Trust Club: Trust Accounting the Check Method

Trust Accounting the check method is a method I see with established firms with the partners that have the accountant or bookkeeper write a check from the IOLTA or Trust Bank Account to be deposited into the Operating Account.  One check per client.  That can involve lots of checks each month at the billing cycle time.  Last week I had a little fun with the trust club.  One of my favorite articles that explains trust accounting and the general rules is from the American Bar Association (ABA). You can find that here.

The method from the previous week demonstrated using LeanLaw and using a bank transfer to move the funds recognized as income from IOLTA (Trust) to Operating. You can access that blog post here. 

 That post generated some questions specifically, "how do you record this when the attorney-client writes individual checks for each matter to move the revenue earned?"

The steps are the same as last week. Until that point is when you leave the LeanLaw application and go to QuickBooks Online to make that bank deposit. Here is where the difference lies:

  • Open each customer "payment" that was recorded from LeanLaw.

  • Edit the name to say "Name of Law firm." In my example, my sample file is named Law Firm. So you write the check to the Law Firm. Be sure to select "No" for if you want to prefill this check.  See image below.  
  •  Next, you would deposit it in your Operating bank account.
  • Go to + print checks.
  • Once the checks are printed, you can make your bank deposit in QuickBooks. Go to the + bank deposit and select the payments to be grouped or deposit.
  • Make sure you select the correct bank account for the bank deposit. Here is where you will choose the operating bank account.

We can tell our values by looking at our checkbook stubs. ~Gloria Steinem

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That's it! It's a lot of extra steps that are not necessary if you create a bank transfer. There are times when you probably will run into a client or firm here and there with a process that still does it old-school style with cutting individual checks and taking them to the bank.

So I hope the short video helps demonstrate how to perform this workflow. Next week we dive into cash versus accrual bookkeeping.  If you need more help or would like to hire our firm to do this type of accounting work for you, feel free to contact us.  Call us today at 239-349-2004

Lynda Artesani

Lynda Artesani is the president of Artesani Bookkeeping where she uses her expertise and organizational skills to help her clients thrive and become profitable. Lynda is a member of the Intuit Trainer Writer Network. She is an alumni member of the Intuit Advisory Board. Additionally, she is the first Expert Columnist for the QB Community forum. She is also a co-founder in a Facebook group called QB Community Live!