Pop Quiz: How Well Do You Understand Trust Accounting?

By Author: Mayank Kapoor
Total Articles: 277
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The bar exam and your professional responsibility class are ancient history. You're not an ethics lawyer, and you don't file legal malpractice suits. All the more reason we want to spring this pop quiz on you!
Which of these funds do not belong in your clients' trust accounts?
Earned fees
Personal funds
Real estate escrow funds, such as a down payment on a house
Your firm's operating funds
Personal injury settlements
Collections
Retainers and advances
Other settlements and judgments
 
How do you make sure this actually happens, so that you keep your nose clean at all times?
Get an all-in solution like Easy Soft's Easy TimeBill and Easy Trust. Our trust accounting software gets you in compliance and prepared ­for a knock on the door from random bar auditors—at all times.
Basically, here's how it works.
•  You're retained by a new client.
•  The client pays your retainer, which you deposit into your trust account. ...
... Our escrow accounting software takes note of this.
•  You track your hours and bill your client—both through our legal billing software.
•  You debit your trust account for the earned portion of the retainer. Then, you move this portion into your law firm's operating account.
Here's another question.
What are the five steps to keeping your trust accounting clean?
Step one: keep all of your client's funds in separate accounts. Step two: make sure your client ledger has a positive balance. Step three: make sure all money is in the proper (trust v. operating) account at all times. Step four: reconcile everything. Step five: keep paper records of your check stubs and expense receipts.
Don't lose sleep over trust fund accounting . Follow the above rules, and you'll always be prepared for an audit.

Author Bio

Easy Soft specializes in helping law firms automate their processes with law office software. Easy Soft has automated software solutions for virtually every practice area, from case management, document assembly and time & billing, to trust accounting.