Solicitors

Why you need a specialist accountant on your side

The Solicitors Regulation Authority’s Accounts Rules are not only complex but need to be strictly adhered to, as even the smallest of errors may cause a breach. The rules are frequently updated and with the last change implementing immediately (i.e. 6th October), this meant virtually all legal practices following two sets of rules in one year.

The latest rules state the following “It is strongly recommended that accounting records are written up at least weekly, even in the smallest of practices, and daily in the case of larger firms”.

We have been advising solicitors for many years. Our experience involving advising the individual partners and the practice means that we have a detailed knowledge of the issues relating to solicitors.

Our particular areas of expertise include:

We can assist with the practical application of the Solicitors’ Accounts Rules, including handling client money, controlled trusts and the need to maintain a central register, client reconciliations including providing you with a pro forma schedule to carry these out efficiently in accordance with the Rules, and complying with the interest Rules.

We review accounts and circumstances to ensure all available tax reliefs are considered and claimed as appropriate.  We provide a comprehensive set of annual accounts detailing firms’ performance. We meet to discuss these accounts to help you to reach conclusions about ways to improve performance.

We assist in valuing your work in progress so that it is not unnecessarily high, thus minimising your tax liabilities while still providing a valuation which is acceptable to HMRC.

We can assist in establishing a structure for partners’ capital and current accounts, determining appropriate amounts for partners to leave in the firm as capital and establishing what is available for them to draw out on a monthly basis. A clear policy on partners’ drawings greatly assists in managing cash flow.

Have you thought about your business structure? Is a partnership the best option for you or should you become a limited liability partnership (“LLP”) or a limited company?  Some legal firms have already moved away from a partnership arrangement. We can advise you what’s involved, and the pros and cons of each business structure.

We can assist in drafting partnership agreements and resolving disputes. There may be issues with the ongoing running of the firm, or perhaps succession planning for new partners or retiring partners, including the valuation of goodwill or the structuring of a deal. A merger or a takeover of another practice may be considered to strengthen your position in the market place. We can assist in all these areas.

Finally, have you considered whether or not to own property in the firm? How is this reflected in the accounts? How would the non-property owning partners be dealt with, including the treatment of property expenses and the charging of rent? We can assist with this.