The Trust Accounting Myths

Again and again I run into a discussion about 'trust accounting'.  Trust accounting is one of those terms that people throw around, but usually mean many different things.  So I thought I would put my 'stake in the ground' about how I utilize the term trust accounting. First, I use the term ‘formal trust accounting’ when I refer the requirement of detailed records and separate bank accounts for the owner bank accounts and records.  I do this because many property managers utilize the term trust accounting when they refer to the regular accounting that needs to be done to track the reservations & owner activity.  A monthly statement, a formal trust accounting solution does not make, but it meets all the requirements of most states. The biggest myth – QuickBooks cannot do formal trust accounting.  QuickBooks is the most widely used and extremely user friendly solution on the market and can absolutely be used for formal trust accounting. Formal trust accounting record requirements require a detailed accounting of the following four items: (these vary somewhat from state to state where formal trust accounting is required): 1) Ledger for each owner
a.       Name of the owner and identification of the bank account
b.      Dates of each activity
c.       Amounts received and from whom
d.      Amounts disbursed and to whom
e.       Current balances of funds for each owner, each month, or as of any date2) Journal for each owner trust account
a.       Name of the account (including the bank and account number)
b.      Date of each transaction, each debit and credit to the account
c.       Names of the sources of each deposit
d.      Names of each person receiving a payment
e.       Current balance in the account3) Copies of all bank statements, canceled checks for each owner trust account4) Monthly reconciliation of each of the above items.  

All of the above are tracked and available in QuickBooks for vacation rental property management.  So, find out what the requirements are for your state and do not be confused into thinking that QuickBooks cannot manage your accounting needs.

Ralf

LiveRez.com