While most people reconcile their bank and credit card accounts, many do not know that most balance sheet accounts can be reconciled. Why would you do this? This capability can help you with reporting when you track billed and unbilled advanced client costs, general retainers or trust/IOLTA account balances by client.
When I teach people to enter advanced client costs, retainers and IOLTA transactions in QuickBooks I always emphasize that you must include the customer name. I then show how to create custom transaction summary reports to show balance by customer and transaction detail reports to see all the transactions by customer. The details on these transactions and reports can be found in prior posts.
The custom transaction summary report can be limited by customizing and clicking on Advanced. You can then select only Active row or non-zero rows. Active rows will include those with a zero balance if they had any activity during the date range specified.
While the advanced is great for the summary report, that option doesn’t exist for the detail report. Over time this means that, when reporting on these by client the reports can get very long. If clients have a zero balance you might want them off the reports. You can reconcile the account to an ending balance of zero and mark all transactions that belong to customers with a zero balance. It’s easy to identify the transactions if you customize the reconciliation to include the Payee column for both checks and deposits and then sort by payee. Once you have reconciled all the zero clients, customize your transaction detail report to include only uncleared transactions (cleared = no). When you run the report it will be shorter as transactions for all clients that no longer have a balance will be removed from the report.
This process can be used for any balance sheet account that includes transactions that offset one another.
For legal firms, complete details on this process, creating the reports and other tips and tricks for using QuickBooks in law firms are included in my new book “QuickBooks for Law Firms”. The book, written by me and published by Sleeter Group is available in kindle versions and as a physical book from Amazon.