Practicing law comes with many challenges and risks, as does becoming an entrepreneur. When starting your own law firm, you’re taking on two of the toughest occupational challenges possible.
One of the many time-consuming and risky areas of taking on these two challenges lies in the accounting system of the law firm, and the personal responsibility of the attorney. Due to several factors, lawyers are at a higher risk of being audited – which can lead to expensive fees, a significant investment of time, and if negligence or illegal activity is found, could even lead to jail time or disbarment.
The Clio blog recently featured Five Reasons Lawyers Are More Likely to be Audited, written by Kahuna’s Michael Luchies and Carin Weiss Krolikowski. The article covers five of the leading reasons lawyers are at a higher risk of an audit and how they can lower that risk.
Looking to lower your risk of being audited? Here’s an excerpt from the article:
“Every entrepreneur is responsible for the taxes they submit. This responsibility shouldn’t be taken lightly, but it doesn’t have to be done alone either. The best way to immediately lower your risks of being audited is by working with a trained professional accountant that specializes in working with attorneys and law firms.
If that isn’t an option, educating yourself on how to properly track and record trust accounting related transactions and documents are key. It’s also important to dedicate yourself to capturing and recording transactions daily. You always want to have a paper trail that can show third-parties how and why you made specific entries.”
To read the full article and see the five reasons you’re more likely to be audited as a lawyer, visit the Clio practice management software’s blog here. To get a better handle on your firm’s finances, see how Kahuna Accounting works with small and solo law firms to free up their time and protect their business.
Also read: Being Audit-Proof Has Its Benefits: Attorney Matt Mickle Kahuna Accounting Case Study