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Managing Client's Trust Account in QuickBooks

QuickBooks SupportCategory: TransactionsManaging Client's Trust Account in QuickBooks
Hawks asked 6 years ago

We are a law firm based in Lagos, one of the services we render is to help our client keep their cash in an account called Trust account pending when an instruction will be sent to us. This instruction could be for property purchases, payment for rent or whatever. But here is the point, we invest this money in a call account with daily interest accrued on this account, how do we track the income and record these transactions when the clients call for the money?

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1 Answers
BigResources Staff answered 6 years ago

Client’s trust account is a liability, the best way to resolve this issue is to add “client trust” to your chart of account and map it to a liability account in QuickBooks. You can also drill down further by creating an additional account for each of your clients as a sub-account of client’s trust account, this will help see what each of the client’s balance held in the trust account.
For additional payment made by clients into their trust account, use QuickBooks to record the cash paid into your bank with the corresponding entries reflected in the trust account. When you invest the money, you are expected to create a fixed deposit or call money account to track all trust fund invested while an interest income lets you monitor all accrued interest income from that account. 
Charts of account in QuickBooks is very flexible, it allows you to easily create additional account head for interest income, call money and trust account. 
When a client sends instructions on how the money should be used, you can then reverse the entry, starting from the call money/fixed deposit account to the trust account and bank accounts.
I believe these details will help you get your book right?

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Last modified: May 25, 2018