Newbie question - Trust Account

[Jean-David Beyer]

Benjamin wrote:
 > On Fri, 27 Feb 2004 04:44 am, cwchia at hotpop.com wrote:
 >
 >> The laws here requires us to keep accounts for money received from
 >> client and be placed in client's accouts. I believe that is
 >> referred to as 'trust accounts' by the American. I've tried to look
 >> for any tutorial, template of chart of accounts or help file
 >> pertaining to this type of accounts but to na avail. Please
 >> enlighten me on how to set up this type of account.
 >
 >
 > I am not an accountant, and I'm definitely not an accountant in your
 > legal jurisdiction. That said, I don't even understand your question
 > :)  ... so I'll try to help.
 >
 > The first question is "what are you trying to do?". Who are your
 > clients? Are you a lawyer? Are you being payed for services you are
 > yet to render, or are you just keeping the money on behalf of your
 > clients?

I am not an accountant either, and I'm definitely not an accountant in 
your legal jurisdiction. That said, I don't even understand your question

If my understanding of law around here is correct, you cannot keep the 
money in your own banking account. You must establish a trust account at 
a bank and have them keep the money. This so that if you become 
insolvent, the money still goes to the clients for whom it is held in 
trust, and not your creditors.
 >
 > If my understanding of what you're doing is correct, you're setting
 > up a trust account for your clients where they give you a bunch of
 > money and you have to give it back to them sometime later. In the
 > mean-time you might invest it, and I guess you would have to give
 > them the money back at the end.

Around here, your choices for investing the money are extremely limited; 
rent security deposits, for example, must be deposited at a bank in 
trust for the tenants. Furthermore, interest must be paid to the tenants 
on the money held. You would not only have to give them the money back, 
but you must pay them the interest as well. You will not get the float 
on it for the interval you are holding it.


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