does your state require that you track your expenses by client well then you
will learn how to do that in quickbooks online by watching this video profit and loss by client
if you have any questions about this topic you can leave them in the comments section below and
i'll do my best to help you and of course if you feel the video helped you i hope you will click
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we have already saved the profit and loss by customer in our customized reports section
let's practice report customization a little bit let's change the name from profit and loss
by customer to profit and loss by client and it's very simple so we come back to the report section
now we are working in the custom report section because that's what we set up in
earlier videos now this is called profit and loss by customer and we can click and open it up
now right now it's only showing the income from each customer because we have not yet recorded
any expenses but let's just change the name we click the pencil tool
and instead of profit and loss by customer let's call it profit and loss by client
oops now that it looks the way that we look we click away and you can see it saves the
name now we can click save customization and in the very name itself we can call it
client and click save now when we go back to click reports and custom reports
we really have to profit and loss by customer and profit and loss by client they're the same report
with a different name because if you change the report name you're making a new report
that you're saving to the custom report list now let's talk about paying law firm expenses
you can use the checks window if you are paying an expense by check you can use the expense window
if you're paying directly from the bank account to a vendor for some necessary service to run your
law firm so what would change in the trial balance if you paid money for a law firm related expense
well the cash in the bank would go down by the amount of the check by the amount that you paid
but whatever expense you're paying will increase quickbooks online will document an
increase in the expenses if you pay those expenses from your bank account now when you're tracking
expenses by client that's because most states require that law firms track expenses by client
and when you record the check or expense you as a law firm must include the specific client that the
check or expense was for if you include this then you will be able to see the income expenses and
profit that you made for each individual client for example let's imagine on february 22 we paid
donna's accounting firm six hundred dollars for professional services related to allen orbee the
customer and we gave her check number two so we must pay this in order to be able to service alan
so we will therefore include alan's name when we record check number two
so what will be the result in the trial balance after check number two well
cash and bank will decrease by six hundred and become twenty four thousand four hundred and five
and of course legal and professional service will show up for the first time as six hundred dollars
and then we will check the profit and loss by client so from the top left we click new we go
to the column of vendors and we click check now this should be check number two because we gave a
refund to someone with check number one but this person we're paying is donna's accounting firm
now be careful you must make sure that the money is being paid from the correct bank account
and on the correct date now why did we pay donna's accounting firm click directly under
the category then click the pull down arrow and scroll down to the specific expense
legal and professional services the amount that we are paying her is six hundred dollars now do not
touch the billable check mark do not touch we will learn about that in the next video
for now it should remain gray so we put in the who the when the what and the why and the how much
but before we save this particular check we must tell quickbooks which particular client this
ch in this case it was alan arby alan arby so we now click save and close
now when we click reports trial balance the numbers are exactly as what we expected
after paying our first expense cash in chase bank is down to twenty four thousand four
o five and legal and professional services has shown up for the first time as six hundred dollars
now let's check the profit and loss by client for the very first time we click reports profit and
loss by client now take a look in the column of alan arby we have earned a total of three thousand
five dollars some from legal services some from notary but our profit from allen is only 24
2405 because we had six hundred dollars in expenses that relate specifically to alan arby
so this bottom line is the real money amount we made from that client now let's try a second
example let's imagine on february twenty third we paid ups three hundred dollars for a delivery
that relates to servicing betty boop the money was paid from the company bank account
by debit card therefore we must include betty's name when we record the expense and we will use
the expense window because we paid by debit card so here we are back in quickbooks online
and we choose new and we go to the vendor column and instead of clicking check we click expense
now you may notice that the expense window looks exactly like the checks window and the
only difference is instead of this saying check number it says reference number but it's basically
the same thing the number of the transaction we change the date to february 23rd of 2001.
now the vendor that we're paying is ups and you have to make sure the money is being paid
from the correct bank account you click directly under the word category and then click the pull
down arrow and you will choose delivery expense and we know that the amount of this payment
is three hundred dollars the most important point is that the customer field
we need to choose the customer that this expense relates to
betty boop betty boop is the client that caused us to pay this 300 and delivery expense
so when we click save and close and we look again at the profit and loss by client we can see that
even though we earned four thousand dollars in legal services from betty boop we only profited
by 3700 because we needed to pay this 300 in delivery in order to perform those legal services
you