Trust accounting for Ontario property managers, explained

If you manage property on behalf of someone else, the money you hold is not your money. That single fact is the whole of trust accounting, and it is also where most small management companies quietly get into trouble.

What “trust” really means

A trust account holds funds you collect for owners and tenants — rent, deposits, and reserves — separate from your operating cash. The balance of that account should, at any moment, equal the sum of what you owe every owner and tenant. When it doesn't, you have a problem you can measure.

The cardinal sin: commingling

Commingling is mixing trust funds with your own. It usually isn't malicious — it's a management fee swept a day early, or an expense paid from the wrong account because it was faster. The fix is structural: your books should make the wrong move harder than the right one.

Reconcile every day, not every quarter

Most trust failures are discovered late because reconciliation happens late. A three-way reconciliation — bank balance against book balance against the sum of owner liabilities — is only useful if it runs continuously. When it runs nightly, a discrepancy is a small question. When it runs quarterly, it's an investigation.

• Keep a dedicated trust bank account, never your operating account.
• Post every receipt and disbursement to a specific owner or tenant ledger.
• Reconcile bank, books, and owner liability on the same cadence.
• Make management-fee transfers an explicit, logged step.

Done right, trust accounting stops being a compliance chore and becomes the thing that lets you take on more doors without taking on more risk.