Your First Attorney-Client: QuickBooks File Review


In last week's post, it was all about how to handle your first attorney-client prospect.  We talked all about what to say and what information to gather.  You made the initial sale during the conversation you had with the client.

This week is all about "what do you do next?" 

Let's paint the picture further for the scenario....now you have the logins for QuickBooks, and George, your new potential client, has provided us with the dreaded spreadsheet. Make sure the client provides your accountant access to QuickBooks. Without it, you lose your accountant super-powers or tools.  I make sure in my follow-up email request for documents, I give specific instructions on how to give me accountant access.

See a snippet below with my follow up email after the initial conversation.

Jump into the QuickBooks File to the Overview Tab

Are the Books Reconciled?

My first step is to start by jumping into QuickBooks. I quickly navigate to the very first tab called the "Overview Tab." The overview tab shows you everything you need to see in the file. How many unreconciled transactions are there? When were the bank, credit card, and loans last reconciled? 

Analyze the Undeposited Funds Account

Do they have hanging deposits? How many transactions are sitting in the undeposited fund account?  Undeposited Funds can sometimes be a default landing ground if the client isn't aware it exists. Occasionally when they use an outside app, like Clio or LeanLaw, the transactions may post there by default. The client may not know they haven't completed a crucial step in the workflow, making the deposit and putting it in the correct bank account.  And then, they download the Bank feed to legal income. 

Uncategorized income, expense, and asset accounts

Let's discuss the uncategorized asset account, which lends itself to being mostly a bank feed error. Users don't pay attention, and they click OK to match it, and then they realize later that they're missing one side of a transfer aware perhaps they were paying the credit card. Uncategorized income is another one that I see. And uncategorized expenses.  Bank feed suggestions typically cause all of the above mistakes. 

The opening balance equity account

You see this one quite often, especially if they connected the bank feed, the system will enter the opening bank balance with the offset entry to the opening balance in this account. To make matters worse, it comes in as a reconciled transaction that can throw off the balance sheet. 

Negative asset and liability accounts

Next up is negative asset and liability accounts is a common error when the admin does the bookkeeping and doesn't understand balance sheet accounts.  With assets accounts, you really should work with the tax professional's guidance.  A big red flag should be loans with negative balances and assets with negative balances. I've seen depreciation entries that exceed the actual original purchase on an asset. 

Transaction Volume

The overview tab will give you a total transaction volume. You can run the date range as year-to-date and see how many entries were made in the year's account. Doing this one task will give you a good gauge of how much work is involved and how much you will charge them for monthly accounting work. 


Reports to examine

I would next look at the balance sheet and filter it by month for the year to date. Examine the trust liability account and see how it lines up with the trust bank account.  You can check month over month to see the last time it balanced.


Chart of Accounts

Another pitstop for me is the chart of accounts. Is it law-specific, or does it need modifying? Do you see unusual accounts listed, like accounts named after employees? Yes, I've seen a client with employee names on their COA. If the chart of accounts requires fine-tuning, make that the first step once you have signed engagement and have been compensated. I will get into the chart of accounts in a future video. 

As you can see, just from these few steps, it's not for the faint of heart. You have to know what you're doing, or you hire someone that does to help you. There's a deep learning curve in examining someone's books and helping them make the proper corrections. Remember, everything should tie back to the source documents. And by source documents, I mean the bank and the tax return, not some random spreadsheet that the client has created. You can use the spreadsheet as a guideline, but the bank should always be your source of truth for the accuracy of the data.

In this scenario, we have a spreadsheet from the client where he was tracking the data. It gets a lot more complicated when you're using a spreadsheet. If the spreadsheet matches, hooray! Often, they keep it as a running spreadsheet without separation by month. That makes it harder to figure out exactly where they left off each month and do that three-way bank reconciliation.

All of the above steps are just a guideline but an excellent baseline to get you started with your first attorney-client clean up job.

If you are an attorney that has messy records and needs assistance with cleaning them up, we are EXPERTS!  


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If you’re an accountant or bookkeeper and need more direction or education, please join our Facebook group QB Community Live! It’s a safe place to ask any question. I co-admin group, and I’m here to help. Our motto is, Together We All Succeed! #TWA$

Lynda Artesani

Lynda Artesani is the president of Artesani Bookkeeping​ where she uses her expertise and organizational skills to help her clients grow, thrive, and become more profitable. Her firm specializes in working exclusively with the legal industry. She is passionate about helping her attorney-clients migrate from antiquated systems and become future-ready.​ ​ She is a Top 100 ProAdvisor, alumni member of the Intuit Advisory Committee and a member of the Intuit Trainer Writer Network. As the co-creator of QB Community Live, Lynda dedicates her time to mentoring and helping other accountants and small business owners succeed.​ Lynda lives in Southwest Florida. She is a registered yoga teacher and teaches at a local studio called Fusion Yoga and Spa. In her free time, you will find practicing yoga or walking on the beach.​