QuickBooks Online for Attorneys Processing the Transactions

Hi there, Linda Artesani, Artesani Accounting. This week I'm going to discuss a little bit about some of the navigation features in QuickBooks Online. I realized as I'm going through the process of doing this series of posts, so if you haven't gone back to the very first one, we start from the very beginning of purchasing QuickBooks Online, and then we go through the Chart of Accounts and the importing of different areas, different list items. Some of the back history, and now we're to the point where we're going to be starting to do some of the work inside of QuickBooks, doing the— laying the groundwork for the accounting piece. Now I'm going to jump into QuickBooks and give you a pretty high-level, super speedy version of a QuickBooks lesson, how to navigate around the product. I highly recommend, you know, maybe taking some time and going through some videos in their training section or just kind of getting inside it. I'll give you a link to get to a playground where you can kind of play around in their test file. But I want to at least give you the opportunity to see where some of the things are. And as well as we'll get into some places that you probably should dig deeper into, maybe in a future video I'll give you some maybe higher level, more dive in deep on some of these areas. But I want to give you a really short version of how to navigate around QuickBooks so you can get going in the file and start to get going on the transaction. So let me share my screen. But here we are in my test file. So this is really the place where there's a lot of things in here that may be good, maybe not, because it's been me playing around in here. And sometimes some clients, some potential clients, I let them visit this account. So I just wanted to show you that. Here's the plus sign, New. So if you look over here at the plus sign, New, you'll see as we pop it open, there's a lot of areas. You have the Customer area, the Vendor area, the Employee area, and the Other area. I'm primarily going to live in maybe these 3 pieces of this, but you do have a Statement area here too. And then the customer side invoicing payment link is here now, which wasn't— it's new. And then other things that you would use for a customer and anything under here. So if you're not sure where you want to get to, how to enter a transaction in QuickBooks, you want to go to that plus sign, New. Now you can also, as in QuickBooks always, you can jump into any of these features right here in this side navigation toolbar. But as you can see, it's a lot more— I think a lot easier for the brain as well as you could go right in here on the homepage where you can kind of click there. So it's money in, money out. Obviously money in would be clients, manage the clients, it's going to bring you right to the client list. It's funny, this has not been here that long and it used to be in desktop and I tend to not click there. I keep going to the navigation bar. I forget that it's here. But you can see at the top here you've got overview, all sales, invoices, payment links, products and services. So overview is just going to give you that high-level overview. And then if you want to go into all sales, it's going to show you sales receipts and invoices. So the whole enchilada. And then you've got here on this, in this right side of the screen here, you've got the gear where you can filter and really customize your screen look. So maybe you want to see if any of these clients have an email address. You can add that there too. So you can see where there's email addresses there, and you can take off anything that you want. Maybe you don't want to see the due date. Maybe you— I would think you'd want to see the status, but the type, definitely the email, and you can, you can choose how this screen looks. One of the other features I do like about this, and this is kind of getting into more than what's in the article, is you can see like what's the unbilled activity, who hasn't paid you. So you have a way to go in here and find out Mary Smith still hasn't paid me, and she may not have had any— first want to see if she had trust funds to pay it, and if she didn't, then you would want to go and chase down Mary Smith because attorneys are usually not the best at staying on top of the AR. For the most part, they kind of let that part go. And then there's only one open invoice in this file. Now you can go through expenses. Expenses, the same kind of deal, but you can always go back to that home page to access as well. So that would be your— let's see— dashboard. You could grab it from Money Out. So now you go to Money Out, where you can go to pay bills, track time, or you can go into expenses if you want to see. This is a nice spot that I like to tell people to go if they want to see if everything's in the right category. So you can come to Broward County Court and you can see the accounts that it went to. And at the end of the year, or even 6 months in, you can kind of go here and make sure if you've got like Amazon, you want to see it's all office expense, which not always is, but— or bank service fees. This is a nice, easy, quick way to kind of clean that up as an— as, as the attorney or a law firm or person that works at the law firm. Now, the other place I want to show you is going here to this gear. And under the gear, this is more your settings section, more of the things— think of the plus sign, new, is what you do all the time. And then the settings section, it does have reconcile and budgeting. So those are things you probably want to do monthly, but they're not more like the day-to-day transactions that would be in that plus sign. Bye. But this is more of how you would set things up. You've got tags in here if you want to tag items. Tag feature, I would definitely hop into reports first to see what reports you get out of tagging, to understand the report section. I'll just click here now for a second to show you tags. So you can start to tag, but you can also, um, you know, you can tag if you want to track anything, but you have to make a tagging group because the tagging on reports is basically at the group level. You don't want to just throw a bunch of tags in and then not have a way to get the reporting out of it. Remember, the one thing about tagging, and I actually had somebody that I worked with that was really creative in how they use tags, but they didn't realize that if anything's up in that balance sheet like advanced client costs, it will not show on a tagging report because tags are only under the profit and loss side of any reporting. So remember that feature when you get into doing any tagging. Tagging is pretty cool. We use tagging a lot of times for 1099 items. So if you're trying to track as you go throughout the year, maybe it's a 1099 NEC or 1099 miscellaneous, if you're not in Advanced where you could make a custom field, tagging will help there. So you'll be able to pull those reports up and be able to see at a high level where, where these items are and which one should be where. And then maybe you can maybe change them if you find that they're not exactly right. So that's where you would find that. And really, the Gear is truly a section that is just for— you can find your attachments, you can do recurring entries, recurring transactions. Like if you're recurring invoicing, maybe you've got somebody that you need to do a recurring type of invoicing for. A lot of attorneys do like a subscription billing. That's a beautiful place to do that. Of course, if you are working with a law firm and you really need to check the ABA to see what the local, especially at the local level, to see what is allowed. Some states don't allow you to do flat fee billing only up to a certain amount, like a $2,000 limit. So you really want to check your rules to understand what the limits are, especially if you're an attorney doing your own books. You want to know if there's a cap on that. And a lot of times I see attorneys trying to creatively get around using trust accounting because the trust accounting is so— the trust accounting is so much about compliance and being really regimented about tracking. And I've seen some firms that try to get around that by kind of using creative ways to bill. And you really want to check to see your ABA and the local or the state ABA to see what the rules are. So that's basically it when you— when it comes to looking at the features of QuickBooks. Reconcile is important. So I'm just going to go over here, I'm going to get out of this screen and go over to the Banking section. So under Banking, if we go into Banking, you can see that there's— we'll just go into the Banking tab. You can connect your bank accounts to QuickBooks and start to pull the transactions in. So you can see I've got this checking account connected. You can come over here and see what's been categorized through it and then anything that's been excluded, which there isn't anything. So that's a way, and there's also a dropdown list. So if you have multiple bank accounts, we only have one attached here, but if there's multiple, you can start to see What's in the account and what needs to be matched. Now matching is critical and following and making sure that as you enter the transactions you can match them because they process through the bank. So anything that's not processed, maybe you refund a client in the IOLTA, you refund a client some funds. Sometimes if you're trying to clean up the IOLTA, it can be a check for 23 cents. And then if that happens, then maybe you have to go back and then look at that check is still open because you still have to refund it even if there's $0.28 there. And then you have to maybe reach out to the client, get that money out because you want to get it off of your books. So it's important to track. And then this matching will help you in figuring out what's open, what's not. It helps with reconciliation. You still have to do reconciliation even if you match the transactions. I see this a lot with clients. They say, well, I match my bank accounts. Do I still have to reconcile? The answer is yes. I have seen in my career working with bank feeds, sometimes they don't come in right, or sometimes they'll come in and they'll— lots of times things are missing. So if there's a multiple, let's just say you paid for Adobe and you bought it for a couple people in your office and all 3 of them had 3 subscriptions and they were all $9.99 a month. Sometimes the bank, because it's like a trigger in QuickBooks, will just— QuickBooks won't bring in all of them. And you'll miss that expense because you're just bank matching, but you're not reconciling. So really critical working with law firms, or if you're an attorney doing your own books, please, please, please reconcile all your accounts, the operating, the IOLTA, any credit cards, any loans, advanced client costs, another account you have to reconcile. So there's a lot of pieces there. Now I just want to go at a very high level at looking at some of the transactions that you'll be producing in QuickBooks. If you have not downloaded my book, my ebook about working with attorneys and law firms, I highly recommend it because in there they give little short videos on these little pieces that I'm going to go over rather quickly. But I wanted to make sure that you see how to do that here as well, because this is part of the series of working with QuickBooks Online. Let's go over here and let's go to— let's go over here and let's go to I'm just going to go right into the sales section. I want to show you, here's a sales receipt, and this is a sales receipt for someone that paid me, a law firm, a retainer of $5,000. So here's a sales receipt that I created. I used the product or service that we already created in the system as retainer received, and it's going to point to that header account for this person. It's going to really point to the header account, so it's only going to do that high level, and then we have to do a journal entry to move that down. And it's $5,000. And I didn't use a class, but classes are great to use if you're a law firm that has multiple partners. It's a great way to track also how much revenue is brought in by each attorney. But here you can see it's the client's name is John Lampman, and he paid me $5,000. Now, if I go into his account, what you will see— and I'm going to go right to his account. We've already set up an account for Jonathan Lampman, John Lampman, and it's going to be a a other current liability, a trust type. And let me go here. And then you can see here it is. Here's this $5,000. I'm just going to view the register. I'll view it at the top level, but it's estate planning. So he, he paid me for estate planning, that $5,000. So I've shown it in the sales receipt. I want to show it as a sales receipt because I want it to be under the client's name. I want it to show in the customer section of QuickBooks. If you just book it directly in, it's like a shortcut I see people do. They'll go to plus sign, bank deposit, and they'll and then make the subledger there and book it directly in, you're not going to have that sales transaction. It won't show at all. It'll show here in the register, but it won't show at all if you are trying to see all the transactions under the client, which I really recommend that you have pure visibility there. Now, as you can see here, it's not showing the sales receipt at all. It's showing the journal entry. So what I did, because I booked it to the header, I needed to move it out of the header. So I booked it at the sales receipt level here. as a credit, debited our accounts receivable, credited this header account. Now I'm moving it out of the header account and moving it to the subledger. So that's the second step of receiving the retainer sales receipt. Then you have to do this, you have to move it out of the header. And I'll take you to a balance sheet. What's the date on this? 6/13. So I'll take it to a balance sheet so you can see all the transactions and how that transpired in that header. So let me just bring up a balance sheet. Hopefully it's this year. This year, I can just do all dates, run the report, and I'll show you in the header. And like I said, don't judge me on this file because it's pretty, pretty, pretty messy. Um, I'm not even sure we've got 2 liability accounts here, so I'm not really sure where I'm going to see this, but let's see if I can find Jonathan Lampman here. He should be here. A little shortcut to find— I'm going to hit Command+F and I'm going to do Lampman because I know he has a balance. So I'm going to do Lampman and just look for him, and there he is. So here he is with the $5,000, and if I go into his account, you're going to see again that's going to bring me back to what we just looked at. So that's the money there, but now that I know what account subheader he's under, when I look at Lampman, I just have to go up here to the header And then you will see in the header the $5,000 out showing Lampman there. So Lampman's sales receipt would have been booked there, which probably in this file I have it hooked up to go to the other trust liability. So there's an issue, right? It went to the other trust liability, but I booked Lampman under a different trust header. So you'd need to have— if you have multiple trust accounts, multiple trust bank accounts, you need to create multiple Parent accounts with multiple sub-ledgers, because you want to use that view of a parent sub-ledger for one bank account and a parent sub-ledger for the other. That way you can collapse. It's going to help you figure out if something goes awry, and you'll be able to see where the mistake is, just like this one. I'm going to need to go in and make sure I move that 5, because this should have been a 0 entry. And if I go back to my balance sheet— this is why this is a good one to show— if I go back to the balance sheet here, if I go back up to the other header, account. So I created an item to point to a header, but I didn't create an item to point to the second header. So if I go here, I believe here's another trust liability. See how there's $8,000 and my $5,000 from that sales receipt is probably inside there for Lampman. So that was in 6. Here it is right here, Lampman John. I need to move that down as well. I need to move it into the right subledger, and I need to really create a second item for this other parent account. So that's one thing. Now let me go back to Sales, and I see QuickBooks is doing a little jumpy thing here. If I go back to Sales, I want to show you an invoice. So we've got some— let's go to Mary Smith's invoice because I've got some time entries. Actually, I'll take you to a time entry. I didn't really touch upon time, but you can do time entries inside of QuickBooks, and this is a way to do this. And I made sure I made it billable by the hours and put the words in. This is where it gets a little sticky and manual, but if you're first, you know, solo lawyer working on your own, it's a great way to start to track your time for now until you grow. Although I really recommend using LeanLaw for even starting from the very beginning. It's not that expensive. You will create a workflow. You'll have an app where you can use your phone to pick, you know, start to put the time entries in. And in the long run, it will save you time and money because if you have to start to grow and then this becomes unmanageable, having LeanLaw to kind of navigate through all these features and enter all these transactions that I'm showing you with all the journal entries and all that. It's done with a couple of clicks. So having this here is the manual way of doing it. And then if you have plans on growing, I would just jump right in with the extra legal software. It will really save you a lot of time. So let's go into Mary Smith's invoice for a moment and take a look at how that is set up. So here's a bill that we just had for legal services, and it was a direct bill. with one link time charge. And if I click this, it's going to take me to the billable time I just showed you. So we're just billing her for the time. Now, if she's got money in trust, we can pay this invoice, but we'd have to go see if she has money in trust, which I could come over here to see if she has money in trust in that actual account for— she does have money, but it's for estate planning. So we don't have a retainer in here for her divorce. So we'd have to either ask for a retainer or she would pay this out as a straight AR. Maybe it was only a consultation. And she didn't need to be— it didn't go any further than a consultation, which would be straight up AR transaction. I know that was a lot, and I know that you're probably sitting here saying, wow, there's so much here, and how am I going to navigate all of this? I know I went through it really quickly, but you can in fact do this work if you go back and watch the video. If you need help on any of this, Feel free to reach out. This is the work we do. And again, just like the app, sometimes it's worth getting that professional involved right off the bat. It might help you even at tax time, so you're not scrambling back with your tax professional asking them to do it. Hiring someone who can advise you along the way is money well spent. This is the stuff that we do. You can reach out to me and we will definitely have a phone call and we will go and talk about what it would cost to have us do this work. If you are an attorney, if you are a bookkeeper or an accountant and maybe you got your first law firm client and you want to learn more on this stuff, reach out. We have a Facebook group called the Accountants Law Lab that you could join and learn there as well. We share a lot of things there as well as if you're interested, you can join our private mastermind group. So on that note, I hope you all have a wonderful wonderful week. If this is helpful to you, please hit the subscribe button. I'm really close to getting 1,000 members. For some reason, 1,000 members is like a big deal, so I'm hoping to get there very soon this year. It's a goal. And then if, um, you have any questions, please reach out. I'd love to help you. Thank you. Bye now.