LeanLaw organizes everything by clients and matters (or projects if you are using the consultant version). Time entries, expenses, and fixed fees are always tied to a matter.
For a given matter you will find this setting under the "QuickBooks" tab:
This innocent-looking settings has very important implications, especially how the client is handled in QuickBooks Online, in summary:
- Clients are created as "customers" in QuickBooks. Matters are *not* created in QuickBooks.
- All invoices for the client go in the client "bucket" in QuickBooks.
- You can create invoices with multiple matters.
- Trust accounting is done for the client (and the trust account balance is for the client, not individual matters)
- Clients are created as "customers" in QuickBooks and matters are created as "sub-customers" (a.k.a. jobs) under each client.
- Invoices go in the matter "bucket" in QuickBooks, so under each sub-customer.
- You *cannot* create invoices with multiple matters, only one matter at a time.
- Trust accounting is done for each matter with a sub-account under the client liability account. So if a retainer is made, it is accounted for a given matter, not for the client as a whole.
Which one to pick?
Unfortunately, there is no simple answer here, it depends. Some considerations:
- Client Accounting is simpler and less cluttered in QuickBooks because no sub-customers are created and no sub-accounts for trust.
- Pick Matter Accounting if you need to keep track of trust monies separately for each matter.
- Pick Matter Accounting if you want the accounting system to show account balances (receivables) and revenue reports for each client (note that with Client Accounting you can get a matter revenue break-down in LeanLaw)
- Pick Matter Accounting if you want invoices to show account summaries for the matter, as opposed to for the client as a whole.
- Pick Client Accounting if you need time or expenses from multiple matters on the same invoice.
In some cases you may have conflicting needs. A solution here can be to split the client into multiple clients, where one client is set to Matter Accounting and the other is set to Client Accounting.
The default is Client Accounting. You can change the default under Settings > QuickBooks.
See some examples of how this is done in QuickBooks here.
Changing from Client Accounting to Matter Accounting
You can change from client-accounting to matter-accounting, however, if you already have invoices for the client and/or trust accounting you might need to do some manual work in QuickBooks as well, including:
- First go into each matter under the QuickBooks tab and click QuickBooks Connector to create a sub-customer in QuickBooks for the matter.
- Move any transactions (invoices, payments, etc) from the client in QuickBooks to the matter. Or, make a journal entry to transfer account balance from the client to each matter.
- Move any transactions (deposits, etc) from the client trust liability account to the matter account. Or, make a journal entry to transfer balances from the client to the matter.
Changing from Matter Accounting to Client Accounting
This also has accounting implications that might need to be fixed manually if you have existing invoices and/or trust account balances. Because matter balances roll up to the client level, you don't actually need to do anything. But you can clean it up in QuickBooks by removing the matter sub-customers and the matter sub-accounts so that everything is at the client level.