Trust account rules vary from state to state, however one constant for attorneys or anyone working in an exceedingly fiduciary capability is the over-riding fear of running afoul of strict requirements. Take the subsequent steps and you will not lose sleep worrying about your responsibility to accommodates difficult trust account regulations.
1. Migrate from Manual to Automated Record Keeping
Review your firm's trust bookkeeping procedures and identify which procedures are managed manually. Often, law corporations enter every client's transactions separately and issue trust checks manually. Manual bookkeeping is the root of several downside areas. Not only are manual processes time-consuming, but additionally mistakes are tough to detect and reports are next to impossible to prepare.
A good trust accounting software program can easily replace ALL your manual bookkeeping tasks and give you with total control of your trust accounting. You will:
o Simplify transaction entries, trust check printing, bank reconciliations, and generating reports
o Readily detect errors
o Maintain an audit trail for any changes created in your trust books
o Create it straightforward for your accountant to review your trust knowledge and make acceptable corrections while not shuffling through stacks of paper
2. Choose Your Trust Accounting Program Wisely
Do not rush to embrace the first accounting program you find to manage your trust books. Many accounting packages that work very well for general operating accounts typically lack options that trust accounting requires. For instance, general accounting packages sometimes do not turn out consumer ledgers easily and do not forestall trust accounting mistakes from occurring. There's usually no audit path log and one can even return to reconciled months and edit prior transactions. That's not proper trust accounting! When you evaluate your trust program decisions, think about the following queries:
o Does the program build deposits and disbursements in each client account very easy to enter, track and reconcile?
o Is the program designed to forestall common trust accounting errors, like duplicate check numbers, shopper ledger overdrafts etc.? These are samples of issues that has to be stopped at the transaction entry itself.
o Are needed monthly reports such as ledger card balances, transactions, reconciliation and 3-means reconciliation, etc. easily created?
o Is there an choice to print trust checks and/or deposit slips?
3. Avoid Commingled Bank Trust Accounts
A client trust bank account is a special reasonably account. Nowadays, several banks supply a explicit type of trust account with separate sub-accounts for every client.
A checking account that enables you to manage individual client funds separately provides a double layer of protection for your firm as a result of a bank can conjointly alert you to any shopper ledger overdraft situation. Additionally, you may receive monthly client ledger trial balances from the bank, which you'll then match along with your office client ledger records.
4. Archive Closed Shopper Accounts
When a shopper matter has been completed, the balance on the shopper's ledger is zero, and all transactions have been reconciled with the bank statement, you must "close" or archive that shopper ledger. Otherwise, over a amount of your time, you will be coping with hundreds or perhaps thousands of "open" shopper ledgers.
5. Shield Your Trust Software Data File
Whereas a laptop or software will get replaced, lost knowledge is not simple to re-create. For trust accounts, continuously maintain a onerous copy of every shopper ledger on a monthly basis. Build regular backup copies of your trust database files and store them at a far off location.
Automate Nowadays and Put a Stop to Trust Fund Account Worries
Managing trust accounts is less complicated than you think. Begin with a careful review of your firm's trust accounting processes. Begin using trust account software designed to help you go with state regulations. Bear in mind, a consumer A's money has nothing to try and do with consumer B's money. Your trust books should only contain open accounts. And, make an iron clad rule to backup copies of data files and store them during a secure and separate place. Follow these tips and you may bring order to your trust bookkeeping, tighten controls and no longer worry whether or not or not you're in full compliance with state regulations.
Author Resource:
Jeff Patterson has been writing articles online for nearly 2 years now. Not only does this author specialize in Accounting, you can also check out his latest website about
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