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By Tammy Hoang, Certified QuickBooks ProAdvisor Almost every law firm has one: a trust check written months ago that still has not cleared. It sits on the reconciliation as an outstanding trust account check, month after month, and everyone agrees to deal with it later. Later is the problem. An old outstanding check blurs the picture of what each client is owed, and it can mean a client has not received money that belongs to them. This guide explains what an outstanding check

By Tammy Hoang, Certified QuickBooks ProAdvisor Attorneys often ask what monthly bookkeeping for law firms actually includes. The answer is more than data entry. A good monthly engagement produces specific, dated work you can see: reconciled accounts, a client-by-client trust balance report, financial statements, and at year-end a package your CPA can use. This guide lists those deliverables one by one, so you know what to expect and what to ask for. What Monthly Bookkeeping

By Tammy Hoang, Certified QuickBooks ProAdvisor A law firm month-end close is the set of steps that turns a month of activity into books you can trust. Firms that skip it tend to find out at tax time: transactions that were never recorded, checks that never cleared, and reconciliations that fell behind. Firms that run it every month hand their CPA clean records long before deadlines arrive. This guide gives you a close you can start next month: a calendar, an owner for each s

By Tammy Hoang, Certified QuickBooks ProAdvisor Sometimes the problem is not a mistake you made. A partner retires, a bookkeeper leaves, a firm merges, or an office manager's records turn out to be thin. The books are now yours, and they do not meet the standard the State Bar expects. Catch-up bookkeeping for law firms is the work of finding out where things really stand, and then rebuilding the records so they can be relied on. This guide walks through that work in the order

By Tammy Hoang, Certified QuickBooks ProAdvisor It is easy to mix up disbursements and reimbursements, especially since both involve money moving between parties, often on behalf of a client. Their roles in law firm accounting, however, are very different. This guide defines each term, shows how the direction of the money tells you which one you are looking at, and explains how to keep them separate in your records. In short, trust account disbursements are payments that leav

By Tammy Hoang, Certified QuickBooks ProAdvisor Looking at a current ratio in isolation only tells part of the story. Each industry has its own norms for what's considered a healthy current ratio — a retail chain like Target operates with a much tighter margin for liquidity than a big-ticket manufacturer such as Boeing. What looks risky for one industry might be perfectly normal for another. Comparing a business's current ratio against its own historical data can also flag tr

By Tammy Hoang, Certified QuickBooks ProAdvisor A current ratio of 1.5 shows that for every dollar a company owes in short-term liabilities, it holds $1.50 in current assets. This generally suggests the business is in a comfortable position to cover its immediate obligations — there are more than enough liquid resources on hand to handle what's due in the near term. While a ratio above 1 is typically considered healthy, it's always good practice to compare this number against

By Tammy Hoang, Certified QuickBooks ProAdvisor Washington attorneys often refer to "1.15A compliance" as if it covers the whole trust account obligation. It does not. RPC 1.15A and RPC 1.15B are two separate rules governing two separate things, and a firm can be careful about one while quietly failing the other. Together, violations of these two rules account for roughly ten percent of all cited ethics rule violations in Washington's most recent discipline data — a meaningfu

By Tammy Hoang, Certified QuickBooks ProAdvisor Most Washington attorneys assume the Washington State Bar Association runs their entire trust account obligation. It does not. Washington splits this responsibility between two separate organizations, and understanding which one does what is the difference between knowing exactly where to send unidentified trust funds and guessing. The Legal Foundation of Washington administers the state's IOLTA program itself — collecting inter

By Tammy Hoang, Certified QuickBooks ProAdvisor The Washington State Bar Association publishes an annual discipline report, and the trust account numbers inside it tell a consistent story. Trust account overdrafts alone accounted for roughly four percent of all grievances filed against Washington attorneys, and violations of RPC 1.15A and RPC 1.15B together made up approximately ten percent of every ethics rule violation cited statewide. Ten percent is a striking share for tw

By Tammy Hoang, Certified QuickBooks ProAdvisor A Washington attorney pays a client cost — a filing fee, an expert's invoice — out of the firm's business checking account, planning to reimburse the expense from trust once the client's funds cover it. This is common practice. The timing of that reimbursement, however, is where a routine convenience turns into a real trust account exposure. The WSBA's own trust account guidance addresses this exact scenario directly, because it

By Tammy Hoang, Certified QuickBooks ProAdvisor Nearly every law firm's trust account eventually has a stray balance nobody can quite explain — a few hundred dollars left over from a closed matter, a deposit that no one can match to a client file, an old client trust balance no one has claimed in years. Washington's rules do not allow that money to just sit there indefinitely. It has to be resolved, and if it can't be, it has to go to the Legal Foundation of Washington. This