Law firms in the UK, together with hard working sole practitioners are crying out for legal cashiers. Have you ever thought about running your own business and becoming self-employed? Often, we fall into working in law firm's accounts department, but bookkeeping specialists for the legal sector are in demand.
The Institute of Legal Finance & Management (ILFM) is the professional body supporting legal cashiers through specific qualifications, continued professional development and a real time community.
Accounting and Bookkeeping Best Practices for Law Firms
As a legal bookkeeper (known as a "legal cashier") you will no doubt already have a head for numbers, organisation skills, and understand financial data but do you know the requirements of a legal cashier in law firm accounting?
Best practices for accounting and bookkeeping in law firms across the UK focus on understanding the regulations and accounts rules (for example, if a law firm is regulated by the SRA then the finance team must know the SRA Accounts Rules, which we have as part of our qualifications and also offer continued online training on).
Double ledgers are a big part of being a professional legal cashier, as this bookkeeping specialism requires understanding a client account and an office account. The client account must stay protected and compliant, which is why the ILFM is the go-to for understanding these accounts.
Solicitors, lawyers, paralegals and fee earners require their "books" and finances to be compliant and adhere to its regulator. Client invoices must have backed up financial records and its financial responsibilities lie in protecting its client funds and a reporting accountant will check everything is in order when they run their annual audit.
Depending on the size of the practice and the area of law, often there are many financial transactions occurring, including payroll expenditure, client payments, disbursements, etc. The reporting accountant will help the lawyers maintain a proper record of every financial transaction in the firm and correctly record expenses and revenue, however it’s the legal cashier that will keep the cash flow and compliance on track.
Work out your freelancer fees and rates
How to become a freelancer in the UK? Start freelancing by doing some market research into your industry by looking at roles advertised on recruitment sites for a start. You already have your target market sorted, but why not look at sole practitioners and the SPG Group for example, they often can't invest in a full time permanent legal cashier, and it's not great for them to get their partner or friend to check the books for them as they might not understand the Accounts Rules or double ledgers. Sole practitioners need you!
Why not have a look out the ILFM's 2023 salary survey results (in partnership with Balance Recruitment) HERE to give you an idea of what salaries are out there and from there work on your rates. Hourly might suit you fine or your client or a daily rate might work out. Remember, you are not covered for sickness and holidays so take that into account and adjust your rates accordingly.
Remember, if you charge your client £1,000 for legal cashiering work for that month, that doesn’t mean you will get to keep all of that £1,000. You will still have to pay tax on that money like employees have to pay tax on their salaries. You must educate yourself how taxes work for self-employed freelancers.
In the UK, if your business revenue goes over £85,000 per year, you must register for VAT (value added tax) and charge VAT (currently 20%) on all of your invoices. However, you don’t get to keep that VAT, you must then turn around and make regular submissions to the government of this VAT via Making Tax Digital. This requires excellent record keeping and attention to detail, which as a finance person, you are probably rather good at!
Just because you might be new to freelancing life, don't sell yourself short and make sure you know your worth and ask for the going rate. Freelancers are a valuable asset offering a personal touch who can be the trusted go-to on a regular basis for law firms.
Freelancer business structure
As a numbers person you are probably more au fait with getting the ball rolling with income, tax and business decisions than most of us!
Here are our top tips for a freelance structure to work on:
- Think of your company name, check domains for websites and emails too at the same time - then register
- Online presence - how will potential clients find you
- Business bank account
- Start-up revenue
- Tax set-up - who doesn't love a tax return?!
- System for tracking invoices, payments and expenses
- Physical workspace
- Small business knowledge
There are many small business resources out there, but the above is something that you could start on your spreadsheet!
Unless your clients insist on working with limited companies, we'd suggest thinking about becoming limited further down the line.
Make a plan
Plans, processes and spreadsheets will help keep you on track in your new venture whilst working on legal finance jobs as a sole trader.
A plan helps all self-employed workers and goes towards your own financial reports. Here are the ILFM's steps for going freelance and will help with less paperwork and making more money whilst you welcome your first clients.
Brainstorm with family or friends to help you in this exciting and liberating career journey ahead with the following:
- Company Overview
- Industry Analysis
- Customer Analysis
- Competitive Analysis
- Marketing Plan
- Operations Plan
- Team (growth)
- Financial Plan
Small businesses require a business plan and structure just as a leading international law firm would do too, but the difference is you are totally in control of it.
How to become a freelancer in the UK
The ILFM has its majority of members based in the UK and for readers who are based outside of this jurisdiction we would suggest doing due diligence for going freelance in your own country. For this article, we will focus on the UK.
In December 2022, there were around 4.3 million self-employed workers in the UK. This is up from 3.2 million two years previously, according to the ONS. The fallout from Covid is still very much in our minds and as software allows us to become more hybrid in our capacities of working together, so does the ease of becoming a freelancer.
Firstly, know your specialism, that makes sense of course! You will be in demand if your target audience and potential clients know you are a trusted source of experience and/or expertise. Legal cashiering is in demand and the Solicitors Regulations Authority is cracking down on law firms not adhering to their Accounts Rules when it comes to client accounts, this is where you come in!
There's a great free template from the Prince's Trust that you can access HERE to help you going forward.
Still not sure about employment versus freelance life as a legal cashier?
Pros and cons of going freelance
As a freelancer and sole trader you are going to have to put your "services" out there and offer your valuable advice through online activity such as a blog post, LinkedIn article and make sure you get paid for the job you have done. You are for hire but you are also in control of who hires you!
Become the billable hours' guru in your own time! You can manage the law firm's accounts with your helpful service, whilst helping them with their risk management.
Let's kick off with the pros first
- Freedom to choose what work you’ll do and when (and who for!)
- Better work-life balance
- More variety in the types of freelance jobs you take on
- No office politics or bad bosses
- More responsibility over your career in legal finance
- Opportunity to earn more money
- Fits in with family or other commitments
- Your salary/take home may not be regular
- Might need to chase up late payments - but you might love credit control anyway!
- Must be proactive, network, and reach out to potential clients to find work
- Can be lonely and isolating
- You have to sort out your own taxes – or employ an accountant - again, as a legal cashier this is probably already something you have in the bag!
- No employer pension contributions
- Work and life are less delineated
- It can feel more personal, as clients are choosing or rejecting you
Do the pros outweigh the cons for you?
Legal Finance Jobs
We are specifically talking about legal cashiering roles here, but within law firm accounting and management the finances roles can include:
- ebilling assistants
- commercial finance manager
- billing co-ordinator
- chief cashier
- accounts payable
- purchase ledger manager
- billing manager
- financial operations manager
- financial controller
- finance director
- chief finance officer
You never know, you might find yourself finding that practice management is something you’d like to move into and again, that’s a much sought after role, which the ILFM supports through dedicated training.
How to register as a freelancer for tax
Working as a sole trader in the legal profession is very rewarding and there are some fantastic forums and networking opportunities, including becoming a member of the ILFM.
If you make this decision, then registering as a freelancer for tax in the UK is relatively simple.
As mentioned above, unless you have to, no need to register as a limited company, so although you are not going to be an employee it's still worth thinking about benefits you would want and build that into your rates and budgets going forward, for example, healthcare. If you are a member of the ILFM, there are huge benefits you can get through us including healthcare, so think of our community as your wider support teams.
To register yourself for tax in the UK go through the HMRC's website. Fill out its self-assessment form, the HMRC's and Government's website is very accessible, and you can read how to register yourself via the link HERE.
Legal cashiers are known for being specialists in this regard. If you are new to legal finance jobs it is worth learning how to use the double-entry system, and our tutors and trainers are experts in this regard.
Our ILFM Diploma Tutor, Sarah Blundell, lives and breathes double-entry systems and is such a great motivator and supporter of all her students, if you decide to become qualified with us.
If you have never come across a double ledger before, please read our article on it HERE.
You can always dip your toe in slowly by doing a few bits and pieces of freelance work while you are still employed. Or if you not employed currently, are on maternity leave, or just feel like going back to work after time out, do check out the tax and national insurance implications for you and budget those into your rates.