Setting a Budget for Your Law Firm for 2025

 

 

Managing your money wisely is key to the long-term success of your law firm. After all, a well-planned budget means you can stay on top of your bills, and have nothing to worry about come tax season.

In addition to this, a carefully managed budget can maximize your earning potential by enabling you to invest more money into things such as employee satisfaction and retention and the latest technology.

With that in mind, here are some top tips for setting a budget for your law firm for 2025.

Assess your 2024 performance. Before you can set yourself a budget for the new year, you need to figure out the financial position you’re in right now. After all, doing so can let you know whether you’re on the right track when it comes to money management or if you need some additional help and support to get things where they need to be.

Carry out revenue projections. When it comes to setting an annual budget, you need to know how much money you’ll have to play around with. This means that you need to use historical data from previous years to predict how much money you’ll earn in 2025, taking into account additional factors such as cash flow, market trends, and changes to consumer spending habits. 

Write down a list of expenses. Writing down a list of all of the expenses you’ll incur within a year (or on a month-to-month basis) plays a critical role in creating a successful budget, as it means that you have a clear understanding of your financial situation and can make informed decisions about how to allocate your resources. Typical law firm expenses could include: 

Predict challenges. Being able to predict the challenges you may face in the new year is also important when it comes to budgeting, as it means that you can then set aside additional funds to dedicate to weathering that specific storm. For example, if, in the past, you’ve dealt with cash flow issues due to slow payments from customers, you may want to set aside funds to invest in invoice processing software. This means that invoices are sent out promptly, and reminders are sent when a payment is late.

Consider working with an accountant. With many law firm owners admitting to working 40+ hours a week, finding the time to sit down and adjust your budgets can feel near impossible. Not only that but without a background in accounting or financial management, this may not be a task that you are particularly suited to carrying out. In these cases, seeking out the support of a trained and experienced accountant is key, as they’ll carry out a lot of the work on your behalf.

If you don’t have the funds to hire a full-time account or CFO – don’t worry; we’ve got your back.

Our expert accountants and CFOs are on hand to provide you with support across all things finance, whether adjusting your budgets ahead of the new year or working on payroll management. Get in touch to find out more today!