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Setting up client trust accounts

A client trust account is a checking account set up to hold money that a client or clients have given you in advance of performing work on their case.

  1. Create a QuickBooks "bank" account called Client Trust Accounts.

    1. Go to the Company menu and click Chart of Accounts. Shortcut

    2. Click Account at the bottom of the list and click New.

    3. Click the Type drop-down list and choose Bank.

    4. In the Name field, enter Client Trust Account or Client Trust Accounts, depending on whether you have one or more actual bank accounts for client trusts.

    5. Click Save & Close.

  2. If you have more than one bank account for trusts, create subaccounts for each one under Client Trust Accounts.

    In this case, Client Trust Accounts will be the "parent" account in QuickBooks for the actual trust accounts. This lets you see all your bank trust accounts together under one parent account on a QuickBooks balance sheet.

    Don't do this step if you have only one actual bank account for client trusts.

    1. Go to the Company menu and click Chart of Accounts. Shortcut

    2. Click Account at the bottom of the list and click New.

    3. Click the Type drop-down list and choose Bank.

    4. In the Name field, enter the name of the client or case.

    5. Select the Subaccount of checkbox. Click the Subaccount of drop-down list and choose Client Trust Accounts.

    6. Click Save & Close.

  3. Create a QuickBooks "other current liability" account for the client monies you're holding in trust.

    You can have just one liability account for trust monies, even if you've opened several bank accounts for trust monies. QuickBooks can separate what you owe to each client and each client's fees and costs.

    This liability account represents money you owe to your clients. The balance of the liability account should be the same as the total amount you have in your bank trust accounts, minus any of your own money you may have had to deposit as a minimum balance (see next step).

    1. Go to the Company menu and click Chart of Accounts. Shortcut

    2. Click Account at the bottom of the list and click New.

    3. Click the Type drop-down list and choose Other Current Liability.

    4. In the Name field, enter Funds Held in Trust.

    5. Click Save & Close.

  4. If you had to deposit your own funds to maintain a minimum balance in the trust bank account, write a check to the bank from your own checking account:

    1. Go to the Banking menu and click Write Checks.

    2. Click the Bank Account drop-down list and choose your operating checking account.

    3. Click the Pay to the Order of drop-down arrow and choose the name of your trust account.

    4. On the Expenses tab, select the trust account in the Account column.

    5. In the Amount column, enter the amount of the check.

    6. Click Save & Close.

    Send the check to the bank or physically deposit it. However, don't include it in the QuickBooks Make Deposit window, as you've already transferred the money to the client trust bank account when you wrote the check in QuickBooks.

See also

KB ID# H_V_RETAINERS_SETTING_UP_CLIENT_TRUST_ACCOUNTS
12/7/2016 4:34:15 AM
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