BMFTax

11/09/2024

BMF Tax and Financial is a tax and advisory firm for small to medium size businesses in the law firm, construction, real estate, and professional services industries. Our firm provides strategic tax planning for businesses and their owners focusing on short and long term goals, tax preparation, bookkeeping, and comprehensive financial reviews. If you are a business owner looking for proactive tax advice and a partner in achieving your business and personal goals, please visit bmftax.com today and schedule a consultation. Let's work together to build a Better Money Future.

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08/10/2024

What is a trust account and why is it important?

A trust account is an account that is separate from a law firm's operating accounts and does not belong to the firm. It is used to house client funds that are to be used to cover client expenses or pay for work that is completed by the firm. Once work is performed and billed, the money can then be transferred to the firm's operating account.

When money is received it goes in to an asset account, usually labeled as "trust account" and corresponding client trust liability. When the money is earned there is a double entry. The first entry is to move the money from the client trust bank account to the firm's operating account and then the corresponding reduction of liability and recognition of the income.

Why is it important? Trust accounting is a big part of legal ethics. Failure to comply with trust accounting rules could lead to significant issue including criminal charges or a loss of the attorney's law license.

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07/25/2024

2. Realization Rate

There are a few types of realization rates. Today we will discuss the billing realization rate. This rate is the amount you billed in relation to the total amount of hours charged. For example, if you worked 10 hours on a case at a rate of $200/hour the total bill should be $2,000. If you only bill $1,500 then you have a realization rate of 75%.

Knowing your realization rate can help you determine how certain aspects of your firm are operating, whether you need to adjust how you determine discounts, or if you need to improve efficiencies to avoid substantial write-offs.

Realization rates can be less than 100% for many reasons. For instance, there is a disconnect of perceived value of the service or the scope of the work ended up being greater than originally expected and communication with the client was lacking.

Having rates less than 100% aren't always a bad thing as there could be strategic reasons to write-off time that aren't due to inefficiencies or a poor lack of scope but understanding what the realization rate is can help law firm owners make important decisions within their practice.

Tomorrow we will discuss the collection realization rate.

07/24/2024

Law firm owners, let's face it, you're busy. Busy with client work, networking, trials, etc. But don't let your busy schedule keep you from tracking your numbers and KPIs. Understanding these numbers can greatly help you make financial decisions for your law practice.

I'll be going over some key financial KPI's for law firms and their importance over the coming days starting with Utilization Rate(UR).

Utilization Rate is the amount of billable hours worked in a day versus the numbers of hours worked in a day. For example, if an employee billed 4 hours in an 8 hour day, the utilization rate for the day is 50%. The UR essentially measures the efficiency and productivity of a law firm.

UR can give firm owners a lot of information. For instance, if one employee has a UR of 65% and another has 35% it might indicate that resources need to be shifted to avoid burnout or overwork. It can also be a good indicator of how to increase your top line revenue without having to bring in additional work by increasing the amount of billable work without increasing burnout.

You can increase UR by improving time management, improving training, optimize processes, and making readily known and achievable goals for employees amongst other methods.

Average UR for firms have ranged from 28% to 37% from 2016 to 2023. Increasing these rates even slightly can have a big impact on income.

If you have any questions on utilization rates and how they can impact your practice please don't hesitate to reach out.

Tomorrow we will discuss Realization Rates.

05/28/2024

2024 Q2 estimated payments are due 6/17. If you're a business owner in the following industries: real estate agent/investor, attorney, doctor, dentist, tattoo artist/studio owner, or retail services, please reach out today to schedule a call. The only type of tax planning is the proactive kind.

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03/03/2024

https://www.withum.com/resources/breaking-news-federal-court-ruled-corporate-transparency-act-unconstitutional-beneficial-ownership-information-reporting-on-hold/

CTA ruled unconstitutional by Federal court. What does this mean for BOI filing? Stay tuned for further updates.

In a surprise decision, a federal district court ruled that the CTA is unconstitutional, effectively placing the BOI reporting on hold.

02/18/2024

Today’s busy season workout:
3X8 weighted step ups
3X6 barbell squats
3X10 wide legged sumo squats
3X15 barbell calf raises

02/15/2024

This is how I feel every day when people ask me what I do during work hours, but especially during busy season!

02/01/2024

The House of Representative passed the Tax Relief for American Families and Workers Act. Now off to the Senate. This bill would bring back 100% bonus depreciation through 2025. Could be a big deal for real estate investors should this pass the Senate and signed in to law by the President.

01/31/2024

Tax tips for real estate agents:

1. Set up an LLC
2. Obtain an EIN and set up a bank account for the LLC.
3. Talk with your accountant to see if electing S-Corp status is right for you - see Episode 3 of “Be a BMF With Your Taxes”
4. Keep track of income and expenses either in excel or an accounting software like Quickbooks
5. Don’t over look deductions such as mileage and the home office deduction.
6. Hire a tax professional to help advise and prepare your taxes.
7. Set up a retirement plan such as a SEP, Simple, or Solo 401(k)

01/27/2024

"Be a BMF With Your Taxes" Episode 3 - To S-Corp or Not To S-Corp

01/21/2024

Continuing to stay on a workout routine keeps me focused and calm during tax season. What do you do to stay in shape during busy times?