Want to master STR bookkeeping and trust accounting?

This guide breaks down the flow of funds in your short-term rental business - from guest payments to owner payouts. Whether you're handling direct bookings, using Airbnb or VRBO, or managing multiple bank accounts, a clean flow of funds is essential. We'll show you how to stay compliant, track money clearly, and avoid common mistakes - plus which tools make it seamless.

What Is Flow of Funds in STR Bookkeeping?

"Flow of funds" refers to how money moves through your STR business - from guest bookings, through your trust account, to owners, vendors, and finally your operating account. Unlike typical businesses, STR managers often handle owner funds, making trust accounting legally required and operationally critical.

Step-by-Step: How Money Flows from Guests to Owners

1. Guest Booking and Payment Channels

Guest revenue comes from multiple sources:

• Airbnb (acts as its own processor)
• VRBO or Booking.com (often uses third-party processors like Stripe, Auth.net, or Lynnbrook)
• Direct bookings via PMS
• Occasional checks or Zelle payments

2. Deposits to the Trust Account

Funds land in your trust account based on channel rules:

• Airbnb: Payouts close to check-in date, often grouped by reservations
• Stripe/VRBO: typically 50% at booking, 50% at check-in
• Others: May vary; track carefully to ensure accuracy

Trust accounting is key here. You may be holding funds for months before the actual stay.

3. Recording and Reconciliation with STR Software

Use STR-specific tools like VR Platform to:

• Auto-categorize deposits by property and reservation
• Split revenue types (accommodation vs. cleaning)
• Match reservations to bank deposits

This ensures you’ve received full payment before issuing owner payouts.

4. Owner Payouts from the Trust Account

Payouts should occur monthly and only from the trust account. Use tools like:

• TopKey, Ramp, Bill.com
• Or your bank's ACH system

5. Handling Lodging Tax Payments

If you're collecting taxes on behalf of owners:

• Pay them directly from the trust account
• Airbnb usually remits automatically, but still requires reporting
• VRBO/Booking.com often deposit tax funds - these must be held until filed

6. Paying Vendors and Cleaners Correctly

Property management expenses:

• Pay from operating account or company credit card

Owner-related expenses:

• Ideally use credit card, then reimburse from trust at month-end
• If needed, pay directly from the trust account

Cleaner payments:

• If PM keeps cleaning fees: pay from operating account
• If passed to owner: pay from trust account

7. End-of-Month Transfers to the Operating Account

After reconciling:

• Transfer management fees, tech fees, reimbursable expenses
• Leave behind: future stay deposits, unpaid owner funds, taxes

Common STR Bookkeeping Mistakes to Avoid

• Using the wrong account for payments and forgetting to adjust later
• Failing to reconcile trust accounts monthly
• Not knowing how much of the trust balance is reserved for each property or purpose

Best Tools for Managing STR Flow of Funds

• Banking: Relay, Mercury, Chase
• Accounting: QBO Advanced, VR Platform
• Payments: Stripe, TopKey

How Keystone Bookkeepers Simplifies It All

• Weekly transaction categorization
• Monthly reconciliations and clean financial handoffs
• Full integration with PMS, processors, and VR Platform
• Support for payouts, vendor payments, and lodging taxes

FAQs

What is a trust account in STR bookkeeping?

A trust account holds guest funds before they are paid to owners or used for taxes. It's legally required in most jurisdictions.

How often should I reconcile my trust account?

Monthly, at minimum. You should always know how much is held for each property.

Can I pay expenses from the trust account?

Only if the expense is on behalf of an owner. Never pay company or PM expenses from the trust account.

What if I make a payment from the wrong account?

Adjust your end-of-month transfer to compensate. Accurate bookkeeping solves most issues.

Does Keystone handle vacation tax filings too?

Yes - monthly, quarterly, and annual lodging tax filings across the U.S. and Canada.