IOLTA accounts typically earn interest which is then withdrawn and passed on to the state's IOLTA program.
Though the interest comes in and out and therefore not accumulating, it is important to track this amount so that your accounts can properly reconcile.
Ensure Interest is Allowed
- Within the bank settings, you want to ensure to allow interest entries for that bank.
- To do so, go to Accounting > Bank and edit the bank(s) you wish to add interest to.
- Once in the edit window - under advanced settings, be sure to check "Interest Allowed", then Save.
Setting up an "Interest" Matter
All funds within your trust account, need to be attributed to a matter. However, interest should never be received/withdrawn from a client's ledger. For that reason, you want to set up an administrative matter to track these transactions.
To do so, first Add a Matter and name it something similar to "IOLTA Interest", so that it is clear what this matter is tracking.
Receiving IOLTA Interest
When interest is received within the IOLTA account, you want to add that entry under the "IOLTA Interest" matter that you created.
- On the matter tab, select that matter and click "Trust Transaction" on the right
- Once the trust transaction screen displays, select the date of the interest deposit, enter the amount and select the transaction type "interest" and enter the amount. For Payee, you can enter the Bank Account Name (Ex: Attorney Trust Account)
- Click Save and you will see the matter ledger has increased.
Withdrawing IOLTA Interest
- Once the trust transaction screen displays, select the date of the interest withdrawal, enter the amount and select the transaction type "adjustment-out" and enter the amount. You can also enter a memo to clarify if needed.
This will then update the matter's ledger as well.
NOTE that by default our system does not allow overdrafts of a ledger, so you will be blocked from withdrawing more interest than what was received.