Method 1: Use Client Tracking
Last week, I showed you how one method of seeing client balances. That using the sub-liability account method works well for a lot of attorneys, but for some it will be a little cumbersome. You can learn more about the sub-liability account method by clicking here.
The second method is better for three types of law practices:
- You have tons of clients. If your law firm has a lot of clients, using the previous method (the sub-liability account method) will be a pain. It will make your balance sheet ridiculously long and annoy your tax preparer.
- You are using QuickBooks Online to make retainer invoices. A lot of attorneys do not need to make an invoice for a retainers because they collect the retainer upon the initial consultation and make a sales receipt. If you are the type of attorney who sends out retainer invoices through QuickBooks Online, you want to use the Client Tracking Method.
- You are in a state that has privacy laws against having client names on the balance sheet. In this case, you definitely want to sue the client tracking method over the sub-liability account method.
