Recently I have noticed a lot of information on the web talking about client trust accounting using QuickBooks®. I also notice that people are suggesting making sub-accounts under the bank account for each client. This is a method I do not recommend doing. It limits you on having to make one transaction for each client. If you only have a few clients and a few clients in your trust account this may work for you but it will become very cumbersome when your practice starts to grow.
Key things to remember when setting up your client trust account.
- You need to be able to provide the reports on a monthly basis to show activity for each client, sometimes called a client ledger.
- You need to be able to have a report that shows all the activity in the trust account and clearly identified for each client.
- You need to reconcile your trust account monthly with your bank statement.
- If you print a Balance sheet report in QuickBooks® and the Trust account does not equal the Trust Liability you setup then something is wrong. All money going into and out of trust should be coded to Trust Liability. I recommend using subaccounts under the trust liability but you can just use the customer name.
- You want to make your system easy enough that at any given time you can identify who has what in trust. This is a very important part of your business.
- You never want to be in a position that you bounce a check in the trust account. If you mess this up it can cause the bar association to step in and look at what you are doing.
If you need help or would like me to review your current CLient Trust Accounting procedures I would be happy to help. You may call me at 904-284-4480 or email me at Lynette@attorneystechnology.com