How to handle security deposits

[Michael Smith]

Hey BP,

I'm about to close on my first investment property in the next week or two, and after doing some renovations I plan on renting it out. I know that in the state of Florida landlords are required to put security deposits in a separate bank account... but do I need to set up a different account for each tenant, or can I set up one account specifically for all tenant security deposits, as long as it is separate from the account that I use for other business transactions?

It would be so much easier to use one account for all tenants, but I want to make sure that I am running my business properly and not breaking any laws... Thanks!

[Bill Gulley]

You can hold all deposits in an escrow account. 1 bank account. Tell the ban it's an escrow account, they know the applicable requirements on their end.

There may be limits as to how much money you can have in that account, and never put your funds in or out of that account. Ask your accountant how to show the separate accounts and credits for each tenant. :)