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Migration of Account Balances

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This is the last step in the Data Migration process. Before migrating your Account Balances, please make sure that you have completed the migration of your Non-Financial Data and other Financial Data first.

To complete these steps, follow these instructions. 

After you have completed the instructions for Non-Financial Data and Financial Data migration, please come back to this article to continue.

Introduction

Migrating financial data from third-party software is an essential, multi-step process to ensure the financial status of the firm is accurately reflected in CosmoLex. Often a firm will say they wish to ‘start fresh’ with their new system. Unless you have a brand new firm, certain information, like prior balances, will still need to be migrated to maintain accuracy your billing and accounting activities, and reports, going forward.

Important

Below are general guidelines for migrating your balances. These guidelines are not designed to cover your unique situation or provide you with any type of tax or financial advice. Please confer with your accountant or one of our certified consultant to ensure the accuracy of transferred data and for assistance with this process. Also, please ensure to preserve your old books or export a complete set of reports that contain your historical data.

When migrating your financial data, there are different types of balances and figures to consider:

  • A/R Balances
  • Trust Balances
  • Uncleared Transactions
  • Opening Bank Balances
  • Other Starting Balances (General Ledger)

We have bulk import tools and instructions to assist you with A/R balance, Trust Balance and Uncleared Transaction import functions. Following those instructions is the most efficient way to import your ledger balances and uncleared transactions so we encourage that you complete this steps first. Learn How to Migrate Your Data into CosmoLex.

The instruction in this article will be focusing on the remaining activities that you and your bookkeeper need to complete to ensure a proper migration. which include:

  • Entering Opening Bank Balances
  • Entering Other Starting Balances
  • Importing Historical Transactions (optional)
For Accrual Based Reporting or Taxable Matters:

Before doing manual entering of financial information, make sure your system settings are set to accrual-basis and/or matters are set to taxable. The system should automatically record the information correctly. For any additional questions regarding accrual-basis or taxable matters, please contact our Support Team.

Before Getting Started

Step 1: Close Your Old Books

  1. Pick a suitable “Closing Date”. Customarily this will coincide with a financial year-end or quarter-end and relate back to balances used for tax filings, e.g. March 31, June 30, September 30, December 31.
  2. Reconcile all business bank accounts and credit card accounts through the Closing Date. 
  3. Run reconciliation reports to confirm outstanding transactions as of the Closing Date.
  4. Review your reconciliation reports and create list of uncleared deposits and uncleared checks for each business account till the Closing Date.
  5. Calculate “Cleared Book Balance” for each bank account as follows:
    1. Add total of all outstanding checks to the book balance
    2. Subtract total of all outstanding deposits from the above balance
    3. Resulting number is “Cleared Book Balance” which will be used while Entering Opening Book Balances.
      • As an example, your software Book Balance is $4,400. There are four outstanding checks totaling $620; one deposit of $1500. Then your Cleared Book Balance is $4,400 + $620(checks) – $1500(deposit) = $3520.
  6. Close your books. Most accounting software provide a “hard close” which prevents any changes being made prior to that closing date. We strongly recommend you use this option, if available.

Step 2: Run Reports

  1. From your prior system, run a Balance Sheet as of the Closing Date and Profit and Loss (or Income Statement) for the fiscal period as of the Closing Date. These reports will be used to confirm the accuracy of the data entered into CosmoLex.
  2. Create “Trial Balance Report” as of the Closing Date. The Trial Balance Report provides the debit or credit balance of each account on the Chart of Accounts on the Closing Date. These are the ending balances in the old software and the opening balances to be entered into CosmoLex. All opening balances are entered from this report. 
    Important

    Your accountant may make adjustments to the trial balance at year-end or quarter-end. You should create the report after these adjustments have been entered.

Enter Opening Book Balances

There are three types of bank accounts in CosmoLex: Operating (Business) Accounts, Credit Card Accounts, and Trust Accounts. The following instructions are to be used with your Operating and Credit Card Accounts. 

Trust Accounts

Trust bank balances and trust uncleared transactions are handled very differently, as each ledger needs to be migrated individually. We have an automated import process for those as explained in our data migration training article. 

Reference your Trial Balance Report to enter balances for all business and credit card accounts as of the closing date. The balance entry and migration of uncleared transactions will need to be completed for each business account you have (plus credit card accounts if you choose).

Step 1: One-Time Opening Bank Balance Entry:

In CosmoLex, add a transaction within the appropriate bank account:

For Operating (Business) Accounts: Add a deposit transaction (Learn how to add Operating Bank transactions)

For Credit Card Accounts: Add a charge transaction (Learn how to add Credit Card transactions)

Use the instructions below to accurately complete the transactions:

  • Date: Should be the Closing Date.
  • Amount: (Cleared Book Balance / Bank Balance)

    For Operating Retainers: If you happen to manage client funds in your business account, this balance should NOT include those funds as those will need to be added within the individual matter.

  • Type (for Operating/Business Accounts): Adjustment In
  • Method (for Operating/Business Accounts): Internal Operation
  • From: Your Law Firm Name
  • Memo: Opening Balance
  • Account: 3100: Opening Balance Equity

Step 2: Migrate Uncleared Transactions (Operating / Business Accounts Only)

You can then use our transaction import function to migrate your uncleared transactions, which will then create your full book balance. If you have a very low volume of these transactions, you can add them individually.

In CosmoLex, within the appropriate bank account, add a deposit or withdrawal transaction (based on transaction type). Learn how to add Operating / Business or add Credit Card Transactions:

  • Date: original date(s) of each transaction
  • Amount: Enter original transaction amount
  • Type & Method: Same as the original transaction
  • Ref #: For checks specify check number
  • Payee/Payor: Name of Original Party
  • Memo: “uncleared transaction at migration”
  • Account: 3100: Opening Balance Equity

Step 3: Confirm Your Balances

Confirm the “Bank Balance” in CosmoLex matches the bank balance on the Trial Balance Report from the old software.

To find the Bank Balance in CosmoLex:

1. Click the Accounting Tab

2. From the Banks tab, double-click the desired bank

3. The “Bank Balance” will show at the top right of screen

Enter Other Starting Balances 

For all other General Ledger accounts on the Trial Balance Report, you will need to use the Journal Entry tool. Do not use these procedures for the Trust Liability Accounts. Instructions for migrating Trust balances are listed separately.

Trust Accounts

Trust bank balances are handled very differently. We have an automated import process for those as explained in our data migration training article. 

Before Getting Started

You’ll want to first take the time to customize your Chart of Accounts section within CosmoLex. This will ensure that you have all the accounts needed to migrate your starting balances and are utilizing CosmoLex accounting appropriately going forward.

Step 1: Enter Journal Entries

After reviewing your Trial Balance Report, you can begin to create necessary journal entries. We recommend you create one journal entry for all Balance Sheet debits and credits, and a second entry for all Profit and Loss debits and credits. Learn how to create Journal Entries. 

For each entry:

  • Entry #* – This can be a number or name used for reference for these grouped entries
  • Date – Closing Date
  • Debit/Credit – Enter $$ amount as per the Trial Balance Report
  • For all journal entries, the “Difference” must equal 0.00. Enter an offsetting transaction to balance this entry and bring that difference back to 0.00. To do so, follow these instructions:
    • In the next line, Select 3100: Opening Balance Equity as the offsetting account to balance the journal entry. This can be done for each line entry or for the journal entry as a whole. See examples below:

Offsetting account for each line entry

  Debit Credit
1700 Advanced Client Costs 10,000  
3100 Opening Balance Equity   10,000
1620 Furniture and Equipment 72,830  
3100 Opening Balance Equity   72,830
2500 Line of Credit   2,999
3100 Opening Balance Equity 2,999  

Offsetting account for journal entry

  Debit Credit
1700 Advanced Client Costs 10,000  
1620 Furniture and Equipment 72,830  
2500 Line of Credit   2,999
3100 Opening Balance Equity   79,831

Step 2: Compare Profit & Loss and Balance Sheet

Print the Balance Sheet and the Profit and Loss Statement from CosmoLex for the fiscal period ending with your Closing Date. Not sure how? Learn how to print your Balance Sheet and Profit and Loss reports.

Ensure the Profit & Loss and the Balance Sheet in CosmoLex match with the Closing Date Balance Sheet and Profit & Loss Statement from the old software. Compare all other accounts for accuracy.

If your Balance Sheet in CosmoLex does not include the Trust Bank Account(s) or Trust Liability Account(s), it is because you have not yet migrated your trust ledger balances. Please Follow the separate instructions for doing so. These accounts offset each other, e.g. $1000 in the trust bank account (asset) $1000 in the trust liability account (liability). 

Importing Historical Transactions

If your closing date is in the past (start of year/quarter etc), you will also need to import transactions from that date forward.

This can be done for Operating, Credit Card and Trust Account Transactions.

To import historical transactions, follow these instructions for each bank account:

  1. Export the transactions starting from the opening date for each bank account separately.
  2. If migrating from a prior system, all data must be in Excel or CSV format. If using a downloaded statement from your bank, you can use a .qbo file as well.
  3. You can then import your bank transactions following these instructions
  4. Once complete, reconcile all accounts to the present time.
    1. For trust accounts, you must do a month-by-month reconciliation from the Opening Date
    2. For Operating/Credit Card accounts, you can do a month-by-month reconciliation from the Opening Date or a cumulative reconciliation from Opening Date through the end of current month.

All set! After completing your Non-Financial Data, Financial Data, and the remaining steps in this article, you will have completed your Data Migration process in full!

Updated on September 10, 2018

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