The biggest mistake I see attorneys make while using QuickBooks® for Trust Accounting is trying to get money from the Client Trust Account to the Law Firm Operating Account. If not done correctly, this can cause a major issue for your Client Trust Account Reports.
Don’t make the mistake of just writing a check out of your trust account and code it to the operating account. Almost all of the trust account transactions should hit the client trust liability account and individual client’s subaccount. By transferring or coding, you are skipping this step , and then you have no record of where that money is or who’s money it came from.
Here is a quick breakdown of the proper steps for moving money for fees from your Client Trust Account to your Law Firm Operating Account.
1. Create a charge for your fees using statement charges or invoices.
2. Write a check out of the trust account and then choose the client’s subaccount under the Client Trust Liability account.
3. Receive the payment against the charge just like you would if they walked in and paid you.
4. Make a deposit into your Operating account.
These steps will make sure that all of the transactions in the client trust liability account are balanced and will help you get the reports you need to stay in compliance with trust accounting rules and regulations.
If you are new to QuickBooks® or would like more help with using QuickBooks® in your Law Practice please take a look at my books; Law Practice Accounting Using QuickBooks® and Maintaining a Trust Account Using QuickBooks® you can also call me at 904-284-4480 and we can setup a consulting appointment to go over your needs. I specialize in this area of QuickBooks® and offer training for for lawyers that want to use QuickBooks®® in their law practice.