for yourself in the future.

Get in touch with us to find out how we can help you reach your business, financial and lifestyle goals.

FTSBlog

Tips to Keep Your Business Finances in Order

Posted on | by Ruby Watt | Leave a Comment on Tips to Keep Your Business Finances in Order
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If you’re like most small business owners, you spend the majority of your time managing daily operations, keeping customers happy, and looking for new ways to grow. Spreadsheets, cash flow analysis, and financial projections are probably not your first passion.However, measuring profitability, creating realistic budgets, and planning ahead for the future are crucial to your professional success.

Follow these four tips to get a handle on the numbers, and take control of your business finances.

Move to the cloud

How much of your time do you spend hunting down financial documents, poring over spreadsheets, and tracking expenses?

Constantly searching for and trying to integrate scattered data makes it nearly impossible to close out the monthly books quickly and efficiently. Plus, reliance on spreadsheets is a proven liability. Research shows over 88% of all financial spreadsheets contain errors.

Manage your business finances faster and more accurately by moving them to the cloud.

Cloud-based financial management systems have several benefits, including:

  • Integration with all your other operational systems for the quick retrieval of the most current data;
  • Automation of daily financial processes so you can step away from spreadsheets;
  • Efficient expense tracking that improves accuracy and reduces revenue leakage; and
  • Easy collaboration with team members and stakeholders.

Conduct regular financial reviews

Experts agree that vigilance is key to effective business financial management. Each month, set aside time to review your balance sheet, profit and loss statement, and cash flow statement.

Regular monthly check-ups will give you actionable insights into your business performance and growth potential. This information is crucial for:

  • Projecting future revenue, cash flow, and expenses
  • Validating major purchasing decisions
  • Anticipating and mitigating risk

You’ll need this key data, too, if you ever want to apply for a loan to expand and grow your business.

Bring a professional on board

On the surface, hiring an experienced bookkeeper or accountant may seem pricey, but their expertise could mean considerable long-term gains for your business.

A technical financial expert can optimize the efficiency and accuracy of your financial management, granting you peace of mind and added time to pursue growth opportunities.

Plus, most small businesses don’t need full-time professional help. Part-time services are typically enough to help you manage crucial processes, plus a few extras, including applying for a business loan or overdraft, articulating and adapting your business plan and managing sudden growth – for example, hiring new staff, acquiring office space, or determining when to introduce a new product or service.

Final tips

Consider enrolling in a basic bookkeeping or accounting course so you can better understand the fundamentals of business financial management. The knowledge you gain will feel empowering, and can help clarify discussions with your accountant.

Self-education is also key when it comes to investing in financial IT. Be sure to do your research and consult an expert before investing in any new accounting solutions for your business.

Your knowledge, combined with professional support, is the very best route to sustainable, effective business financial management.

FTSBlog

Cybersecurity Tips for Business Owners

Posted on | by Ruby Watt | Leave a Comment on Cybersecurity Tips for Business Owners
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It’s natural for small business owners to think that they won’t be victims of cyber attacks. Most of the news surrounding hacking and data breaches involves large corporations, but that is because that’s where a high number of victims are affected. Hackers may find they have an easier time going after small businesses and start-ups that aren’t prepared for a security breach. So while they might get less information from a small business, thieves will have an easier time accessing that information.

If your company keeps any time sensitive information on a computer network—whether that is personal information, credit card info, or other vital data—you need to ensure your cybersecurity is top-notch, so you, your business and your clients are fully protected.

Here are some tips for enhancing your cybersecurity.

1. Keep your employees informed

The unfortunate truth is that human error is one of the portholes through which hackers can attack your business. Employees are constantly hooked up to your network, whether that’s through email, company-provided computers, or working from home.

Make sure you have security protocols for accessing your network, and ensure your employees are aware of them. Keep a checklist handy that your employees—and anyone who accesses your network—can access. Regularly update your policies to reflect the new techniques cybercriminals develop.

Here are some questions to ask: Are there rules about when employees can be connected to your network or what they can do while connected? Do you have policies about password protection? Are employees allowed to take company laptops and tablets home with them? If so, what are the rules around doing so?

2. Update your network regularly

Your computers, network and system should be updated regularly. These updates provide additional protection for your company. As developers become aware of new threats, they create programs designed to prevent the latest hacker techniques and spread those through updates. Old, outdated networks are easier for hackers to access.

In addition to updating your network, take the time to regularly inspect your system for weaknesses and take the steps to address those vulnerabilities.

3. Be aware of information breaches

It isn’t just credit card information that hackers are after. Personal information, passwords, and other sensitive data can be sold and used for fraudulent purposes. Your business may not collect credit card and other payment information, but that doesn’t mean you don’t have data that’s valuable for hackers.

If you have any information that could be bought, used for fraud or identity theft, or used for extortion, you need to take steps to protect that information.

Once your network has been hacked, you risk losing your customers’ trust. Once that trust is gone, it’s hard to get it back.

4. Keep up-to-date on the latest scams and threats

Monitor the media and security sites to keep yourself informed about the latest techniques being used by scammers so that you’ll be better able to identify them if they approach you. For example, phone calls to your business asking your staff for information, or that there is an issue with the company computers that the caller can help fix.

Final thoughts

Don’t make the mistake of assuming that just because you run a small business or don’t collect payment information that your business is safe from hackers. There is a lot of private information available that hackers and thieves can use to make money from, and businesses small and large are targets.

Be aware of vulnerabilities in your system and take the steps to address them, before it’s too late.

FTSBlog

Three Signs You’re Addicted to Work

Posted on | by Ruby Watt | Leave a Comment on Three Signs You’re Addicted to Work
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Running a small business is hard work. Entrepreneurs know they have to put in long days and give up personal time in pursuit of success. There’s a line, however, between putting in some extra time and becoming addicted to work, and it’s important to know the difference between them.

Being addicted to work—sometimes referred to as being a “workaholic”—can have serious negative consequences for your personal life and your health. Figuring out when you’ve crossed the line and taking steps to gain control over your work life-balance are vital to maintaining a healthy lifestyle.

Here are three signs you’re addicted to work.

1. You work far more than you intended to

Most people have occasional days where they get caught up in work or a project keeps them at the office hours after they should have been home. That’s part of working. The problem is when those become the norm for you, when you’re frequently working 12- to 16-hour days and only going home long enough to sleep and grab a bite to eat.

Even if you have a bit more time than that at home, if you intended to work 40-50 hours a week and you routinely hit more than that, you may need to take a step back from work and enforce a 40-hour work week.

Ask yourself: How many hours should I reasonably work at this business? Am I frequently working more than that?

2. Your health is suffering

If you are showing physical signs of stress, or if you are generally more unwell than in the past, it’s possible that you’re working too much. It may seem like a good idea to put in all the hours you can to make your business successful, but the consequences of poor health can be devastating for your company.

Your decision-making skills may suffer. You may find yourself unable to complete required job duties. You might miss important details, such as vital payments that are due. All have a negative effect on your organization.

Working to the point of being sick is not a sound business strategy. You need time away from work to rest and recover, and give yourself something else to focus on.

Ask yourself: Do I generally feel healthy and energetic? Am I sleeping well? If not, you might need time away from the job.

3. You constantly cancel on people because of work

Unless your small business involves actual life-and-death scenarios, there’s no need to constantly cancel on your friends and family for “work emergencies.” Sure, they can happen once in a while. You might have an important deadline with a client or an urgent phone call with a supplier that pulls you away from your plans.

If you frequently cancel engagements with your friends and family—and if they’ve started complaining about it—there’s a chance you’ve become addicted to work.

Ask yourself: How many times in the past month have I had to cancel plans for something work-related that wasn’t actually urgent? If it’s more than a couple of times, you might need to rethink your work/life balance.

Final thoughts

Running a small business requires a lot of you, but becoming addicted to work increases the risk of burnout. Burnout can be catastrophic for a small business, especially if there is no one else to take over while you recover.

A better plan is to work only as much as you need to and to protect your personal time as much as possible. Listen to your body and the people around you when they tell you it’s time to stop. Enforce hard stops for workdays, after which you must go home. Hire a team that can handle your business while you’re not there, then trust them to do so.

Your business will be better for it, and so will you.

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Resources to Help You Survive – and Thrive – During the COVID-19 Pandemic

Posted on | by Ruby Watt | Leave a Comment on Resources to Help You Survive – and Thrive – During the COVID-19 Pandemic
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As the COVID-19 pandemic deepens its hold across the country, governments and industry leaders are stepping up to help those impacted. To help you make sense of the barrage of information out there, we’ve put together a summary of helpful resources. We will be updating our COVID-19 Resources page regularly, so feel free to bookmark it.

The latest news – Federal Stimulus

On March 27, 2020 the CARES Act was signed into law. This wide-reaching stimulus package is aiming to help families and businesses impacted by the coronavirus. Here’s what’s in that package:

Stimulus payments for individuals and families

Every U.S resident with adjusted gross income under $75,000* who is not the dependent of another and who has a Social Security number that allows them to work will receive a payment of $1,200. Married couples filing jointly will receive $2,400. Families with children under the age of 17 can receive an additional $500 per child.

The exact amount of the payment depends on certain details.

Help for small businesses

The CARES Act has many helpful provisions for small businesses, which the Senate Committee on Small Business and Entrepreneurship details in this helpful guide. Here’s an overview of the most important provisions:

Loans for small businesses

The CARES Act also expanded eligibility requirements for disaster relief loans from the SBA to make it easier for small businesses to access the funds they need to stay afloat. There are some new provisions which we’ve detailed here.

Emergency cash grants of $10,000

Another resource available through the SBA is cash grants of up to $10,000. These do not have to be repaid if the funds are spent on paid leave, maintaining payroll, costs of supply chain disruption or repaying lease, mortgage or other debt.

Paycheck Protection Program

The SBA is also working with a network of 1,800 local lenders who will extend funds to businesses with fewer than 500 employees. A portion of the loan proceeds can be forgiven for certain reasons.

Debt relief for SBA loans

Business owners who take out non-disaster loans from the SBA can have all principal, interest and fees paid by the SBA for six months. This includes 7(a), 504 and microloans, and includes new loans taken out within six months of the date the law was signed.

Payroll tax credit for wages paid

Employers can receive a refundable payroll tax credit for 50% of wages paid to certain employees. This is available to employers whose operations have been fully or partially suspended as a result of a government order or to employers who have experienced more than a 50% decrease in quarterly receipts compared to the previous year. Eligibility criteria is detailed here.

Payroll tax payments may be deferred

Employer portions of Medicare and Social Security taxes for 2020 may be deferred. All deferred amounts are due in two installments, one at the end of 2021 and one at the end of 2021.

There are also some state and other financial support options for small businesses which we have researched and summarized for you here.

Please get in touch if you have any questions.

All the best

FTSBlog

What The CARES Act Means for You

Posted on | by Ruby Watt | Leave a Comment on What The CARES Act Means for You
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Help for small businesses

The CARES Act has many helpful provisions for small businesses, which the Senate Committee on Small Business and Entrepreneurship details in this helpful guide. Here’s an overview of the most important provisions:

Loans for small businesses

The CARES Act also expanded eligibility requirements for disaster relief loans from the SBA to make it easier for small businesses to access the funds they need to stay afloat. These new provisions include:

  • Loans can be approved based on the applicant’s credit score. No prior year tax returns are needed, and a previous bankruptcy won’t disqualify an applicant.
  • Loans smaller than $200,000 don’t require real estate as collateral or a personal guarantee.
  • Sole proprietors, independent contractors, tribal businesses, cooperatives and not-for-profit organizations are also eligible.

Emergency cash grants of $10,000

Another resource available through the SBA is cash grants of up to $10,000. These do not have to be repaid if the funds are spent on paid leave, maintaining payroll, costs of supply chain disruption or repaying lease, mortgage or other debt.

Paycheck Protection Program (PPP)

The SBA is also working with a network of 1,800 local lenders who will extend funds to businesses with fewer than 500 employees. A portion of the loan proceeds can be forgiven if:

  • Employers keep the same average number of employees on payroll for at least eight weeks.
  • Employers do not cut pay by more than 25% for employees making less than $100,000 per year.
  • Proceeds can be used for payroll, rent, utilities or health insurance premiums.

This program is also available for sole proprietors, independent contractors or other self-employed persons up to the amount of their lost income from self-employment. The U.S. Chamber of Commerce has a comprehensive guide to this program, which will be expanded as further details emerge.

Debt relief for SBA loans

Business owners who take out non-disaster loans from the SBA can have all principal, interest and fees paid by the SBA for six months. This includes 7(a), 504 and microloans, and includes new loans taken out within six months of the date the law was signed.

Payroll tax credit for wages paid

Employers can receive a refundable payroll tax credit for 50% of wages paid to certain employees. This is available to employers whose operations have been fully or partially suspended as a result of a government order or to employers who have experienced more than a 50% decrease in quarterly receipts compared to the previous year. Eligible wages include those of employees who have been furloughed or had their hours reduced. All wages for employers with fewer than 100 employees are eligible, regardless of any reduction to hours. This credit is available for the first $10,000 in wages and compensation paid to eligible employees.

Payroll tax payments may be deferred

Employer portions of Medicare and Social Security taxes for 2020 may be deferred. All deferred amounts are due in two installments, one at the end of 2021 and one at the end of 2021.

This also applies to half of self-employment taxes paid by sole proprietors and other self-employed individuals.

There is a lot to work through here but please get in touch with us if you have a question.

December 2019 (3) blog photo

Is Your Firm Losing Out on $38,220 Per Lawyer Per Year in Profitability?

Posted on | by Ruby Watt | Leave a Comment on Is Your Firm Losing Out on $38,220 Per Lawyer Per Year in Profitability?

The simple, yet scary answer is yes.  And there’s a good chance that you don’t even know about it.  According to the 2018 Report on the State of the Legal Market by Thomson Reuters, “the current level of billable worked hours per month is some 13 total hours below the level at the beginning of 2007 (just before the onset of the Great Recession). That represents a total of 156 billable worked hours per year.”

Simply stated, lawyers are billing an average of 156 work hours less than a decade ago.  If you take the average billing work hours missed and multiply it by the average hourly amount billed ($245 average), then you’ll see that it’s costing firms $38,220 per lawyer per year in profitability.

Some firms are operating with a false sense of things going well, yet they are missing out on profits that could make the firm go from surviving to thriving.  To see if this applies to your firm, simply multiply the number of attorneys in your firm by $38,200.  This represents the potential that you may be missing out on.  Is this a significant amount that could help boost the bottom line?

If so, then understanding your utilization ratio on both an office level and billable employee level is crucial.  The utilization ratio is the difference between the number of hours an employee works vs the number of billable hours that employee produces.  

The problem is having that knowledge readily at hand so that your firm can make decisions to positively impact utilization and drive profitability. firmTRAK was designed to solve this problem (and many more). 

Our Productivity Panel outlines hours worked versus hours billed versus hours collected on an office and per employee level. From this, you can determine the profitability of each employee’s time. 

Here’s a video overview of this feature: 

firmTRAK will sit on top of your current practice management system to automate reporting and analysis of key performance indicators that will help drive the success and growth of your law firm.  No more spreadsheets to analyze using a team of people.  The information is instantly configured and available at your fingertips.  Matters are tracked according to the time and overall activity. 

Attorneys can work from remote locations and firmTRAK will be able to make sure that the time spent working remotely is effectively tracked and recorded.

You went to law school to follow your passion for helping people with their legal needs, not to become a business analyst.  That’s where we come in.

We are so confident that firmTRAK can help your firm, that we are offering you a FREE 7-day trial of our program. Please click here to register for your FREE 7-day trial today.