Why is there no way to set up a non- trust account?
Solved
set up operating account
- Contributor
Best answer by JKibler
Its not clear to me based on your question what you are seeking as there are different types of “non-trust account(s)”. For example our firm uses two operating accounts. One is for legal fee income. The other is for “operating retainers” i.e. money that cannot be deposited to trust per IARDC IOLTA regulations but we do not consider income for taxable purposes or partnership purposes as it may be subject to reimbursement.
Smokeball only provides account receivable management for your operating account. You must use quickbooks online or xero to set up an operating account. SB will push income received and costs advanced to your QBO or Xero. These platforms allow you to do bank transaction downloads, payroll, credit cards, financial statements, etc.
Your question suggests that you need additional training / assistance for a critical need.
Its not clear to me based on your question what you are seeking as there are different types of “non-trust account(s)”. For example our firm uses two operating accounts. One is for legal fee income. The other is for “operating retainers” i.e. money that cannot be deposited to trust per IARDC IOLTA regulations but we do not consider income for taxable purposes or partnership purposes as it may be subject to reimbursement.
Smokeball only provides account receivable management for your operating account. You must use quickbooks online or xero to set up an operating account. SB will push income received and costs advanced to your QBO or Xero. These platforms allow you to do bank transaction downloads, payroll, credit cards, financial statements, etc.
Your question suggests that you need additional training / assistance for a critical need.
- Contributor
Do you know if it is possible to set up two operating accounts in SB? I am looking to establish a second one for two different types of legal work and am struggling to do this or even see if it is possible. I'd really appreciate it if anyone has done this if they could give me some guidance.
From the U.S. version of the product (perhaps the US and other versions are different?):
No, it is not possible to set up two operating accounts in SB. You can set up multiple trust accounts but not multiple operating accounts.
However, our firm uses the operating retainer as a logical book of account separate from legal fee income book accounting. The money for both go into the same bank operating account. We maintain three accounts (trust, operating 1 for legal fee income, and operating 2 for operating retainers). Once operating 2 payments are deposited into operating 1 we move the money via digital bank transfer to the operating retainer account. We maintain our own excel ledger to track account transfers between all three accounts. For us, the purpose of the operating retainer accounts is to:
- Segregate “earned fee” and “unearned fees” in accordance with rules of professional conduct;
- Segregate earned fee income into non-reimbursable (legal fee income) versus reimburseable (operating retainer).
We do not treat the operating retainer deposits as income for IRS purposes until it is non-reimburseable. This benefits us as a firm by protecting against accounting for fee income when the work is not completed. The money stays available to reimburse the client if we are discharged or to pay the firm when the work is complete or sufficient progress is made to warrant an invoice.
For additional information see your jurisdiction’s rules of professional conduct or consider (if in the US) the IRS audit technique field guide attorneys.
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