How should I record trust deposits?

CosmoLex Team

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Record Trust Deposits

No matter what type of accounting your firm uses, trust account deposits should be recorded using the principles of double-entry accounting[1]. In double-entry accounting, each transaction is entered twice: once as a credit and once as a debit. Which accounts the transaction is applied to will be determined by how your firm’s chart of accounts is set up. If you’re unsure about which accounts to use, contact your accountant.

Every trust account deposit should be connected and recorded as part of the overall trust account ledger. Additionally, each client should have a separate ledger, where all transactions are recorded. You should make sure that each deposit is recorded not only in the primary pooled accounts records but also in the individual client ledger. You need to be able to show a clear trail of all funds for both your trust account and for your client accounts in the event you’re audited.


References

1. Common IOLTA Mistakes