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When it comes to trust accounts, keeping a record of amounts, transactions, and details is necessary. However, they can be confusing and complex, especially for new lawyers or firms. That’s why it’s ideal for keeping track of individual client funds. If you’re struggling to keep track of your Interest on Lawyers Trust Accounts, or IOLTA, this blog will help you out.

How to Set up Your Chart of Accounts

To receive funds into your IOLTA and keep track of transactions, you must first set up a Chart of Accounts. After that, you will also be able to create invoices.

How to Create an Account

1. First, create an account under “Other Current Liabilities” on your Chart of Accounts. This account will be called “Funds Held in Trust.” Additionally, this account will become the parent account for the client sub-accounts on the Trust.

2. Next, create a new client or customer.

3. Then, create a Trust sub-account for your client. This is done by going to the Chart of Accounts. Select ‘New,’ choose ‘other current liabilities’ for the type, then choose ‘trust account liabilities’ for the detail. Then use the name of your customer and then check ‘sub account,’ and click ‘Funds Held in Retainer.’

4. After that, you will need to deposit the retainer. To do this, click on ‘make it deposit’, and click ‘Choose IOLTA.’ Then set the new customer you created and set up as your ‘received from.’ Then choose the sub-account for your new client on Trust.

5. You can then create an invoice for the transaction.

6. Write a check to send an invoice and receive payment to the client after work done from their retainer. Fill up the payee field with the client name, the bank with Trust, and the category will be the client’s sub-account from the ‘Funds Held in Trust.’

You can then input the details in the description. You can also communicate there any additional details you want to inform the client.

Last, input the client’s name on the “Customer” field.

7. Now the next step is to receive the payment on the invoice. Input the new client’s name on Customer, then write the invoice amount on the payment field.

Last but not least, don’t forget to manually move funds from the Trust account to your checking account outside of QuickBooks.

We hope this short guide can help you in keeping track of your IOLTA and funds. And if you need any assistance, you can always contact our professional team at Prestige Accounting Solutions.

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