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Trust money belongs to clients until it is earned, so the books have to show it that way from the first entry: a trust bank account kept apart from the operating account, a matching client-trust liability, and a ledger for every client or matter that adds up to that liability. This page sets out that structure in QuickBooks Online, how each kind of trust entry posts, and the checks to run before the first deposit. It is a bookkeeping reference, not legal advice — trust-account rules are set by each state, and a few are quoted below from the state’s own text.
Setting up IOLTA in QuickBooks (Interest on Lawyers’ Trust Accounts, a pooled trust account for client funds) takes three accounts: a trust bank account holding only client money, a client-trust liability carrying the same total, and the operating account. A ledger for every client adds up to the liability, and five checks run before the first deposit.
The three accounts, how client ledgers roll up to the liability, how deposits, earned fees and disbursements post, the five checks before go-live, and where the bookkeeper’s role stops — set out in full below.
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Two bank accounts and one liability. The trust bank account says where client money is; the liability says it is owed; the operating account holds only what the firm has earned.
One account in the chart of accounts for each trust bank account the firm actually holds, named so nobody can mistake it for operating — for example “IOLTA Trust – bank name – last four digits”. Intuit’s help page lists Bank among the account types you can add from the chart of accounts, with an opening balance and an “as of” date. Only client money is recorded here, and it is reconciled to its own bank statement.
A liability account — for example “Client Trust Funds Held” — that carries the same total as the trust bank account. Intuit’s help pages say the account type decides whether an account reports on the Balance Sheet or the Profit and Loss; a liability keeps client money on the Balance Sheet as an amount owed, and off the income statement. Every trust deposit increases it and every trust payment reduces it.
The firm’s own account, where earned fees land and firm expenses are paid. Keep it as its own bank account in QuickBooks, with its own reconciliation, so no entry can be made against “the bank” without saying which one. Unearned client money does not go here unless your state’s rule allows it — California’s, for example, allows an advance flat fee into operating only with written disclosure to the client.
A note on subaccounts. Intuit’s help page on subaccounts describes a “Make this a subaccount” checkbox and suggests locking a parent account so entries can post only to its subaccounts. One approach is to hang one subaccount per client under the trust liability. Check Intuit’s own help page for its current subaccount limits before choosing that route. The per-client ledger described next does not depend on subaccounts.
The liability says how much the firm owes clients in total. The ledgers say how much it owes each one — and the two have to agree.
A client ledger is the running record of one client’s money in trust: each receipt with its date, amount and source; each disbursement with its date, amount, payee and purpose; and the balance after each entry. California’s record-keeping standards list those same elements for the ledger kept for each client, and Florida’s Rule 5-1.2 calls for a card or page “for each client or matter”. Where one client has several matters, a ledger per matter stops money held on one file from paying costs on another. Whether your state requires per-matter ledgers is a question for your state’s rule.
In QuickBooks Online, each trust entry names the client. Intuit’s deposit screen gives each line a “Received from” name and an Account, so a trust deposit line can name the client and post to the client-trust liability. Intuit’s report help says reports can be filtered by account and by customer, which is how one client’s ledger is read back out of the liability account. Where a matter needs its own record, Intuit’s projects feature groups transactions for a single customer; Intuit lists it in QuickBooks Online Plus, QuickBooks Online Advanced and Intuit Enterprise Suite. If the firm’s practice-management software keeps the client trust ledgers instead, QuickBooks still has to agree with it, client by client.
The roll-up test. Add up every client ledger balance. That total has to equal the balance of the client-trust liability account, and both have to equal the reconciled balance of the trust bank account. If one client’s balance is below zero, the total can still look right while that client’s costs have been paid with someone else’s money — which is why the test is run client by client and not only in total. Illinois’s Rule 1.15A sets out this comparison as a three-way reconciliation; the monthly trust reconciliation checklist walks through it step by step.
Every trust entry moves the trust bank and a client’s trust balance together, by the same amount, with the client named. If an entry moves only one of them, the ledgers stop adding up.
The trust bank account goes up and the client-trust liability goes up by the same amount, with the client named on the line. Nothing touches income: an advance fee is still the client’s money. Record the deposit straight to the trust bank account, not through an account shared with operating receipts, so the books show the money arriving where the bank shows it arriving. The client’s ledger now shows the receipt, its date and source, and the balance held.
Two things happen and the books must show both. The client’s trust balance and the trust bank go down, recorded against that client; the operating bank goes up and the fee becomes the firm’s income, against the bill it pays. Intuit describes a Transfer as a single transaction that affects the two accounts it moves money between — so a bank-to-bank transfer on its own moves the cash but leaves the client’s liability where it was. The entry, or pair of entries, has to reduce that client’s trust balance too. When a fee is earned, and whether it is in dispute, is the attorney’s decision under the state’s rule; the books record it once it is made.
A filing fee, an expert’s invoice or a settlement payout paid from trust reduces the trust bank and that client’s trust balance, with the payee and purpose on the entry. It is charged only to the client it was paid for, and only up to what that client has in trust. Florida’s Rule 5-1.2(e), for example, limits electronic transfers out of trust to money paid to or for a client, expenses properly incurred for the client, earned fees not in dispute, and transfers between trust accounts.
Bank charges. A bank fee on the trust account is the firm’s cost, not a client’s. California’s Rule 1.15(c) and Florida’s Rule 5-1.1(a)(1)(A) each allow a lawyer to keep in trust an amount of the lawyer’s own money reasonably sufficient to pay bank charges. One way to record that cushion is as a firm-owned line in the trust ledger, so the client ledgers still add up; the State Bar of Arizona’s trust-account guidance, for example, speaks of reconciling “the total of all individual ledgers (i.e. client and administrative)”. Confirm the treatment your own state expects.
Firm money in trust beyond what the rule allows, or client money in operating, is commingling. California’s Rule 1.15(c) bars the lawyer’s own funds from trust except bank-charge money and funds partly owned by the lawyer, and requires the lawyer’s portion to be withdrawn at the earliest reasonable time after the lawyer’s interest becomes fixed — so under that rule an earned fee left sitting in trust is a problem too, not only a fee taken early. In the books, every entry on the trust bank account should name a client, or the firm’s own permitted bank-charge line.
Rent, payroll, software and every other firm expense are paid from operating. If a firm bill is paid from trust by mistake, the books record it as it happened rather than hiding it inside a client’s ledger; the shortage then shows in the roll-up, and the attorney decides how the account is made whole. Illinois’s Rule 1.15(a) says a lawyer must not use client funds for the lawyer’s own purposes “even temporarily” without authorization. Florida’s Rule 5-1.1(a)(1)(B) allows a lawyer’s own deposit to replenish a shortage and requires immediate notice to the bar of the shortage, its cause and the replenishment.
A client balance below zero means another client’s money paid that client’s costs. In the books, the entries are recorded as they happened and the shortfall is flagged; moving money to cover it is the attorney’s decision, not the bookkeeper’s. The error patterns that lead here, and how each one shows up in the numbers, are on the trust accounting errors page.
Run these in order on the start date. The last one sets the baseline every later reconciliation is measured against — see QuickBooks reconciliation for how the bank side is done.
List every trust and operating account the firm holds at its bank, and check that each has exactly one bank account in the QuickBooks chart of accounts, with the trust accounts clearly labeled as trust. An account the bank has that QuickBooks does not, or the other way round, is fixed before anything is entered.
Intuit’s help page lets you enter an opening balance and an “as of” date when you add a Bank or liability account. For the trust bank account that figure comes from the bank statement on the start date; for the client-trust liability, from the sum of the client balances on the same date. If the two do not agree on day one, the difference is found and explained before go-live, not carried forward.
Every client or matter with money in trust on the start date gets its opening balance, with the document behind it: the deposit record, the prior ledger, the settlement statement. The sum of those balances is the liability’s opening balance from the step before.
Bank feeds, card processors and practice-management sync each post to a specific account. Check that the trust bank feed posts only to the trust bank account, and that retainer payments and payments of earned invoices each land in the account they belong to.
Reconcile the trust bank account in QuickBooks to its statement — Intuit’s reconcile tool is finished when the Difference reaches $0.00, and it saves a reconciliation report. Intuit describes reconciling as matching QuickBooks with the bank statement, which covers two of the three balances; then compare that reconciled balance with the liability balance and with the sum of the client ledgers. All three agreeing on the start date is the baseline every later month is measured from.
Trust-account rules come from the bar or high court of each state where the lawyer is licensed, and they are not uniform. Each row below is taken from the state’s own published text, read on 26 September 2026 and linked so you can read it yourself. The rows are examples, not a survey: your state may say something different, and a firm licensed in more than one state may answer to more than one rule. Confirm with your state bar or your own counsel.
| State and rule | Ledgers and reconciliation | Records kept | Read it |
|---|---|---|---|
| California — Rule 1.15 (effective January 1, 2023) and the State Bar’s record-keeping standards under it | A written ledger for each client, a written journal for each bank account, the bank statements and cancelled checks, and “each monthly reconciliation (balancing)” of the three. The State Bar’s guidelines say a firm with two or more licensees designates one “designated licensee” for each trust account, responsible for performing or supervising the monthly reconciliations. | No less than five years after final appropriate distribution of the funds (Rule 1.15(d)(5)). | Rule 1.15 and standards · State Bar guidelines |
| Florida — Rules Regulating The Florida Bar, chapter 5 (version dated June 30, 2026) | Rule 5-1.2(b)(7): a ledger with an individual card or page for each client or matter. Rule 5-1.2(d)(1): a monthly reconciliation of each trust account, and a monthly comparison of the total of reconciled trust balances with the total of the client ledger cards, with any difference explained; (d)(2) adds an annual list of the balance held for each client or matter. Rule 5-1.2(c)(1): a firm with more than one lawyer keeps a written plan naming who reconciles. | 6 years after the final conclusion of each representation (Rule 5-1.2(f)). | Chapter 5, Rules Regulating Trust Accounts |
| Illinois — Rule 1.15A, Illinois Rules of Professional Conduct (effective July 1, 2023) | Receipts and disbursements journals, contemporaneous ledger records for each trust client, and three-way reconciliation reports of all client trust accounts “on at least a quarterly basis”. The rule’s comment adds that banks may allow only 30 days from the statement date to report errors. | Seven years after termination of the representation (Rule 1.15A(a)). | Rule 1.15A · Rule 1.15 |
| Arizona — Rule 43 and Rule 42 ER 1.15, per the State Bar of Arizona | We read the State Bar’s trust-account page, not the rule text, so no frequency is stated here. The page’s reconciliation tip: reconcile the total of all individual ledgers (client and administrative), the general ledger balance, and the bank statement balance adjusted for outstanding transactions. | Not stated here — read Rule 43 itself. | State Bar of Arizona, trust accounts |
What this table is not. A state missing from it is missing because we have not read its rule text for this page, not because it has no rule. The American Bar Association’s Model Rule 1.15 is a model: it binds no lawyer until a state adopts its own version, which is why every row above names a state. For your jurisdiction, the authority on the rule is your state bar or high court, and how it applies to your firm is a question for your own counsel. Nothing here is legal advice.
The records are bookkeeping. The trust account, the money in it and every decision about that money stay with the firm. Neither TechBrot nor any practice it engages will ever:
On TechBrot’s engagements, the bookkeeping is done by TechBrot’s signed trust-accounting specialist practice: it sets up the trust structure in your own QuickBooks file, keeps the client ledgers current, and prepares the three-way reconciliation, with any break flagged to the attorney. A Certified QuickBooks ProAdvisor reviews every close a specialist practice prepares before it reaches you. The trust specialist prepares the trust ledgers and the three-way reconciliation; a Certified QuickBooks ProAdvisor reviews the close before it reaches you. TechBrot is a bookkeeping and advisory firm, not a law firm and not affiliated with Intuit Inc. For the wider picture of trust recordkeeping, see the law firm trust accounting hub.
Law-firm trust accounting engagements are backed by a specialist partner practice that has signed with TechBrot for this work.
Yes, as separate bank accounts in one chart of accounts, each reconciled to its own bank statement. What keeps them apart is the structure, not the file: a trust bank account that only ever holds client money, a client-trust liability that equals it, and client ledgers that add up to both. Keeping trust money separate is set by your state’s rule; how many files the firm keeps is a bookkeeping choice.
Because it is not the firm’s money yet. Intuit’s help pages say the account type decides whether an account reports on the Balance Sheet or the Profit and Loss. Recording a retainer as income puts client money on the income statement and overstates what the firm has earned; recording it to a liability shows it as owed to the client until the fee is earned and moved.
Per matter is the finer grain: it stops money held on one matter from paying costs on another matter for the same client. Florida’s rule allows a card or page “for each client or matter”; California’s standards call for a ledger for each client or other person on whose behalf funds are held. What your state requires is in its own rule — confirm with your state bar or your own counsel. Either way, the ledger balances must add up to the trust liability.
Not for the accounts themselves: bank and liability accounts are added from the chart of accounts. Intuit lists its projects feature, which can serve as the matter record, in QuickBooks Online Plus, QuickBooks Online Advanced and Intuit Enterprise Suite. Without projects, naming the client on each trust entry and filtering reports by customer still gives you the client ledger. Plan features change, so check Intuit’s current plan pages before choosing.
As a deposit to the trust bank account, posted to the client-trust liability with the client named on the line — not as income, and not through the operating account. The client’s ledger shows the receipt, its date and source, and the balance now held. When part of it is earned, the entry that moves it to operating also reduces that client’s trust balance. Some states treat certain advance fees differently — California’s rule, for example, allows an advance flat fee into operating with written disclosure — and that is a legal question for the attorney.
Only as far as your state’s rule allows. California’s Rule 1.15(c) and Florida’s Rule 5-1.1(a)(1)(A) each allow an amount reasonably sufficient to pay bank charges on the trust account, and Florida’s rule also allows the lawyer’s own deposit to replenish a shortage, with immediate notice to the bar. Other states have their own text. In the books, any firm money in trust sits on its own ledger line so the client ledgers still add up.
It depends on the state, and the clock starts at different points. California’s Rule 1.15 says no less than five years after final appropriate distribution of the funds; Florida’s Rule 5-1.2(f) says 6 years after the final conclusion of each representation; Illinois’s Rule 1.15A says seven years after termination of the representation. Confirm your own state’s period with your state bar or your own counsel, and keep the QuickBooks records, bank statements and reconciliation reports for at least that long.
No. The firm opens and controls its trust account and deals with its bank and with the state’s IOLTA program. On TechBrot’s engagements, TechBrot’s signed trust-accounting specialist practice sets up the matching structure in your QuickBooks file, keeps the client ledgers and prepares the reconciliation as a bookkeeping service. A Certified QuickBooks ProAdvisor reviews every close a specialist practice prepares before it reaches you. Neither TechBrot nor the practice is ever a signatory, and neither ever deposits to or disburses from the account. Talk to us about the records.