If you’ve ever heard the term trust accounting and immediately felt overwhelmed, you’re not alone. For many small business owners, property managers, lawyers, and even real estate agents, trust accounts can feel like complicated financial puzzles wrapped in legal jargon.
But it doesn’t have to be that way.
In this guide, we’ll explain what trust accounting really is—in simple terms—why it’s important, and how to do it properly. Plus, we’ll show you how Perfect Accounting PTY Ltd can take all the guesswork out of managing your trust accounts, so you can focus on what you do best.
What Is Trust Accounting?
Trust accounting refers to the process of managing money that you hold on behalf of someone else. This could be a tenant’s deposit, a client’s legal settlement, or funds collected by a real estate agent for a property sale.
In simple terms, you’re acting as a “babysitter” for someone else’s money.
You’re not allowed to mix this money with your own business or personal funds. That’s where trust accounts come in—a special kind of bank account that’s legally required to keep other people’s money safe and separate.
Who Needs to Use Trust Accounting?
If you’re in any of the following professions, chances are you’re legally obligated to use trust accounts:
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Real Estate Agents
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Property Managers
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Lawyers & Legal Firms
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Accountants
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Travel Agents
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Auctioneers
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Financial Planners
For example, Sarah, a property manager in Sydney, once shared how confusing it was when she started. “I thought I could just log the bond money like a regular payment. Turns out, I was violating compliance laws. I got a warning and had to scramble to fix it.”
Don’t be like Sarah.
Why Is Trust Accounting So Important?
The rules around trust accounting exist for one reason: protection.
You’re holding someone else’s money. If it gets misused—even by accident—it could lead to serious legal consequences, fines, and loss of your professional license.
Also, regulators require regular trust account audits to ensure transparency. If your records are a mess, you’re in trouble.
That’s why many professionals choose to work with experts like Perfect Accounting PTY Ltd. They specialize in trust account management and can help you stay fully compliant, without the stress.
Step-by-Step Guide to Doing Trust Accounting Right
Let’s break down how to manage a trust account properly. Whether you’re new or just need a refresher, this checklist will help:
Step 1: Open a Dedicated Trust Account
You must open a separate bank account labeled as a trust account. Make sure it’s with an approved bank and registered correctly according to your state laws.
Read about setting up trust accounts
Step 2: Keep Funds Separate
Never mix trust funds with your own business or personal money. Not even for a second.
Step 3: Record Every Transaction
Use trust accounting software or detailed ledgers to record:
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Who the money belongs to
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Why it was received
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How much was deposited or withdrawn
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Running balances for each client
Step 4: Perform Monthly Reconciliations
At the end of each month, compare your bank statement with your trust ledger. Everything must match perfectly. Any discrepancy must be explained and fixed immediately.
Here’s a great guide on reconciliation.
Step 5: Submit Regular Trust Audits
Depending on your industry and location, you might need to provide annual or biannual audit reports to the governing body. Failure to do so can result in penalties.
Common Mistakes in Trust Accounting (And How to Avoid Them)
Even experienced professionals make mistakes. Here are a few to watch out for:
❌ Commingling Funds
This is the most common (and most dangerous) mistake. Keep all trust money separate at all times.
❌ Not Updating Records Immediately
Every deposit and withdrawal should be logged the same day it happens. Procrastination can lead to costly errors.
❌ Not Using a Specialist
Trying to juggle trust account rules while running your business can lead to burnout—or worse, fines.
That’s why hundreds of professionals trust Perfect Accounting PTY Ltd to handle their trust accounting with precision and care.
Why Choose Perfect Accounting PTY Ltd?
Here’s what sets them apart:
✅ Industry Experts: With years of experience in trust account compliance, they know all the ins and outs.
✅ Tailored Services: Whether you’re a law firm or a property manager, they adapt to your specific needs.
✅ Peace of Mind: Sleep easy knowing your trust account is fully compliant, audited, and accurate.
✅ Affordable Packages: High-quality services without the premium price tag.
Visit www.perfectaccounting.com.au to learn more or request a free consultation today.
Final Thoughts
Trust accounting may sound like a headache, but with the right tools and support, it’s absolutely manageable—and essential.
It’s not just about ticking boxes for regulators. It’s about building trust with your clients, protecting your business, and doing things the right way.
So, whether you’re just starting out or looking to improve your current system, consider partnering with the pros.
Visit Perfect Accounting PTY Ltd today and take the stress out of trust accounting.
