Looking After Other People’s Money the Right Way
When you’re looking after money that isn’t yours, you have to follow a special set of rules. In accounting, we call this trust accounting.
It’s not just about keeping neat records — it’s about protecting someone else’s money and making sure it’s handled exactly how the law says. If you get it right, you build confidence and trust. If you get it wrong, you could face fines, lose your licence, or even end up in court.
Trust accounting is a system for recording and managing money or assets that you hold on behalf of someone else.
The important thing to remember is: it’s not your money. You can’t spend it, you can’t “borrow” it, and you can’t mix it with your own business funds. Think of it like money in a clear, locked box — you can see it, you can check it, but you can’t touch it unless it’s for the right purpose.
⚖️ Law firms – Holding settlement money for clients.
🏠 Real estate agents – Managing rent payments and tenant bonds for landlords.
📜 Estate executors – Looking after money and property until it’s given to the right people.
🎗️ Charities – Keeping donated money separate for special projects or causes.
🔹 Keep it separate – Trust money must be in its own bank account, never mixed with your business or personal funds.
🔹 Track every cent – Record every payment in and out, no matter how small, and keep the records up to date.
🔹 Follow the rules – Each industry and state has strict trust accounting laws that you must follow.
🔹 Be transparent – The people whose money you hold (beneficiaries) have the right to know exactly what’s happening with it.
Breaking trust accounting rules is serious. You could face:
🔑Fines and legal action.
🔑Suspension or loss of your licence.
🔑Damage to your professional reputation.
Once your clients lose trust in you, it’s very hard to earn it back.
📌 Set up a proper trust accounting system.
📌 Make sure your records are accurate and up to date.
📌 Do regular reconciliations to spot mistakes early.
📌 Prepare reports and statements for audits or beneficiaries.
Final Word:
Trust accounting isn’t just paperwork — it’s a promise to handle other people’s money with care, honesty, and accuracy. When you follow the rules, everyone can relax knowing the funds are safe. When you don’t… well, nobody wants to explain “creative bookkeeping” to a regulator.
