Linda Artesani explains how law firms should account for Clio practice-management software. She recommends buying dedicated user seats instead of sharing logins, and warns that Clio's one-way sync to QuickBooks creates duplicate transactions when invoices are edited, requiring monthly reconciliation across all three systems.
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Clio software is overhead. It's part of your break-even costs and it's also part of doing business. So you have to have the Clio software as an attorney and law firm to run your firm. It's got your document management, communication with the client, your calendaring, it's got your billing. So all of these things are part of the work that you do. So if you're using Clio, a lot of times what we do is we will share the attorney's login and they know this, it's a thing. It was never built that way. Hi there, Linda Artesani from the Accountants Law Lab. This week, and actually for the next few weeks, we're going to discuss some questions around the software Clio. Clio's the number one software that the attorneys use. You're gonna find that if you work exclusively with attorneys, you're gonna run into Clio for sure. It's a practice management software. It also has two parts to it. There's Clio Grow, which is another piece that's added. You don't see it as often, but it's kind of a lead management, kind of a, it's something that maybe a MailChimp would do or a HubSpot would do or a Salesforce would do. Following the lead to fruition as a client. And then Clio Manage is the one you're going to find, you're going to see more than anything else when you work with law firms is that they have Clio Manage. They don't have an account user in Clio. You'd have, the attorney would have to buy you a user seat. So if you're using Clio, a lot of times what we do is we will share the attorney's login and they know this, it's a thing. It was never built that way. I'm hoping that they do make that change. But for now, you wanna share the lawyer's one or have the lawyer buy one for you. Now, how do you know when you should buy one and, and when you should use share the lawyer's one? It's a practice that we do at our firm. We never do any entries in Clio. The lawyer will have to do the entries into Clio themselves if we are sharing their login, 'cause there's really no way to see who did the entry themselves. You'd have to, it would all be if you use the lawyer's, it's gonna show up as them. So we, we are very careful when it comes to that. If the attorney wants us to do entries for them on their behalf, then we ask them to buy the seat. It's not that expensive. It's part of doing business, and then we'll have our own login to do those entries. So if there's mistakes that are happening, maybe there's a transfer made in one amount and the amount that the attorney booked in the software for another. And we see this, if we have our own login, we would go in and fix that, make that correction instead of going back and forth with the attorney saying you need to move, change this transaction XYZ. And of course Since Clio has a one-way sync, if the attorney makes that change in an invoice or anything like that, any changes, because it's a one-way sync into QuickBooks, it's pushed into QuickBooks one way, it's gonna send another transaction over. If there's a change to a transaction, it sends a secondary transaction over and it's up to you as the accountant or bookkeeper to go in and remove the original and correct and add the correction. It might be sitting in undeposited funds. It could be sitting anywhere really on the books. You have to be careful and look and see these extra transactions. It could just be sitting sent into the accounting as a transaction that needs to be removed and then replaced. So you wanna replace it with the correct one. That will be found when you do a reconciliation of the books. So you really want to stay on top of doing the accounting and doing it monthly and reconciling and doing that three-way reconciliation. All great topics we cover at the Accountants Law Lab. So let's dive into that question and, and tackle it one-on-one, right on, right on point here. So let me share my screen. I'm gonna share the question. Here it is. Just a quick question. And it gives me a beautiful pink glow. Just a quick question. Do you prefer to code Clio? So we're talking about the expense of the Clio software to a cost of goods sold account or just expense the monthly fees? I've seen it both ways and I'm just curious to what others are doing. So my answer to that is no, we really don't have cost of goods sold. I always think of cost of goods sold as like maybe somebody in manufacturing that's building a product and there's pieces that are all purchased individually and then the product is created so it's a cost of goods sold. I have a person who has a jewelry company. She makes beautiful jewelry. And in here in Florida, she makes them all out of fish hooks. It's really interesting. And what that is, is as she buys the beads and the pearls and all the things that go on these fish hooks, that's all cost of goods sold. So Clio software, and if you read the article we placed a couple weeks back, and I'll, I'll link back to that in the article, Clio software is overhead. It's part of your breakeven costs, and it's also part of doing business. So you You have to have the Clio software as an attorney and law firm. You have to have that software to run your firm. It's got your, you know, document management. It's got communication with the client, your calendaring. It's got your billing. So all of these things are part of the work that you do. But it's a straight-up expense to the firm. And so we've had discussions at the Law Lab about whether that would be a dues and subscription expense. Or would it be a software expense? And I am of the mindset that it should really be software. Software expense, I can remember years ago was such a small expense and now it's really quite one of the larger categories on law firms' books. Software expense is something that'd be separated. And we— I'll also give you a link to our— we have a preferred chart of accounts that you'll see that we like to use for all the law firms. We do tweak it by practice area. So this is just kind of your basic law firm template, but I'll give you a link back so that'll help you if you're just starting out working with law firms. If you want to learn more, we have a Facebook group you can join. It's free and we share a lot of content there. And we also have a mastermind group where you can actually work one-on-one with me and Sarah. So if you'd like to join that, we'd love to have you. And on that note, we'll see you all next week. Bye now. Bye.
