QuickBooks Online For Attorneys

This QuickBooks For Attorneys introductory video will prepare you for the entire QuickBooks Desktop for attorneys’ course. It clearly spells out the specific differences between a typical company’s bookkeeping procedures and a law firm or self-employed attorney. The section called “Attorneys Needed Records” covers most (or all in some states) of the unique bookkeeping requirements of attorneys in a law firm. The law firm company file that shows this set up has reports for profit and loss by client, client balances and open invoices. These things help you manage your financial relationship with your law firm’s clients and keep attorney-client records accurate and updated. These client records tie into the rest of the law firms accounting records with the operating bank account and overall profit and loss.

This learn QuickBooks Online for attorneys training tutorial will show you how to adjust the settings in QuickBooks Online to activate features that attorneys might need to keep track of the lawyer financial records. Law firms need to activate specific features like tracking client’s expenses by job. You can also change the law firm’s name and address in this window. This will control the options, defaults and settings of your QuickBooks online plus account when you are using ity as an attorney-accountant of a law firm.

This learn QuickBooks Online for attorneys training tutorial will show you how to input the chart of accounts for a law firm. Most of the general accounts any company may need are already on the list of accounts. The specific accounts that an attorney in a law firm would need are shown in this QuickBooks online video lesson. Law firms need an account in the chart of accounts to represent the amount of money owed to clients who paid retainer payments in advance. Money is owed in the form of future legal services until those services are performed, the amount owed is unearned legal fees. You also need an account to represent the amount of money owed to the clients for law suit payouts collected by the attorneys and payable to the clients. You can also track the different types of income that a law firm makes by inputting the income account categories that you would like to see in the top part of the attorney’s profit and loss.

This learn QuickBooks Online for attorneys training tutorial will show you how to input attorney service items in to the QuickBooks Online List of Products And Services. The items list in QBO must have lawyer’s service items, like “notary fees” or “legal fees earned” connected to an income account. This is the way attorneys in a law firm track their income for management purposes. These are the items that will be placed on the client’s invoices or sales receipts when legal services are give to clients. The income accounts attached to the service items will help the law firm track the income in order to get more helpful detail on the attorney’s profit and loss statement.

This learn QuickBooks Online for attorneys training tutorial will show you how to reports and financial statements that law firms need to operate their law firms. By customizing these QuickBooks online reports, you can more quickly and more easily navigate through all of the transactions you will enter in to QuickBooks online. The attorneys need the trial balance, profit and loss by client and transaction list by customer and the open invoice report. There are other reports that we will learn about later in the course.

This learn QuickBooks Online for attorneys training tutorial will show you how to input client’s data in the customer center of QuickBooks Online. This input is the same as inputting the service vendors on the vendors list.

This learn QuickBooks Online for attorneys class for lawyers will show you how to record receiving retainer payments from clients. Clients usually pay in advance for services they will receive from their lawyers. At the moment the law firm receives the client’s retainer payment, the attorneys technically “owe” the client in future legal services. The account that reflects the total money owed to all clients in total is a liability account called “Unearned Legal Fees”. In QuickBooks Online, you must make this account an “accounts receivables” type of account for it to function the way that you need it to. When you REPORT your financial statements, you make a normal accountant adjustment to move the “Unearned Legal fees” account to the correct position on the balance sheet of the law firm. The client has a negative balance until legal services are rendered and the client is then billed with a QuickBooks online invoice.

This learn QuickBooks Online for attorneys training tutorial will show you how to record invoices to clients for legal services rendered. At the moment you make an invoice, you will have legal fees earned as income and less “unearned” legal fees income. Therefore, the client’s balance will also change from what it was when you first received the retainer payment. It will become less negative because it increases when you make an invoice. The law firm’s open invoice report will show only the net difference between the invoices made for legal fees earned if the past retainer payments are applied to the client’s invoices at the moment legal fees are earned by the lawyer for legal services rendered. The law firm owes less to the client in future legal services as a result of billing the clients from QuickBooks online.

This learn QuickBooks Online for attorneys training tutorial will show you how to record invoices to clients who pay after they receive the legal services from the lawyers or the law firm. These client’s receive an invoice before we receive the client’s payment. This means they are not on retainer; they pay as they go. This method of attorneys billing and clients paying after the attorney’s invoice make the client’s balance positive; the way it usually is in most normal business where customers pay after receiving service. If your law firm has these kinds of clients and also clients who pay in advance, then your “unearned legal fees” account will be inaccurate. It will include unearned fees as a negative number as well as earned legal fees (for those who pay after) as a positive number. This means that before adjusting your accounts, the unearned legal fees is understated by the amount of unpaid invoices from clients who pay later rather than earlier. Although all customer’s balances are correct, you would still need to separate the negative balances of the people who pay in advance, from the client’s balances of those who pay after. The difference can be easily found by exporting the “customer balance summary” report to excel and then sorting by amount. After finding the specific negative and positive amounts, you can then make a normal accountant adjusting journal entry to the receivables account to separate the unearned income from the legal fees earned so you can report accurate numbers on your financial statements. For law firm operational bookkeeping, you can reverse the entry so you can manage our clients during the accounting period.

This learn QuickBooks Online for attorneys training tutorial will show you how to record the adjustment to unearned legal fees for the amount of later paying clients. Client’s who pay in advance should have their balances reflected in the Unearned legal fees account. They are negative numbers because the law firm owes the client money in the form of legal services to be rendered. The later paying clients also have their balances reflected in the unearned legal fees account but it is there as a positive number. The positive balances of the attorney’s clients that pay later, must be separated so that you can adjust the amount of the unearned legal fees in to another account called “legal fees receivable”. This is the correct place for the positive balances. You only need to separate these amounts and make this adjustment when the law firm needs to report the financial statements. The amount can be calculated by separating the negative and positive balances using the “customer balance summary report”. You can export that report to excel and then sort by balances to bring al positive balances together and get the sum. That will give you the adjusting journal entry amount. The adjusting journal entry should be dated the day you are reporting the formal financial statements. When making the journal entry, you must include the customer / client name and have a row for each client. This entry must be reversed after reporting so your records can work for the law firm and the lawyers can operate and record client transactions in a way that is functional between reporting periods.

This learn QuickBooks Online for attorneys training tutorial will show you how to record Sales Receipts To Attorney’s Clients for immediate legal services rendered. Sometimes we give legal services on the same day that we get paid from them. In that case, the client’s balance would not be effected. The appropriate document to make in that case is a sales receipt. This will acknowledge the legal fees earned as well as record the payment in whatever method the client has paid. This receipt ids proof of payment and will track the income with the item that you put on the sales receipt. These immediate legal services are usually small things like a notary public or a quick threating letter from an attorney.

This learn QuickBooks Online for attorneys training tutorial will show you how to record credit memos that decrease the client’s balance. A credit memo is the opposite of an invoice. If an invoice was sent to a client for legal fees earned, and then you need to reduce the amount of the invoice, then the proper law firm bookkeeping procedure is to create a credit memo. This credit memo will have the same items of legal services from the QuickBooks online list of products and services that you had put on the original client’s invoice. After this, you must “apply” the credit memo to the correct invoice. This will make the “open invoice report” correct for the client and only the remaining amount of the open invoice will show as unpaid in the attorney’s or the law firm’s open invoice report.

This learn QuickBooks Online for attorneys training tutorial will show you how to track expenses by client. Job costs in a law firm should be tracked and allocated to the specific client that caused the cost or expense that you needed to pay in order to give the client the legal services that the lawyer is providing. After activating the “track costs by customer” feature in the account settings window (or company settings window) you will be able to add the specific customers name (client’s name) to the “customer” field in the expense window, check window or enter bills window. By adding the name of the client customer to each expense or cost, you can the run the “profit and loss by customer” report, which we have changed in to the profit and loss by client report, to see how well you law firm is doing for each client’s job.

This learn QuickBooks Online for attorneys training tutorial will show you how to allocate costs and expenses to clients. When we pay for supplies or other resources before we use them, it is challenging to determine which client to charge the expense to. This is because we do not know which client will use some of these resources or supplies until we actually do legal work for the client and use the job costs that we paid for in advance. We can track expanse by client or job if we know how much of the pre-paid costs, supplies or resources were applied to any particular client’s service.

This learn QuickBooks Online for attorneys training tutorial will show you how to record billable expenses to the law firm’s clients. Sometimes these are called reimbursable expenses because they are job costs that a client promised to pay you for in addition to the normal fees for earned legal income. These billable expenses get checked at the moment the lawyer pays the expense or records the bill and indicates which client the bill or expense or check is for. Then, when the attorney bills the client for the normal legal service fees, they would add the checks or bills that were marked as billable to that client right on to the invoice. You must make good use of the description fields or the memo field to see from the invoice what charge is being added to the client’s bill. You can see what is marked as billable but not yet billed in the “unbilled charges” report. You must first activate the billables feature in the account settings window. Then, if you record billable expenses or checks, then when you first check the “profit and loss by client”, you will see the expense increase. Then, when you add the billable item to the invoice, you will see a new income account called “income from billable expenses”.

This learn QuickBooks Online for attorneys training tutorial will show you how to record refunds to attorney’s clients for payments they made to the law firm. Since lawyer’s clients usually pay in advance of the legal services, they have a negative balance in the customer records and in the receivables account called “unearned legal fees”. You need to first use the checks window or the expenses window to record paying the client’s the money back. This check or expense will have a positive balance in the client’s reports. Then you must apply the client’s pre-payment to the check to “zero out” the client’s balance in your QuickBooks Online attorney records. To apply the payment and make the balance zero, you then must use the “receive payments” window and apply the payment to the check (or expense) that you recorded when you paid then their money back. This will clear the open invoice report and there will be nothing on the open invoice report for that client. Also, at the moment you pay, Unearned legal fees will decrease and become less negative. After all retainer payments have been refunded to the client, the law firm’s unearned legal fees and the client’s reports will be correct if you use this method of returning client’s retainers or payments for legal services.

This learn QuickBooks Online for attorneys training tutorial will show you how write off uncollectable clients who became insolvent and cannot pay the legal fees earned that have been billed. The client’s balance must be removed from the “Unearned Legal fees account and when you finish, the balance of the client must be zero. In order to write off uncollectable, the best way is to set up an item on the list of products and services, that can be laced on a credit memo, that will both remove the client’s balance as well as acknowledge the “bad debt” expense that we will have from our law firm not able to collect from a dead beat client. This means that before we record the default of the client’s open invoices, and before we put the uncollectable item on the items list, we must first put in the account in the chart of accounts that records and shows the loss on client’s uncollectable balance and resulting default on their account with us. That account is the bad debt expense account. Once the item and account have been input, you can then identify any of the attorney’s clients who are insolvent and cannot therefore pay. For each of these client’s we make a credit memo to lower the balance to zero because the amount of the credit memo (that has the bad debt item on it) must be the same as the remaining client’s unpaid balance. After recording the write off credit memo, we use the receive payments window to apply the credit memo to the remaining open invoices and this will “zero out” the clients balance. Making a journal entry or using the accountant’s toolbox are 2 other optional methods for attorney law firm write offs.

This learn QuickBooks Online for attorneys video class will show you how to collect funds on behalf of client’s. Usually lawyers in a law firm will collect lawsuit payouts that they have won for their clients. In a case like that, the attorneys would subtract out their fee and pay the remittance of funds to the client for the difference between what the lawsuit proceeds were and the attorney’s fee for legal services rendered. The money is usually put in a separate escrow type of account specifically dedicated for collecting and paying the aw suit proceeds less the deducted fee withheld by the law firm that won the case. This bank account can be holding other funds besides the law suit payouts even though attorneys usually keep these funds separate. The type of bank account should be an "attorney trust fund" type of account. You could also call it an attorney escrow account. However, they still may use 1 bank account for all future law suit collection payments. Therefore, no matter what account physically holds the money, the law firm’s QuickBooks Online records must reflect an "appropriated” or “reserved” amount so they can track how much each future client payout remittance will go to each client. To manage this bookkeeping requirement, the law firm’s records should have a separate liability account in the chart of accounts to represent the amount owed back to the clients. This account will be the sum total of all future law suit payouts. Since there can only be 1 “receivables” type of account in QuickBooks Online, and since we are already using “unearned legal fees" as the receivable account to track the client’s balances from the normal legal fees invoices, then the only way, in QuickBooks Online, to know how much of the liability account is owed to each client.

This learn QuickBooks Online for Attorneys Tutorial training lesson will show you how to us the time activities that QuickBooks Online provides so that the law firm can track the time of the associate attorneys who work on client’s jobs. Time activities are either time slips or time sheets. A time slip or “single time activity” is a record of an event where an employee or associate worked for a specific time and on a specific client’s job. A “Time Sheet” in QuickBooks online is simply a week’s worth of time activities organized in to one window. You can enter employee time or attorney’s time in to either of them and they get entered in the same way. You must indicate the amount of time for each event that work was done and must include the name and date as well as the specific client or job that the time was for. If you re-open the time sheet, you can isolate an “drill down” to open each single time activity so you can edit them 1-by-1. They are NOT transactions! They are simply recorded events that will help track time of people and all information about worked time for the law clients. After any time activity is recorded, the event will be shown on the “time activities by employee detail” report. These time sheets and time slips will not show on any other report if you do not mark them as “billable” They will not affect any account or balance of any client until they are marked as billable and put on an invoice. We will learn that in the next video.

This learn QuickBooks Online for Attorneys Tutorial training class will show you how to bill attorney’s clients for time spent rendering legal services. Usually associate attorneys who work for the law firm will document their time spent on each client. They will fill out a time sheet, time slip or single time activity and then mark this time activity as billable to the client. The way QuickBooks online applies time sheets to future transactions, is to use an item on the list of products and services that QuickBooks online has put it there by default. This item is called “hours” it is the default item when using time activities sheets to bill for hours worked. If the time sheet is marked as billable, then when the time sheet or slip or activity is placed on a client’s invoice, the “hours” item is the one that is used on the invoice and it is connected to the income account called “billable hours”. QBO sets this up by default. After saving the billable time, the activities will appear on the “unbilled item report” until you bill the client later for the time. When that happens, you will see on your “profit and loss by client” the income account “billable hours” will show up in the income section for the amount you billed for that law associates time. You could change the default income account for the hours item so that a different income account would appear in the profit and loss by client report.

This learn QuickBooks Online for Attorneys training tutorial will show you how to add service items to a time activity like a time sheet or time slip. This means the items that you have added to the list of product and services can be placed on an associate attorney’s time sheet or single time activity. You must first add the items to the list of products and services. You therefore must have already added the income account that will record the service that your law firm will render to the client. Then, you must “activate” the feature that allows you to add these items to the time activities. You will need to open the account setting (or company settings) window and open the advanced section of the settings window. The section in that advanced category that you must edit is the “time tracking”. You then click “add service fields to time sheets”. You may then place the service items on the attorneys’ time activities and then you can track time of your attorneys by service item in addition to time by employee or time by client. When you ultimately place the time sheet or activity on a client’s invoice, the specific service items that were placed on the time sheet will show in the invoice and track to the proper income account