Client Trust Accounting Using QuickBooks
It is the Lawyers responsibility to maintain accurate and complete accounting records for any monies held in a client trust account. Many Lawyers use QuickBooks to track their time and operating bank account activities. They can also use QuickBooks to maintain their Trust Account.
First and most important is knowing what your regulations and reporting requirements are for Client Trust Accounting for your state.
The next step to maintaining accurate and compliant trust accounts is setting up the account correctly at your financial institution. It is essential that you work with an institution that is familiar with these rules and regulations so that you will be in full compliance with the rules. If you are unsure that a financial institution meets the requirements contact your bar association who will be able to help in this matter.
The trust bank account is a bank account you are using to hold money for a client to cover the cost of expenses. This money is to be kept in a separate bank account and cannot be commingled with other operating funds. It must be clearly identified, using the guidelines set forth by your state rules of conduct.
When opening your trust bank account you may be required to do the following:
- Review the guidelines for your state regarding your trust account.
- Make sure your bank knows how to handle your trust account. It is best to open your trust account at the largest bank in your area. You can still do your daily banking at a local branch it is just best to set it up at the main location.
- Bank Resolution Forms – Make sure the name on the account reads Trust Account or IOTA Trust Account spelled out.
- Make sure the checks have Trust Account or IOTA Trust Account spelled out.
- Make sure the statement has Trust Account or IOTA Trust Account spelled out.
- No overdraft protection is on the Trust Account.
- No ATM card is issued with the Trust Account.
- If you are going to accept payments into the Trust Account using credit cards you need to set up a merchant account that will deposit the funds directly into the Trust Account.
As a final suggestion it is highly recommended, and you may be required, that once you set up your trust account with your financial institution that you may need to send a letter to them asking them to notify the bar in the event of a NSF or other returns absent bank error on the trust account. You need to check with your state to find out if this is required. Here is an example of the letter that the State of Florida uses.
Maintaining Trust Accounting Records
Generally you need to do the following: We recommend you check with your state bar association for your laws regulating Client Trust Accounting.
- Separate bank account for trust monies clearly labeled Trust Account.
- Keep copies of deposit slips and cash receipts books.
- Copies of all bank statements and canceled check for each client trust account.
- Monthly bank reconciliation of Trust Account
- Client Activity and Trust Balance Report - A written "ledger" for each client, setting forth the name of the client and identification of the bank account, the dates of each activity, the amounts received and from whom, the amounts disbursed and to whom, and current balances of funds for each client, each month.
- Trust Account Activity Report - A written "journal" for each client trust account, identifying the name of the account (including the bank and account number), the date of each transaction, each debit and credit to the account, the names of the sources of each deposit and the names of each person receiving a payment, and the current balance in the account.
- Cash Receipts Journal for the Trust Bank Account. - Identifying the date, source of each deposit.
- Cash Disbursement Journal for the Trust Bank Account. Identifying the date, check number and name of the client matter and reason.
Trust Accounting Using QuickBooks - Updated for QuickBooks 2010 
On Sale Now for Only $30.00
If you already know how to use QuickBooks but just don't understand how to setup your Trust Account, then this book is for you! Client Trust Accounting is serious business and this fully illustrated, step-by-step book takes on the serious practice of maintaining detailed financial records of client trust accounts. You will learn how to setup client trust accounts, handle credit card transactions and how to handle retainers. This books cuts through the technical talk that you get with most computer manuals, and specifically spells out everything that you need to do to set up client trust accounts using QuickBooks.
This book is included in the Law Practice Accounting Using QuickBooks Book, so there is no need to order both books.
- Client Trust Accounting Using QuickBooks
- Daily and Monthly Trust Account Activities
- Real World Scenarios to Help You Understand the Basic Principles
- Detailed Step By Step instructions, Including screen shots
- State Required Forms and Letters
- IOLTA and IOTA Forms and Guidelines
- Tips and Tricks for Maintaining Compliance
Links for Lawyers
Knowing the guidelines and rules for client trust accounts is the first step. Here is a link to a listing of the state bar associations that can help you find your rules and regulations regarding client trust accounting.
» Learn MoreMinimum Trust Accounting Records from the Florida Bar Association
Florida Bar Trust Accounting Guidelines and Resources
Order Maintaining a Trust Account Using QuickBooks