One of the most important features of advanced accounting in DoorLoop is Trust Accounting. DoorLoop allows you to keep "in trust" monies belonging to your owners and tenants within a single bank account.

To properly (and legally) handle owner and tenant funds, it's important as a property manager to understand the basic principles of trust accounting. Trust accounting regulations for property managers are country- and state-specific, so consult your local and national requirements to ensure compliance.

When it comes to handling business funds and transactions, specific rules must be followed by a property management company. Property managers typically use trust accounts to keep tenant rent payments and deposits separate from operating capital.

Depending on your state or country, you may be required to keep all owner funds in a separate, federally insured checking account. This account — and the funds stored within it — is known as a trust account and must be kept separate from any other business bank accounts.

These funds are understood to be your rental property owners' funds, not the funds of the property management company.

DoorLoop can handle multiple trust accounts. For example, you might set up two accounts — one as a security deposit trust account for tenants, and a second as an operating trust account. This is good practice to keep security deposit funds well away from any funds used to operate the property.

Confirm with your local and national requirements to determine whether you're able to hold trust funds in an interest-bearing trust account.

Knowing which owner the cash belongs to as you create your opening balances in DoorLoop is key. As you create opening balances, DoorLoop lets you split the money between properties. See Set Up the Opening Balance of a Bank Account for the full steps.

With DoorLoop, you can not only track who the cash belongs to, but also track money collected across multiple properties. Unlike many previous accounting systems, DoorLoop lets you track cash by property. If your prior system didn't allow this, we recommend dividing the money either equally across all properties or associating it with just one property.

DoorLoop automatically moves money across a property owner's portfolio if there's a cash shortfall associated with one of the properties.

One of the most challenging requirements of trust accounts is how quickly the funds must be deposited. If you're required to deposit funds by the close of the next business day, consider using DoorLoop's online payment processing (RapidRent), which is integrated directly with your DoorLoop property management system — helping you avoid handling checks and missing deposit date deadlines.

Security deposits are considered tenant funds until — or if — the landlord/property owner becomes entitled to receive all or part of the deposit under the terms of the lease. When a property manager collects security deposit funds from a tenant, the money must be held in a trust account.

It's good standard practice to keep tenant security deposits in a separate account from your collected rent, even if this isn't a legal requirement — it helps with tracking and reporting the amount of security deposits you should have on hand, and prevents accidentally using these funds. See Manage Security Deposits on a Lease for how to record and track deposits on individual leases.

Trust accounting keeps owner and tenant funds properly separated and compliant with your local regulations — setting it up correctly from the start makes ongoing reconciliation and reporting much more straightforward.