Real Estate Trust Account

[Shellie51]

Can someone tell me how they setup their trust account in Quickbooks that will comply with Wisconsin law. We have an accountant that just set it up using sales receipts as individual transactions The transaction number need to be entered manually in several places and it just seems cumbersome. There has to be a better way !!

[LauraD]

I don't know about Wisconsin law, but this procedure gives you a report of who 'owns' what amount of the trust fund. . and tracks the detail that you should need.

**This is what I do:

I have a trust bank account and a trust liability account set up in the COA. I track all client activity using customer:job. Any activity in/out of the trust bank account must use the trust liability account as the offset with the customer name attached. (NO EXCEPTIONS!)

I deposit retainers into the trust fund bank account directly, using the trust liability account and attaching the customer name.

I cut checks for all of the client disbursements from the trust bank account, using the liability account as the offset, attaching the customer name.

Then, I cut a check from the trust bank account to the law firm for the legal fees, using the liability account as the offset, attaching the customer name.

Then, I cut another check from the trust bank account to the law firm for all the reimbursable expenses prepaid from the Operating account, using the liability account as the offset, attaching the customer name.

(All reimbursable, or prepaid, expenses cut from the Operating account have the customer:job name attached as well. I have the reimbursable expense accounts in the COA set up as "Other expense" type accounts, or you could use a current asset type account called "Advanced Client Costs" for this.)

When I deposit the legal fees check into the operating account, I use the Legal Fees Income as the offsetting account.

When I deposit the reimbursed expenses check into the operating account, I use the Management Fees Income account (or Reimbursed Expenses Income account, if you wish)

Also - I have the reimbursable income account as "Other income" type account, , or you could use the current asset type account called "Advanced Client Costs" for this.

The other expense accounts are used for Operating expenses only.

If you want to create invoices, just enter the invoice, using the appropriate items, and/or time-costs.

Then, cut a check from the trust account for the amount due, using the liability account on that check with the client name attached.

Then, as a separate transaction, Receive that payment against the invoice and deposit it to the bank.

Does this help?

Laura D