A property manager, a broker or an HOA bookkeeper holds money that belongs to other people: owners' rents waiting to be paid out, tenants' security deposits, owner reserves. That money sits in a trust bank account, and every dollar of it belongs to somebody. TaDa Books keeps track of whose it is, refuses to pay out more than a person has, and reconciles three ways.
Setting it up
- Add the trust bank account in Banking like any bank account.
- On Banking's top row, press Trust accounting, then open Setup.
- Press Make it a trust account beside the trust bank account.
- Press Set up the standard three. It adds Owner funds held in trust, Tenant deposits held in trust and Owner reserves held in trust, each backed by that bank. Any Other Current Liability or Long-Term Liability can hold trust money instead: pick its bank under Backed by.
A trust account has no sub-accounts and cannot sit under another account. Trust cannot be turned off for an account while it still holds money.
Whose money it is: Held for
Every line on an account of held money says whose money it is. When a line in Transactions posts to one, a Held for column appears: pick the owner or tenant. That is separate from who paid or was paid (the payee). Rent paid by a tenant and held for the owner names the tenant as the payee and the owner as Held for.
Trust money moves by deposit, check, bank payment or journal entry. Bills, invoices, credit memos and vendor credits cannot post to a trust account.
The rule
TaDa Books refuses an entry that would:
- leave a line on an account of held money without a Held for;
- take cash out of the trust bank without taking it from someone's held balance (a bank fee, or a transfer to operating);
- leave an owner or tenant below zero on any day, including a payout dated before the rent that pays for it.
The rule is kept by the books themselves, so it holds for every way an entry is made or changed: a new entry, an edit, a reclassification or a moved date.
Record it anyway. Sometimes the bank has already done it: a check bounced, or a fee was taken. When the rule refuses an entry for a shortage, TaDa Books asks whether to record it anyway. If you do, the entry is marked, and it shows on the shortage list until it is made good. A void or a delete is never refused, because the bank already moved the money. What it leaves short also shows on the shortage list.
A management fee comes out of an owner's balance in one journal entry: debit the owner's held funds (Held for the owner) and credit the trust bank; debit the operating account and credit fee income. A plain transfer out of trust is refused, because no one's balance pays for it.
Balances, shortages and statements
- Balances shows each person's balance in one account of held money as of a date. Lines from before the account held trust money name nobody; move them to their owner with a journal entry.
- Shortages lists everyone who was below zero on any day since a date, and every entry recorded anyway.
- Owner statement shows one owner's or tenant's opening balance, every line in and out, and the closing balance for a period. Print it or save it as a PDF to send.
The three-way reconciliation
First reconcile the trust bank in Banking and finish the reconciliation. Then open Three-way and pick that reconciliation. Three figures must agree on its statement date:
- the bank statement, adjusted for what has not cleared yet;
- the trust bank's balance in the books;
- the total held for every owner and tenant.
The tables below list what has not cleared and every balance. If an entry in that reconciliation changed after it was finished, the screen says so.
Paying owners
Open Pay owners, pick the account and the pay date, and choose check or bank payment. Each person shows what is available: their balance, but never more than the lowest it reaches on a later date, so money already promised to a later payment stays. Type a reserve to keep some back, tick who to pay and press Pay. Each payment is its own entry. If one cannot go, the others still do, and the result says which one and why.
When the owner's properties carry a management fee, the Mgmt fee column shows what is owed on the rent collected since the last payout, and Pay takes it first: out of the owner's balance and the trust bank, into your own bank as fee income, on each property's class. Set where fees go once, under Setup, Management fees: the income account and your own bank account. Then move the money between the two banks to match.
Properties you manage for their owners
On a property's profile, the Managed for an owner card names the owner, the trust account their money is held in, and the management fee: a percent of the rent collected, or a flat amount for each month rent comes in. From then on:
- The rent the lease bills (with its late fees and reimbursements) is credited to Rent due to owners, not to your income. It is not trust money yet: nobody has paid it.
- Receive the tenant's payment straight into the trust bank. The owner's share moves into their balance by itself, to the cent even when the rent is paid in pieces. A payment into any other bank is refused, so an owner is never paid out before their money is there. Voiding the payment takes it back out again.
- A last month's rent the tenant left with you, held in trust, can pay their final rent: it becomes the owner's money without leaving the trust bank.
- Rent collected for someone else is never paid online: the card processor's money does not land in the trust bank.
- Writing off a tenant's unpaid rent takes it off Rent due to owners: it is the owner's loss, not your bad debt.
- The owner's statement groups the period by heading: rent collected, other money in, management fees, repairs and expenses, and what was paid to them.
Rent already collected stays the owner's it was collected for: if the property changes hands, name the new owner, and only rent collected from then on is theirs.
Shortages lists any rent collected for an owner that has not reached their balance (it should always be empty), with Bring up to date to fix it.
Rentals deposits
A tenant's security deposit whose holding account is a trust account is received into that account's trust bank, and its lines name the tenant as Held for.
At move-out the refund comes out of the same trust bank, and whatever you withhold stays in it. So each deduction goes to a trust account backed by that bank (usually Owner funds held in trust) and names whose money it becomes, usually the property's owner, who then pays the cleaner or the repair from their balance. A deposit held in trust cannot pay one of your own invoices: when it becomes the owner's money, move it to the owner's funds held in trust with a journal entry.
The owner's 1099
A property manager reports the rent it collects for an owner on Form 1099-MISC, Box 1 (Rents), at the gross amount, before your fee and repairs. The 1099 report counts every rent collected on a managed property for its owner and marks the form due once the year's total reaches that year's threshold ($2,000 for 2026). Naming an owner on a property ticks their 1099 setting; untick it in Payees for an owner that is a corporation.
Not here yet
Ownership splits (each property has one owner), keeping late fees as your own income, Held for on the bank feed's Add form and on memorized entries, and per-state trust rules.