Many states' real estate regulatory agencies require strict accounting of all trust funds that pass through your business. Rentables was designed to make this easy.

What are trust funds?

Trust funds are essentially anything of value that you are holding for the benefit of another. For example, when you receive rent from a tenant you are holding those funds for the benefit of the owner (the "beneficiary"). Other trust funds include security deposits and owner reserves.

What is trust fund accounting?

Trust fund accounting is the process of exactly tracking all trust funds, when you received them, when you dispositioned them, and who they belong to at any moment in time. Rentables was designed to make this extremely simple in the property management context.

How does Rentables keep track of all of this?

The short answers is that it is all behind the scenes. Generally our users don't have to think in terms of accounting. Everything is in the context of property management.

The long answer is that Rentables uses a proprietary simultaneous accounting system to track both sides of every transaction. We've tried hard to hide most of the details so it just works.

What do I need to do to keep my account reconciled?

The most important thing to do is to enter every transaction in Rentables as it happens exact how it happen. Only in this way can Rentables exactly match your bank account each month.

  1. Be diligent about entering all activity in Rentables on the day it happens.
  2. Use the Bank Deposits report to build a deposit slip and tally all deposits to insure they match. This way any mistakes will be caught early.
  3. Reconcile your bank account with Rentables at least once a month. It's even easier if you reconcile incrementally every few days or once a week

Following this rules will make it easier to keep your account reconciled.

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Stop here unless you really want to dive into the details.

We've designed Rentables so you can mostly ignore the accounting details. For those that are interested below is more in depth discussion.

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Transactions

A transaction is a set of ledger entries recorded on one or more ledgers that represents funds moving between entities (e.g. tenant => owner) or to show, for example, a liability (e.g. to pay rent or refund a security deposit). All transactions are recorded in a journal with references to their related ledger entries. Rentables uses a double entry ledger accounting system which means the debits and credits on every transaction are always balanced.

Ledgers

There are individual ledgers for every entity in the system (owners, properties, tenants, vendors, and the manager). Every transaction has two or ledger entries that get recorded in chronological order on one or more of these ledgers. By summing up these ledger balances and comparing them to your reconciled bank statement you can quickly show that all trust funds are accounted for.

Summing it Up

Every cash balance, owner statement, security deposit, and year-end statement is generated by summing up the underlying ledgers. The ledgers represent the accounting "truth" and are the basis for every accounting related report. If a ledger changes, that change automatically propagates to every affected screen or report in Rentables.

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