#How to account for personal expenses in quickbooks software

QuickBooks software uses “Items” to assist you in the consistent use of the correct accounts when entering transactions. Items Set Up to Track your Legal Services

Monies in the account can then be reallocated to the Reimbursed Client Cost or income account once the money is earned. The account, depending on the specific state rules, might be an income or liability account. In the circumstance that your client resides in a state that allows General Retainers, we recommend you set up a Suspense account to track a retainer in your QuickBooks chart of accounts. Name this account “Client Trust (name of bank) Liability”. You also need to set up an Other Current Liability account to track the client’s costs and deposits. You will use this account to track client payments and bills that are to be paid from the corresponding Trust’s bank account. If you intend to use Accounts Payable for client trust bills, set up an A/P account that is called “Trust (name of bank) A/P”. Check your state regulations, however in the majority of states the account is not allowed to have ATM accessibility or automatic overdraft protections in place. Be certain that your bank gets this set up as an Interest on Lawyer’s Trust Account so the interest will be handled properly. This account will track all payments and deposits of trust funds for your client. Now create a “Client Trust (name of the bank) Checking”. This account will be used to track all payments and bills that are related to firm operations and for client expenses that are to be paid out by the law firm and consequently then billed to the client. If you plan to use QuickBooks Accounts Payable (A/P) for your Trust transactions, you should rename the AP account to “Operating A/P” so you can easily tell it apart from Trust A/P. One of these accounts should be setup for each IOLTA or Trust account.

If your law firm uses one or more IOLTA (interest on lawyer’s trust account) or trust accounts to hold monies from a client to pay for the client’s expenses or legal fees once they are earned, you need to set up numerous QuickBooks accounts in order to track all of the transactions into and out of the account. It is critical that a law firm sets up a proper QuickBooks chart of accounts to handle trust accounts and more. QuickBooks Chart of Accounts for a Law Firm