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The importance of having separate trust and operating accounts
The importance of having separate trust and operating accounts

A word on having separate trust and operational bank accounts

Updated over a week ago

When establishing bank accounts for your Short-Term Rental (STR) property management business, it's paramount to maintain a clear separation between trust funds and operating funds, a practice often mandated by legal requirements in many jurisdictions. This segregation not only ensures compliance but also safeguards owners' funds from being inadvertently used for operational expenses. Without this distinction, the risk of underfunding the trust account significantly increases, potentially leading to complications down the line.

While having multiple bank accounts—one designated for trust and another for operational purposes—may seem complex, it streamlines accounting processes and minimizes confusion. However, the necessity for multiple trust accounts depends on the specific regulatory requirements in your operational area. Simplifying your accounting setup can be achieved by adhering to these standards, ensuring efficient management of your finances.

VRPlatform's approach to trust accounting offers a robust solution for tracking funds accurately. Through our trust accounting process, we meticulously distinguish between owner funds and property manager funds within the trust account, facilitating transparent financial management. Similarly, we can readily identify expenses incurred on behalf of owners from the operating account, enabling easy reconciliation of reimbursable expenses. At the close of each month, our comprehensive month-end procedures ascertain the balance between the trust and operating accounts, simplifying the determination of profits and reimbursable expenses due to the management company.

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