Trust Accounting

How to Manage Trust Accounts for Vacation Rental Properties

Trust accounting is one of the most regulated and critical parts of running a vacation rental management company. This guide explains how professional managers handle trust accounts, from separating funds and managing sub-ledgers to reconciliation, owner payouts, and North Carolina compliance — and why purpose-built PMS platforms like RNS make true trust accounting possible.

How to Manage Trust Accounts for Vacation Rental Properties: A Simple Guide

Managing trust accounts is one of the most important parts of running a vacation rental management company. Trust money belongs to owners and guests, not to your business, so it has to be tracked and protected very carefully.

RNS has spent more than 35 years helping property managers do this the right way. This guide breaks down the basics of how trust accounts should be handled.

1. Keep Trust Funds and Company Funds Separate

A management company must use two different bank accounts:

Trust Account – holds guest payments, owner money, taxes, and deposits.
Operating Account – holds your company’s money, like management fees.

You can never mix these together. Mixing funds is one of the biggest trust accounting violations.

2. Track Each Owner and Property Separately

Even though the trust account is one bank account, you must still know exactly:

How much money belongs to each owner
How much belongs to each property
What payments and refunds came from each guest
What income and expenses belong to each reservation

This is called sub-ledger accounting, and it keeps everything clear and accurate.

3. Record All Charges and Payments by Reservation

Trust accounting starts with the reservation itself. For each booking, you must track:

Rent
Cleaning fees
Damage waivers
Taxes
Owner’s share
Manager’s share

A proper system also shows when these amounts become “earned” and can be paid out.

4. Only Pay Out Money After It’s Earned

Property management companies can choose how and when revenue becomes “earned.” There isn’t one single correct method — the important part is tracking it properly and being consistent. Most companies use one of these earning methods:

Earn on Arrival – funds become earned when the guest checks in
Earn on Departure – funds become earned when the guest checks out
Earn on Payment – funds become earned as soon as the guest pays

While all three methods are allowed, arrival and departure are the most common. They are safer because the stay has happened (or is happening), which means the revenue is less likely to change.

Earning on payment is possible but risky.
If a reservation needs to be refunded, the manager must get the money back from the owner before issuing the refund. This can lead to cash flow problems and accounting confusion.

No matter which method a management company chooses, the PMS must:

Hold advance deposits correctly
Track what money is still unearned
Prevent owners from being paid too early
Apply the earning rules automatically

Following these steps keeps the trust account protected and ensures both managers and owners are paid accurately.

5. Handle Security Deposits Carefully

Security deposits must be:

Tied to each reservation
Documented if money is taken out
Returned on time

These are highly regulated funds, and mistakes can cause legal issues quickly. Modern managers have moved to insurance policies as it also created an additional revenue stream.

6. Reconcile Monthly

Every month, you must make sure:

The trust bank balance
The trust ledger in your PMS
The balances for each owner/property

All match exactly.

If they don’t, you must find the problem before closing the month. RNS is known for making this process clean, reliable, and easy.

7. Send Clear and Accurate Owner Statements

Owner statements should show:

How much was earned
What fees or expenses were taken out
What deposits are owed
What the remaining balance is

Simple, accurate statements reduce questions and build trust. A bonus is automating the statement process so you can save hours each month - schedule a meeting with RNS so we can show you!

8. Pay Owners Correctly and On Time

Owner payouts must match your trust ledger exactly. You should only pay owners from earned funds, and every transaction must have a clear record behind it.

9. Keep Organized, Audit-Ready Records

A compliant trust accounting system should make it easy to see:

Every payment
Every charge
Every refund
Every payout
The full financial history for each reservation

This makes audits, owner questions, and internal reviews much easier.

10. Follow State and Local Rules (Including North Carolina Requirements)

Every state has different laws for:

When deposits must be made
How long you can hold security deposits
When revenue becomes earned
How payouts must be recorded
What reports must be kept

RNS is fully North Carolina compliant.
North Carolina has some of the toughest trust accounting rules in the country, and RNS supports all required processes, reports, and timelines.