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How to Set Up and Process IOLTA Accounts in QuickBooks Online.

May 2, 2024 3:10:27 PM Kathy Dise QuickBooks, Accounting, Lawyer Trust Accounts

How to Set Up and Process IOLTA Accounts in QuickBooks Online.
1:09

Wondering how to properly keep track of your Interest on Lawyer Trust Accounts (IOLTA)? To many small businesses, keeping records is downright confusing. WeHow to Set Up and Process IOLTA Accounts in QuickBooks Online - cover recommend keeping track of individual client funds. The best way to accomplish that is to set up your Chart of Accounts using subaccounts for each client.

The Process

Here is the process for setting up your Chart of Accounts, creating a new client, receiving funds into IOLTA, creating invoices, and ultimately removing the IOLTA funds as they are earned:

  1. Create an account (Other Current Liabilities) in the Chart of Accounts called “Funds Held in Trust.” This account will be the parent account for the Trust client sub-accounts.
  2. Create a new Customer/Client – “New Client” in our example
  3. Create a sub-account in Trust for your new client. To do this:
      1. Go to Chart of Accounts
      2. Select “New”
      3. Type = “Other Current Liabilities”
      4. Detail = “Trust Account Liabilities”
      5. Name = Use customer name you just created
      6. Check “Sub-Account” and choose “Funds Held in Retainer”

        How to Set Up and Process IOLTA Accounts in QuickBooks Online.
  4. Deposit the retainer. Here’s how:
    1. “Make a deposit”
    2. Choose IOLTA
    3. Received from = new customer you created
Kathy Dise

Written by Kathy Dise

Kathy has over 30 years experience helping small businesses succeed. As a commercial lender, commercialization expert and now as a QuickBooks diamond level advisor, Kathy understands the challenges small business owners face. Her experience helps business owners quickly accomplish their financial goals. As the owner of BudgetEase, Kathy works with clients to develop a plan to efficiently process 1,000s of small transactions so owners can make informed decisions. She lives in Shaker Heights, OH with her husband Ralph and enjoys golf, curling and walking in Cleveland’s fabulous Metro Parks.