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bschimanski
April 19, 2020
Question

I paid my lawyer a retainer. How do I record this/keep track of how much retainer i have left as i use the lawyers services?

  • April 19, 2020
  • 2 replies
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2 replies

IamjuViel
IamjuViel
April 19, 2020

Hello, @bschimanski.

 

You'd want to set up a retainer account and create a retainer item. Once completed, you can use it in recording a bill every time you pay your lawyers. I can guide you how to do it.

 

Here's how to create a retainer account:

  1. Go to the Accounting menu.
  2. Choose the Chart of Accounts tab.
  3. Click the New button.
  4. From the Account Type ▼ drop-down menu, select Other Current Liabilities.
  5. Select Trust Accounts - Liabilities from the Detail Type ▼.
  6. Enter the complete details of the account.
  7. Click the Save and Close button. 

You can add the total retainers fee you've paid to your lawyers. Also, when choosing the specific account to associate your transactions, whether liability or an expense, I'd suggest consulting with your accountant. This is to ensure that this will not mess up your books.

 

Now, let's create the retainer or legal fees item. Here's how:

  1. Go the Gear Icon ⚙.
  2. Select Product and Services.
  3. Click the New button.
  4. From the Product/Service information pane, select Service.
  5. Enter a name for the new product or service item (ex. Retainer).
  6. Choose the Trust Liability Account. from the Income account ▼.
  7. Click the Save and Close button. 

 

Once completed, you can use the retainer service item every time you pay your lawyer. You can record it as a bill, create a check or an expense transaction. 

 

 You can always get back into this post if you have other questions about tracking your expense transactions. I'm just a few clicks away.

B
bschimanskiAuthor
April 19, 2020

i already wrote a check to my lawyer for the retainage. now i have an invoice against the retainage. I still have $ left on my account. I followed what you wrote, but it is adding the check for retainage + the invoice i entered against the retainage. not sure what to do

MaryLandT
MaryLandT
April 19, 2020

Hey there, bschimanski,

 

Let me clear things out for you about recording the check you've paid to your lawyer.

 

You'll want to use Category details for the check, then enter accounts payable in the Category field. This way, you'll be able to link it to the bill, and it won't add another amount on your retainage. See the attached screenshots below for your visual guide.

 

Once done, go to the vendor profile and make payments from there. The Pay bills option won't allow you to link the check and the bill. 

 

I'm glad to show you how:

  1. Go to Expenses from the left menu, then Vendor.
  2. Click the vendor name to open the profile.
  3. Locate the bill, then click Make payment under Action.
  4. Mark the bill under Outstanding Transactions, and the check under Credits.
  5. Click Save and close.

The Retainer account should have one entry for these transactions.

 

Check out the Video tutorials for QuickBooks Online for a step-by-step process to help manage your expenses and vendors.

 

Let me know if there's anything else you need. I'm always around to help you out.

 

Thank you and stay safe!

D
dweiss
November 24, 2023

There's a whole lot of confusing and incorrect information here, so I'm going to give a different (and hopefully correct) answer.

 

The retainer is a deposit you're paying for future services.  Record an Expenditure transaction, using Accounts Payable as the account.  This will create a credit balance in the vendor account.

 

As the vendor/attorney bills you for services, record their invoice as a Bill, using the appropriate expense account.

 

Finally, go to Pay Bills and process a zero payment for the vendor, using the credit balance.

 

After this, the vendor account will show the remaining credit balance.

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