All of these account types (IOLTA, IOLA, and Attorney Trust) have the same purpose. They all used to separate the client’s money from the regular business or operating account. The difference is simply the interest - how much it accrues and who gets it.
Whatever it is called, we need to make sure with the bank that the fee cannot be charged to that account. A separate operating account or credit card has to pay all fees so that the customer’s money is never touched.
IOLTA (Interest on Lawyer Trust Account) and IOLA (Interest on Lawyer Account) are the same, with different names. Most states use the IOLTA name, except for New York, which has its own naming schemes, uses the IOLA.
An IOLTA account is a type of trust account that can collect the interest, then transfers the interest collected to the state bar, usually for charitable purposes, primarily the provision of civil legal services for poor people (such as landlord/tenant issues, custody disputes, and advocacy for people with disabilities). For a clearer definition, it is a method of raising money to fund civil legal services to low-income people through the use of the interest earned on the attorney trust account.
In the United States, lawyers are allowed to place client funds in interest-bearing lawyer trust accounts. In the 1980s, the Interest on Lawyer Trust Accounts (IOLTA) program was first established in the U.S. Nowadays, all 50 states and the District of Columbia have IOLTA programs. However, only 44 states require lawyers to participate. In states with mandatory IOLTA participants, the lawyer must place client funds into a trust account and cannot withdraw the money until they have earned the fee.
What Is An Attorney Trust Account?
An attorney trust account is the second type of trust account, which may or may not be interest-bearing. For most attorneys, it is a non-IOLTA trust account used for an individual client with a large balance held, such as payments for personal injury. If the account accumulates interest, the interest will be transferred to the customer.
If you, as a business owner, see that you cannot handle accounting on your own, consider hiring an accountancy service for contractors to help you with it.
Call Irvine Bookkeeping now for a Free Quote!
#threewayreconciliation #reconciliation #trustaccount #smallbusinessmanagement #budget #administrative #bookkeeping #accounting #digitalmarketing #irvinebookkeeping #managebookkeeping #accounting #la #ca #california