Client trust accounts for travel agencies: when you need one and how to run it

A travel agency trust account is a separate bank account that holds traveler money until it is paid to suppliers, refunded or earned. California requires one for traveler payments, Washington for money held more than five business days, and Hawaii within five business days of receipt. Each allows exceptions. In Florida, FDACS describes a bond requirement, and this guide found no trust-account requirement.

Here is which states require a trust account, when you can skip it, and what you may withdraw. Then how to open, run and document one, with a worked ledger example.

This is a summary, not legal advice.

What is a client trust account for a travel agency?

It is a bank account that holds money you received for someone else's trip. The money isn't yours to spend. You hold it until it goes to the supplier, back to the traveler, or to you as earned commission.

California puts it plainly. Every seller of travel has a fiduciary responsibility for all sums received for travel (Bus. & Prof. Code § 17550.15(g)). Those sums are deemed to be held in trust for passengers whether or not they ever reached a trust account (§ 17550.15(h)).

Your operating account pays rent and advisors. The trust account pays suppliers and refunds. Keep them apart. For how the money arrives in the first place, see how travel agencies collect payments.

Which states require a travel agency trust account?

Three states verified for this guide require one, each with alternatives. For Florida, FDACS describes a bond requirement, and this guide found no trust-account requirement. As published, checked October 2026:

Illinois has a similar rule for travel promoters, covered below. These rules can reach you even if you're based elsewhere. California counts you as doing business there if you solicit buyers located in California. For registration fees and filings in each state, see how to get a travel agent license.

Do other states have travel trust account rules?

Illinois does, under a different name. Several other states had seller of travel laws and dropped them. As published, checked October 2026:

• Illinois. A "travel promoter" must deposit 90 percent of all sums received, cash and card alike. The money goes into a trust account at a federally insured bank or savings and loan association (815 ILCS 420/6). Withdrawals are limited to paying the carrier or provider and to refunds. Interest and any remaining sums can come out only after all goods and services have been provided.
• Who Illinois leaves out. The definition excludes an officially appointed agent of an air carrier who is a member in good standing of ARC. It also excludes a promoter with at least $1,000,000 in errors and omissions coverage and a $100,000 surety bond (815 ILCS 420/2).
• Illinois receipts. When you take a payment, your written statement must show the location and number of the trust account (815 ILCS 420/4(c)). A violation is an unlawful practice under the Consumer Fraud and Deceptive Business Practices Act, enforced by the Attorney General.
• Oregon. Senate Bill 109 of 2009 repeals statutes governing sellers of travel. It became chapter 170 of that session's laws.
• Iowa. Its travel agency law was repealed in 2020.
• Nevada. The current NRS chapter 598, revised April 15, 2026, has no seller of travel sections that this guide could find. Confirm with the state before you rely on that.

When don't you need a trust account?

Each state has its own way out. Check every condition before you rely on one.

California, card payments. You can skip the direct deposit when the payment is made by credit card and the carrier or provider processes the charge. You must also never deposit, factor or get the charge credited to any account you control (§ 17550.15(j)).

California, bond. You can keep an adequate bond in place of the trust account and file a copy with the Attorney General before you advertise (§ 17550.15(k)).

California, other exemptions. Section 17550.16 exempts sellers that use an approved Consumer Protection Deposit Plan or Consumer Protection Escrow Plan. It also exempts sellers that meet a list of conditions together. Examples include forwarding traveler funds to the provider or ARC, three years under the same ownership, and taking part in the Travel Consumer Restitution Fund (§ 17550.16(a)–(c)).

Washington, bond or association. Instead of a trust account, you can file a surety bond of $10,000–$50,000, based on last year's Washington income, with director approval. A seller in good standing with an approved association can skip both. That association must require at least $1,000,000 in errors and omissions coverage and $250,000 in bond or equivalent protection.

Washington, ARC and cards. Payments made through the Airlines Reporting Corporation are excluded. So are card payments the carrier or provider processes, when the charge never reaches an account you control.

Hawaii, waiver. DCCA's renewal page lists conditions for agencies already approved for a waiver. They aren't physically located in Hawaii, accept only electronic payments, and send all payments directly to travel providers.

Hawaii, card payments. You're deemed to have complied when the traveler pays by credit, charge or debit card. You must submit the charge data to the processor or card issuer within five days of the charge. Any of that money that reaches you still follows the trust rules (HRS § 468L-5(a)).

Practical guidance: if travelers pay the supplier or your host directly, you may never hold client money at all. Hosted advisors should ask the host which trust or bond obligations are its own.

Do hosted advisors need their own trust account?

Often not, because the money never reaches them. The trust duty follows whoever receives the traveler's payment.

California spells this out. An individual, single-member LLC or single-shareholder S corporation doesn't register when it meets all of the conditions in § 17550.20(g). Those include a written contract with a registered seller of travel and acting only on its behalf. The agent must also receive no payment from the traveler, who pays the carrier or the registered seller directly.

Practical guidance for the three common setups:

If the money lands in your account, assume the trust rules are yours. Ask your host in writing which registrations, trust accounts and bonds cover you. More on the model in what a host agency does.

What can you withdraw from a trust account, and when?

In California, Washington and Hawaii, only what the statute lists. All three also bar you from encumbering the money.

California. You may not encumber the corpus of the trust account. Withdrawals are allowed only for these purposes (§ 17550.15(c)):

1. Payment to the carrier or travel provider for what the traveler bought, including payment through ARC.
2. Your compensation, once you deliver all the tickets or vouchers the traveler needs.
3. Your commission, once the provider (or another registered seller's trust account) is paid in full.
4. Refunds to the traveler.

Interest earned on the account may be paid to you (§ 17550.15(d)).

Washington. You shall not in any manner encumber the amounts in trust. Withdrawals are limited to payment to the travel provider, refunds, your sales commission, interest credited to the account, and the traveler's remaining funds once services are provided or tickets are issued. The statute also allows reimbursement of agency operating funds advanced for a customer's travel services.

Hawaii. You shall not in any manner encumber the amounts in trust. Withdrawals are limited to payment to the entity directly providing the travel services, refunds, your sales commission up to a maximum of 15 percent, and interest credited to the account. You may also withdraw the traveler's remaining funds once all services are provided or tickets are issued (HRS § 468L-5(b)–(c)).

A deposit is not a cash cushion. Why that squeezes growing agencies is explained in agency capital problems.

Worked example: one booking through a trust account

Here is one California booking from deposit to commission. The figures are illustrative, not from a real agency. The withdrawal rules are § 17550.15(c), described above.

A traveler books a $5,000 tour. The operator's net price to you is $4,400, so your commission is $600.

What the example shows:

1. The $200 left on March 4 isn't yours yet. In California, commission comes out once the provider is paid in full, or as compensation once you deliver all the tickets or vouchers.
2. Washington handles advances differently. If you paid the March 4 deposit from your operating account before the traveler paid, Washington lets you reimburse operating funds advanced for a customer's travel services from the trust account.
3. One traveler's money never covers another's bill. A pooled balance can look fine while one client ledger goes negative. Washington requires every disbursement to be identified to a specific transaction.

How do you open a travel agency trust account?

Banks open it as a business deposit account. The statutes decide which bank qualifies and how the account must be labelled. As published, checked October 2026:

1. Pick a qualifying institution. California: a federally insured bank, savings and loan, or credit union. Washington: a federally insured institution located in Washington. An out-of-state seller can use its home-state trust account if it did more than $5 million of Washington business last year. Hawaii: a federally insured financial institution located in Hawaii, checking or savings.
2. Use your registered name and a trust label. Washington wants the firm name of the seller of travel as registered. Hawaii wants the account name identical to the name on the registration application, with a "Client Trust Account" designation.
3. Get the proof your regulator asks for. Hawaii accepts an original letter from the financial institution, with the account name, designation, date opened and account number. Or it accepts a bank-imprinted blank void check showing the same details. Without one, Hawaii won't issue the registration.
4. Name the trustee. In California, file a written designation with the Attorney General if someone other than the owner or a named officer will act as trustee (§ 17550.15(e)).
5. Check the deposit insurance. The FDIC insures funds an agent holds for its principals to the same extent as if deposited in the name of the principal(s) (12 CFR 330.7(a)). It recognizes that relationship only if it is expressly disclosed in the bank's deposit account records (12 CFR 330.5(b)). The standard maximum is $250,000, adjusted by law.

How do you run a travel agency trust account?

Treat it as a ledger of other people's money. These steps follow the statutes, plus good practice where the law is silent.

1. Open a separate account in your registered name. Washington requires the account in the firm name of the seller of travel as registered. California doesn't require a separate trust account for each transaction, so one pooled account works.
2. Name the trustee. In California, the individual seller, or a managing partner, CEO or LLC manager, serves as trustee. A delegate needs a written designation on file with the Attorney General (§ 17550.15(e)).
3. Deposit on time. California says deposit directly. Washington's trigger is money held more than five business days. Hawaii gives you five business days from receipt.
4. Keep a record per client. Washington requires, for each client, the name, amount and date payment was received and disbursed.
5. Tie every withdrawal to a booking. In Washington, all disbursements must be identified to a specific transaction.
6. Reconcile monthly. Match the bank balance to the sum of your client ledgers. None of these states' rules set a schedule, so this is practical guidance. Build it into your month-end close.
7. Repay bank fees. In Washington, reimburse any bank service charges within 10 banking days after receipt of the monthly statement.
8. Keep the records. Washington: two years after completion of the travel. California: at least three years, open to the Attorney General or a district attorney on request (§ 17550.15(f)).

A shortfall is serious. In California, trust account violations can be charged as a felony when the money reaches $2,350 in any 12 months, or over $950 from one passenger (§ 17550.19(b)).

How long do you keep trust account records?

It depends on the state, and not every statute sets a period. As published, checked October 2026:

Good records also protect you when a trip falls through. In California, say you paid the supplier in full as the statute allows. Instead of a refund, you can give the traveler a written statement accompanied by bank records showing where the money went (§ 17550.14(b)).

Practical guidance: keep everything for the longest period that applies in any state you sell into.

How should trust money show up in your books?

As a liability, not income. Intuit's guidance for deposits says the money doesn't belong to you until it's used to pay for services. In QuickBooks Online, it suggests Other Current Liabilities as the account type and Trust Accounts - Liabilities as the detail type.

Give the trust account its own bank account in your ledger. Then the bank balance should equal the client deposits liability. When you withdraw earned commission, move that amount to income. The full chart of accounts is in QuickBooks and Xero sync. This is general information, not accounting advice.

Trust account or bond: which should you choose?

Practical guidance, drawn from the rules above.

Choose a trust account if you're starting out and want the simplest proof that client money is safe. It costs a bank account, plus the discipline to reconcile it.

Choose a bond if you'd rather keep one operating account and can qualify. A bond doesn't make client money yours: California still deems it held in trust for passengers.

Skip both only if travelers pay suppliers or your host directly and you meet every exemption condition.

How Tripdash Pay helps you track client money

Tripdash Pay sets payment schedules tied to your supplier deadlines, so money arrives when it is due. It traces each payment from the traveler to the exact supplier that received the funds, so you have a record to match against your trust account ledger. Tripdash Pay doesn't replace a trust account or bond where your state requires one. See how Tripdash Pay works.

Sources

1. California Attorney General. Seller of Travel laws, Bus. & Prof. Code §§ 17550–17550.59, including §§ 17550.15 and 17550.19, accessed October 2026.
2. Washington State Legislature. RCW 19.138.140, Trust accounts, accessed October 2026.
3. Washington State Legislature. WAC 308-129-300, Required records and WAC 308-129-310, Administration of nonexempt funds, accessed October 2026.
4. Hawaii DCCA, Professional and Vocational Licensing. Travel Agency Registration: Information, Instructions and Application, form TA-00, revised October 2024. Travel agency program page, accessed October 2026. Hawaii State Legislature. HRS § 468L-5, Client trust accounts, accessed October 2026.
5. Florida Department of Agriculture and Consumer Services. Sellers of Travel, accessed October 2026.
6. Intuit QuickBooks. Record a retainer or deposit, updated August 4, 2026.
7. Illinois General Assembly. 815 ILCS 420, Sec. 2, Sec. 4, Sec. 6 and Sec. 7, accessed October 2026.
8. Oregon State Legislature. SB 109 (2009 regular session), Relating to sellers of travel, chapter 170, accessed October 2026.
9. Iowa Legislature. Iowa Code chapter 9D, Travel agencies and agents, Iowa Code 2026.
10. Nevada Legislature. NRS chapter 598, Deceptive trade practices, revised April 15, 2026.
11. Electronic Code of Federal Regulations. 12 CFR 330.1, 330.5 and 330.7, FDIC deposit insurance rules, accessed October 2026.