In this instructional video, Linda Artesani of Artesani Bookkeeping walks viewers through a specific trust‑accounting workflow used by some law firms that write individual checks from their IOLTA (trust) account to their operating account. Building on a prior video about lien law and revenue recognition, she demonstrates how to record retainer deposits, recognize earned revenue, and apply payments to open invoices within LeanLaw. She then shows how to reflect those transactions in QuickBooks, including creating bank deposits, editing payments to change the check payee to the law firm, printing the checks (or printing to PDF for demonstration), and finally depositing the printed checks into the operating account. Throughout, she highlights key UI settings in LeanLaw (e.g., default landing page), the importance of selecting the correct bank account in QuickBooks, and how to ensure that the trust‑account liability balance matches client balances after the deposit. The video concludes with a preview of the next Trust Club topic on cash versus accrual accounting and related write‑off considerations.
Chapters
Hi there, Linda Artesani, Artesani Bookkeeping. Ready for some more Trust Club? Hope you get to watch last week's video because it— I dived into lien law and how to really record the revenue piece. So you collect the retainer, then you move towards the part where the attorney actually has actually earned the revenue from the client and now has to bill the client. So you get the accounts received receivable piece, and how to bring that accounts receivable into, into the law practice as showing it as revenue. So we went through all the steps last week, I'll put a little link in the blog post to refer you back to that file. But it came up this week and actually came up with a client of ours, that we had a client that she actually writes checks. And she writes checks for each single person that they receive the revenue on. And this is just a practice that they've had for a very long time. She creates the check, she prints the check. So I wanted to show this scenario because it's a little bit trickier than the one we showed earlier where you could just make one transfer over from, from IOLTA to operating, which is what most of my clients do. But I wanted to go over this, this particular workflow because it's different than what we had last week. And it's kind of a workaround, but it will work if you have to print a check out and actually show that that revenue coming out of IOLTA, you're actually printing a check in IOLTA, and then depositing the checks into operating. Not the most optimal workflow, but it is a workflow that I've seen. And I've seen it in a few clients. So I figured it's a really good video to stay with trust accounting this week, and then show how to move that money in using a check method for the individual accounts. So let me share my screen. I just wanted to show you this one really cool thing, because normally when you pop into When you pop into LeanLaw, it brings you to the calendar page. And this is a new setting, at least it's a setting I just discovered where I can actually pick which page I want to come up to. I spend most of my time in the billing. So this is a great page for me. The attorneys might want to have it so that it populates right into time entries or into matters. So it's really up to you which page you want to come into— matters, billing. I'm going to pick billing for now. So now when I come into the program, it should take me right to billing. So it's just something new and hit the Save Changes. So we'll test it out when we get out of here at the end. So I'm going to come over to billing. And then I'm going to come over— let me move my picture here, make it a little bigger so you can see me a little bit better. So I'm going to come over here and I'm going to come into my open bills. So this is— I've got these that I just created. And I created them all on the same day. So these, these few here that are open and not showing as paid, I want to show them as being paid. So I'm going to come over to trust accounts. I'm going to grab Mary Smith first, and I'm going to create these payments just like we did last week. So I just click trust account. I'm just going to go over here into Mary Smith. I've got Mary Smith up here. Now I'm going to go into her account for estate planning, and you can see that she's got several invoices here that she has open and available. So I'm going to hit load transactions. I can see that her account balance is $2,000. $689.50. So that's how much she has left. Actually, her trust account balance is $4,766.50. So I can recognize this revenue now. So I'm going to record a payment. The total on this that's due for this is $2,689.50. I've got plenty of money in here, so I'm going to record the payment for all of these. I just want to back up here for a second. If I only wanted to pay one or two, I can just select them here. And then record the payment. Maybe it's just this top one for $510. But I am going to record the payment for all of these. And there's my payment, $2,689.50. It's payment on these invoices. You can write a memo, anything in here if you wanted to, just tab down and just start to type it in, whatever you want to type in. But this is going to record the payment. So I'm going to record the payment here. And as you know, it's going to go into QuickBooks. It's now— she has no open invoices whatsoever. And if you wanted to load the transactions, you're going to see that her balance has now dropped to $2,077. So that's great. But I'm going to do a couple more of these so that we can go in here and just start to show when you have more than one. So I'm going to bring in Michael Bennett. I'm just going to click there. I'm going to load the transactions. You can see that he's got $7,000 in his trust account just sitting there. That's— remember, trust account balance, that's that prepayment that you have in check. You're holding it in the IOLTA account waiting for it to be used. And he's been billed $510. So I'm going to record the payment here. And then again, you can put the notes. I'm just going to record the payments. He's going to have no AR left over. And now his balance is down to $6,490. And I had one other one. Let me go here and see who I had here. Uh, I'm going to go to Lewis. So we'll just go to Lewis. I'm going to jump here into Jonathan Lewis. So I do have some open AR, but I didn't record the payment of The retainer, so I need to do that first. So I'm going to do a deposit to trust for Jonathan Lewis. Here he is. I'm just going to say he gave me five thousand dollars, and I'm going to put the date. I'm going to backdate it a little bit because it was not entered properly, and then obviously the source would be check one two three four, and then I'm going to record the deposit. So now Jonathan Lewis is okay. If I come back to Jonathan Lewis, you can see here there's a problem because I have not deposited this. So the bank— this is not looking good here for my account, but it will when I get into the accounting side in QuickBooks. So here we are, Jonathan Lewis. I'm going to load the transactions. He now shows $5,000 in trust. once it populates. And then I'm going to record the payment of the $5,000 because it wouldn't let me record a payment and have the money. So I'm going to record the payment here, $5,000, record the payment. Now I want to hop over to QuickBooks and just do a little bit of housekeeping here. So specifically on that trust account. So I'm going to come over to the plus sign, bank deposit, I'm going to put Jonathan Lewis's money in the bank in the IOLTA because it was received. And you can see I've got a couple of checks here for Jonathan Lewis. I gotta check. This is the payment of the accounts receivable. So I'm looking for that entry that had to do with him paying his retainer. So this is an important piece here. So I'm going to make this on 9/11 that he paid me that. And I'm going to put it in the IOLTA account, the trust account, the trust bank account. Now if I pop back over to the trust account and get this off and that off, now we're all happy again. No more warning. That was what it was warning me. It was warning me that I did not make that deposit. So I'm gonna pop back in to quickly QuickBooks now. So for this method that my— one of my clients has, when you come into— let's come into the banking. Let's go into the trust account here. If we go into the register, you're going to see those transactions that I just received the money on the accounts receivable, you're going to see them here, you're going to see these 3 checks. The problem is, is they're actually physically printing a check. They're not doing a deposit with one big amount, making a transfer in their bank account. If they were, it'd be really simple. I would just come over to this Plus sign. I would record the bank deposit. I'd make sure it said to go to the operating, right? I want to make sure it goes to the right account. I would go here and I would select my payments that I just created, my receivables, to show that that money was going into the bank account. I'd make a transfer from trust to operating for $3,949.50. It'd be so simple. However, that's not what they're doing. This, this particular law firm is writing individual checks from IOLTA to operating. So the workaround for that is you're gonna have to actually come in here and edit this payment, this receivable payment. It's still connected to the trust. It's still connected to the customer. So you have that there. So what I'm going to do is come up here and write the check out to Law Firm. That's the name of my company. When you get to this part. Big important piece here. I don't want to prefill. I don't want it to change the details. I just want to change the name of the check, which is now going to be printed out in the name of my law firm because now I'm paying my— I'm paying my— taking money out of my trust, physically moving it the old school way by writing a check, and I'm going to deposit these individual checks into my operating account. So I would do that. I go back into the other ones and do the same thing. I'm going to come into this next one. I'm going to edit it. Again, I'm just going to make it say the law firm, the name of the law firm. So it could be like Linda Artesani's law firm. So I'm making the checkout so that I can have it so I can take it to the bank to make that deposit. I'm going to hit no. Remember that part, real important. You don't want to mess it up. And if you do happen to mess it up, and I will show you in a second. So say I accidentally— I'm going to show you this because it's important. So say I hit law firm and then of course my eyes draw right to green and I hit yes. And I'm like, oh no, I didn't mean to do that. I just come down here and revert. It's going to put me right back to where I was with Mary Smith's name up here. And I'm going to come back over here because we all do things fast at times. Come back over here and just do law firm. So now I'm writing the check out to my law firm. Hit no. Save and close. Make sure you check the little box off to be printed because now you're going to print the check. So you got to remember that one piece, which I did not do. So I'm going to go back to all those 3 checks, edit them. And hit Print Later. So make sure that they all say that so that when you come over to print the checks, they're there to print. I'm going to hit Print Later, Save and Close. And then I'm going to come over to the plus sign. I'm going to come over to print the checks. And then the 3 checks are going to be there once I change it to the right bank account. So I have to make sure that it doesn't— this is not the bank account, I want it to be the trust account. And then those 3 checks are right here. I'm going to print them. I'm just going to print them real simple. Preview and print. Check number, I'm just going to put— I'll put 999. And then I'm going to preview and print them out with the check in. I'm going to print them old school style. Print them. For the sake of this video, I'm going to print them to PDF because I don't want to do any printing. So we're going to pretend that they printed. Now I'm going to take these checks to the bank. When I take these checks to the bank, now I'm going to go to that other step, right? So I'm going to come back over to the bank deposit, make the bank deposit, select those 3 checks that were dated the 14th. There's my deposit, $3,949. But I'm now— I'm depositing it into the operating account. So those 3 checks are going to total that $3,949.50. And when I do that, I'll show you in the bank account. When you come here to the operating account, you're going to see here in this bank register, there is my deposit, $3,949. My trust accounts are going to be fine. We'll take another check in the lien law to make sure. Let's give it a little swirl, make sure that all my bank balances are the same after I make my deposit. And they are. I've got that beautiful flow in the trust account where the bank balance equals the liability balance equals the client balances. That is sweetness right there. So I hope that that wasn't too confusing. But I think that it's a piece that you might need if you start to work with a law firm that does things old school style, and they end up taking things and writing checks and Oh God, I wish people in the US would stop writing checks. But people write checks still, and you're going to run into those law firms, especially when you work with attorneys and law firms. Some of their processes can be really old-fashioned. If you work with a law firm that has got an older managing partner and he's the one that, you know, rules the roost and says that this is the way it's going to be, then you still have to print the checks. The workaround for getting those checks printed in the right way so that you're able to print them On the printer, put them together, make the deposit, deposit them into the operating account as revenue recognized. I hope that's helpful. If you have any questions, comments, feel free to reach out. So more Trust Cloud this week, and I'll see you next week. I think next week we're going to get into cash versus accrual and what the difference is and, and some of the idiosyncrasies involved in that and how we can get into what the differences are when you have to write things off. Because we do have client advanced costs and we do have to write them off at sometimes depending on the law firm that you work with. So I'll get a little bit into that so you understand some of the pain points of working with cash versus accrual-based records. See you next week. Bye now.
