QuickBooks for law firms has the capability to handle the majority of a law firms needs if it is correctly set up and data is entered in the proper manner on a consistent basis. One of the most important bookkeeping tasks in a law firm is managing money held in a client’s trust account. QuickBooks® does allow you to manage both the law firm’s accounting and the trust activity of the client in the same QB company file, but if you want to separate out access to your bank accounts, etc. from the trust account, then we recommend you establish a separate Company in QuickBooks to handle your client’s trust activities. If you have questions about any aspect of using QuickBooks for your law firm, contact our QuickBooks Pro Advisor in your area for help.
You most likely have more than a single IOLTA (Interest on Lawyer’s Trust Account) or Client Trust account and if correct steps are taken, these accounts can all be handled in one company file. For the purposes of this article, we will use IOLTA and trust accounts interchangeably, but we are aware a difference exists although basic procedures are the same. It is critical to be aware of the fact that QuickBooks for law firms does not prevent the overdrawing of a client’s trust account. You need to monitor each individual client’s account balances to prevent the account from becoming overdrawn.
All states have rules in place that govern professional conduct in the management of a client’s trust fund. It is important to consult with your State Bar Association to make sure that your trust account setup is compliant with the rules of your state. If you fail to comply with state regulations, severe penalties and even disbarment may result.
If you choose to accept a credit card payment from a customer for a transaction related to their trust account and you have a single merchant account in place, you need to place all transactions in the trust account first, then you can move money into your operating account. Arrange to have all fees taken from the operating account with your merchant service provider.
Evaluate QuickBooks for law firms to make sure the software meets your billing requirements as there are some limitations. If you plan to use other billing programs, be sure to investigate how the program will integrate with QuickBooks. Click here for information on billing in QuickBooks capabilities.
Now you are ready to start the set up process. Follow our step by step guidelines by clicking:
If you live in Billings, Nashville, Baltimore, Pittsburgh, San Antonio, Long Island, Braintree, Irvine, Spokane, Carrollton or any other small or large U.S. city and need QuickBooks help regarding managing your clients’ trust accounts, do not hesitate to contact our skilled and experienced QuickBooks Pro Advisor in your area.