Do I need more than one bank account for my vacation rental management company?

ASAP Vacation Rental Accounting

Are you familiar with the term “commingling?” It’s when different funds or assets are combined in one account when they should be in separate accounts – such as trust and operating. It makes it difficult to determine who the funds belong to, and it can lead to severe penalties, or worse, litigation.

In vacation rental accounting, there’s another level of commingling to address – paying funds to one stakeholder that are actually due to a different stakeholder. This is generally the result of combining (i.e., commingling) stakeholder funds inside the trust account.

To avoid a commingled account, vacation rental property managers should utilize at least two bank accounts for their business; a Trust or Escrow bank account, and an Operating account.

Trust or Escrow Bank Account

The Trust bank account tracks all funds that are brought in through guest payments, and are allocated to various trust stakeholders, such as you, the manager, property owners, vendors, or tax authorities. For trust accounting to be accurate, funds that belong to one stakeholder cannot be used to pay out another stakeholder – that’s commingling funds within the trust account. For example, if an owner is due $1,000.00 for a guest stay, those funds cannot be used to pay a cleaning vendor. Proper use of a trust account looks like this:

  1. A guest pays $1,000 for a reservation. $800 for rent, and $200 for cleaning. $1,000 stays in the guest “bucket” within the trust account until the guest departs. This ensures that should the guest cancel, they can be refunded.

  2. After arrival, $800 goes to the owner “bucket” within the trust account for rent, from which $200 goes to the manager “bucket” within the trust account for commission. $200 also goes to the manager for cleaning, but $150 of that goes to the vendor that cleaned the property on the guest departure.

  3. The owner can be paid $600, the manager $250, and the cleaning vendor $150. Those funds cannot be used for any other stakeholder payments.

Operating Bank Account

The Operating bank account should be recorded and reconciled within an operating accounting platform, such as QuickBooks. This is where your business financials are tracked.

Your earned income that is transferred from the trust account is reported in this account (e.g., your commission as manager). You will process any overhead expenses/payables from this account as well.

Examples of operating expenses include the electric bill for your office space or salaries for your employees. The income and expenses from within this account make up your entities profit & loss as well as your balance sheet.


To avoid commingling of operating funds and trust funds, utilize at least two bank accounts. You may even need a third bank account. For example, some local laws require that security deposits be held separately. We always recommend that you familiarize yourself with local laws that apply to your properties.

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