Legal Bookkeeper in Pretoria.
Legal Bookkeeping requires you to know the difference between the Business transactions and the Trust transactions. Moreover maintain accurate records to ensure your attorney is compliant with the rules and regulations set our in the Act of 2014 and governed by the Legal Practice Council.
Trust account
Your clients rely on their attorney to hold and keep their funds in a trust. Trust accounting has a lot of rules and responsibility. Keep accurate records of all the Trust account transactions. Make sure you follow the rules as set out in the Legal Practice Act 28 of 2014. It is of utmost importance that attorneys comply with the trust account regulations to avoid serious problems with the Legal Practice Council.
There are a number of legal accounting software packages that take the rules into consideration. They give you the tools to track and reconcile all the money that you receive and pay out of the Trust account on behalf of your clients. The software should also ensure that fees are earned before they are paid out of the Trust account. This will prevent overdrawn client accounts. All interest earned in the Trust account must be paid to the LPC on a monthly basis. The auditors submit a report to the LPC annually to reconcile the interest earned and paid over.
Accurate tracking
Maintain accurate tracking of income and expenses in the attorneys bank account. An example is when a client pays for work already done and invoiced, the payment should be paid into the firms business bank account. When paying an expense for a client and there are no funds available in the client’s account then this must be paid from the attorney’s bank account and not the Trust account.
Section 86(4) Investments / Withdrawals
When an investment is made on behalf of a client, firstly the clients trust funds are withdrawn from the Trust account. Then deposited into an individual Section 86(4) account, in their name. The interest earned on the investment belongs to the client and accurate tracking is essential. Separate investment ledgers are kept for the investment. The main difference between Section 78(2)(a) and 78 (2)(A) – both are investments but the interest on (a) is paid to the LPC and the interest on the (A) belongs to the client. A small portion of the (A) ‘s interest is paid to the LPC monthly.
Cash Flow and Management accounts
Firstly keep record of business transactions, this reflects the receipts and payments from the Business Bank account . Payments are for the running of the business. For example, paying the telephone, salaries, bank charges and SARS for VAT or Tax, or a partner a share of profit (Capital account). Some payments are made on behalf of clients, these are called disbursements. More important is Cash Flow for the attorney to be able to make forecasts. In addition to that is to run their business effectively.
Trust Transfers
Good accounting software packages allows the bookkeeper to process an automatic trust transfer. This will include all Matters with trust funds available, when the client has been invoiced and when there was a disbursement. If a Matter has either a trust debit balance or a business credit balance, a reverse transfer will be generated.
Bank Reconciliation
Reconcile all transactions in both the Business bank account and Trust bank account monthly. Print the reconciliations and keep on record. The auditors will check them when they do their annual reporting.
Correspondent
When an attorney acts on your behalf in an area that falls outside your jurisdiction he is called an Agent or a correspondent.
Read more about our services: https://ndpbookkeeping.com/services/
More about the act: https://www.gov.za/documents/legal-practice-act#
I am a Legal Bookkeeper in Pretoria East and work with a number of attorney firms. Please contact me for more information: https://ndpbookkeeping.com/contact-us/