Accountants For Lawyers

Accountancy firms are widely used across many industries, and larger companies have their own accounts departments, management accountants, payroll administrators and so on. Some companies hire or employ chartered accountants, while others may use less-qualified accountancy firms because of the costs involved.

For some smaller businesses and the self-employed, you are not legally obliged to use an accountant - although it's a sensible idea that has many advantages.

However, the legal sector is different: it is imperative that any law firm operating in the UK is seen to be following all legal and regulatory obligations. Your accounting procedure must be transparent and above reproach. Anything other than this will reflect negatively on you and your firm, and you will be accountable to the Solicitors Regulation Authority (SRA). Any breaches of the rules can result in disciplinary action.

Are You Using The Right Accountancy Practice?

Most legal firms hire an accountant from a standard practice. But is this enough? How well does your current accountant know about how law firms operate? Are they familiar with the SRA accounts rules?

At Auditox Accountancy, we have a specialist team of accounting technicians for legal professionals. They are trained to deal specifically with law firms and those who offer legal services. They are up to date with the solicitors accounts rules and can offer sound advice on all aspects of accounting relating to legal practice.

We believe that everyone should have access to specialist advice and professional accounting services for a small monthly fee.

Aside from a detailed knowledge of the legal market, our dedicated accountants provide all of the basic accounting procedures you'd expect, including the following:

Annual Accounts

All companies, no matter the size, are expected to produce year-end accounts annually, although the rules for reporting accounts differ depending on the type of company or whether you are operating as a sole trader. For the latter, the process is simpler; you'll need to submit a self-assessment tax return to show your annual profit.

If you run a limited company or small business, however, you need to produce statutory year-end accounts. And while these don't legally have to be compiled or checked by a qualified accountant, it's wise to do so - particularly for law firms who need to ensure that everything is 100% accurate and processed in accordance with the strict rules of the Solicitors Regulation Authority.

This is an area in which Auditox accountants excel. We will prepare your year-end accounts accurately and present them to HMRC and Companies House in a timely manner.

A well-presented set of accounts is a must for any successful, thriving and forward-thinking business, but this is especially the case for a legal firm. Transparency, openness and precision are key issues for any law firm, and this applies equally to accounting matters. You can be assured that Auditox will meet these standards in all of your accounting and business procedures.

Compliance

All law firms must comply with strict legal and regulatory obligations relating to ethics and government guidelines. While every business is expected to follow the rules and laws relating to business practice, compliance requirements for legal services are much stricter - they must be seen to be following both the spirit and letter of the law.

We help clients to keep in line with all compliance regulations and maintain a flawless record in this regard.

Tax Planning & Tax Advice

Nobody really wants to pay taxes if they're honest about it! However, tax planning is a fact of life, and it's important to do things correctly - especially for legal professionals.

It's also tempting to try to pay less than you are supposed to, but this often backfires when HMRC discovers that you have underpaid. You will have to pay back the shortfall, and you may well be penalised with a fine.

This is never good news, but for a lawyer or law firm, it can have further repercussions. You need to be extremely careful that you don't contravene rules laid down by the Solicitors Regulation Authority and the Law Society. In extreme cases, this could lead to you being struck off or disbarred.

However, Auditox will examine your tax affairs to make sure you only pay what is necessary. There are no rules against being tax efficient, and this will eliminate the chances of being pulled up by HMRC in the future. We will reduce your tax liability legally, saving you money and increasing the stability of your business.

Tax Returns

If you run your own practice or act as a freelancer (self-employed), you will need to submit a tax return each year. This is always a thankless task that few people look forward to, and for those in the legal sector, it can be even more involved.

Your dedicated Auditox accountant will be on hand to offer guidance and support at every stage, making the process more straightforward. Your returns get completed much more quickly, and you get to focus on your work.

IR35 (Off-Payroll Working Rules)

IR35 is a government initiative established to tackle a perceived tax avoidance loophole whereby employees could avoid paying income tax and national insurance contributions as they are paid through an intermediary (limited companies and partnerships) and are not on the payroll.

The introduction of IR35 hit legal professionals hard and is predicted to more or less end the 'gig economy' among lawyers in the near future. Where an individual is considered an 'employee' purely for tax purposes, the company will be liable for tax and NIC.

The rules are complex, and while you might not believe that you are affected, the company that uses your services might be. On the whole, IR35 only applies to medium and large legal firms, but we will assess your business structure to see whether these rules apply.

Auditox Accountancy's advisory services will guide you as to the best way to negotiate the IR35 system and stay within the guidelines.

Business Planning

Any successful business needs a coherent plan for the future, whether you're operating as a freelance or running a limited company or partnership.

We will advise you on company structure, such as the benefits of Limited Liability Partnerships as opposed to regular partnerships, and use our expertise to recommend a comprehensive business plan that significantly boosts your chances of future success.

Our advice includes such matters as:

• Establishing the overall value of your law firm
• Retirement planning
• Increasing the value of your practice
• Investigating acquisition
• Finding out how much capital new partners should invest
• Succession planning

Many firms in the legal sector have non-lawyer managers, owners or investors, and the best way for these to operate (in England and Wales only) is to become an ABS (alternative business structure).

We will advise you on all aspects of transitioning to an ABS from start to finish, beginning with an initial consultation to see whether this is the best course of action for you.

Starting A Law Firm

Setting up your own company can be a frustrating and overwhelming task, especially for anyone aspiring to operate within the legal sector.

Auditox Accountancy will assist you throughout the process to get your accounting, bookkeeping and payroll system up and running. We will also provide training in the use of the software and will guide you through all the necessary forms and red tape to ensure that nothing is forgotten.

Mergers & Acquisitions

At some stage, you may be in a position to expand your firm by merging with or acquiring another.

This is rarely a straightforward process, so you'll need all the help you can get!

Here's how Auditox accountants will assist you:

• Valuation of the firms involved
• Negotiation of the terms
• 'Due diligence' report to identify potential risks
• Identifying tax implications
• Highlighting cost savings
• Projecting profit share
• A finely-tuned merger/acquisition checklist complete with deadlines

This allows you to proceed in confidence, knowing that the risks are minimal and that your decisions are sound. All aspects of the merger or acquisition will be in keeping with the solicitors accounts rules, which is one less thing to worry about.

Financial Health-Check

It's always wise to have the full picture regarding the state of your finances at all times.

We will perform a full check on your financial reporting and management information process to see how effective it is. We then make recommendations to improve the standard and effectiveness, which gives you a better idea of the performance and position of your firm, allowing you to take decisive action when necessary.

HMRC Investigation Protection

HMRC frequently investigates taxpayers at random, even if there are no grounds to suspect them of wrongdoing. This is not only inconvenient, but it can be costly for the business or individual involved. Even if you are found to be fully compliant, it can be a time-consuming and worrying experience.

We will support you throughout the whole process, providing timely advice to bring it to a timely and satisfactory conclusion. Where possible, we'll liaise with HMRC on your behalf to ensure that the investigation runs as smoothly as possible.

We can also provide advice concerning insurance against being investigated by HMRC and Companies House if you wish.

Learn more: How likely are you to be investigated by HMRC?

Learn more: 5 stages of tax investigation

Learn more: How far back can HMRC go?