How to Start an Airbnb Business

Why start an Airbnb business?

Starting an Airbnb business allows you to set the price you want for your property for nightly rates and extended stays. It can be a great source of extra income if you already have a full-time career. 

The website allows you to list for free, although there are some fees when it actually comes time to rent. Remember, though, that the potential for securing many clients throughout the year can make these fees worth it. And with positive reviews, you’ll become a trusted Airbnb owner, growing your business further. 

Another reason to start an Airbnb business is that guests are always on the lookout for a more relaxing and comfortable home-like location. And perhaps best of all, the website offers protection that can cover up to $1 million in damages to your property.

How to Start an Airbnb Business Checklist

If you’ve decided to take that leap and open an Airbnb business, here are 10 helpful steps. 

Step 1: Plan your Airbnb business

You’ll have to create a business plan first. No matter if your business will be a solo venture or you’ll run it with others, you’ll have to decide on the business structure. An LLC is a good choice for an Airbnb business because it provides personal asset protection and limits owners’ liability.

Beyond that, you should also consider the following questions:

• Who will be the host? 
• Who is in charge of the overall business?
• Who will handle complaints? 

These will all be handled by you if you plan to run things alone. If you have a team, you’ll need to sit down and discuss the merits of each role and how much work each position will require.

Additional Questions to Consider Before Opening an Airbnb

A few other questions to think about include:

• What should your nightly price be?
• What house rules should you enforce?
• Should you offer a single room, a loft, an apartment, or larger property? 
• What luxuries should you offer to make renters’ experiences better?
• How can you structure your listing to attract potential guests? 
• What will your recurring costs be for cleaning, furniture, etc.? 

Step 2: Decide your budget

If you decide to purchase a property for your Airbnb business, then consider the costs, insurance, taxes, utilities, and mortgage (if applicable). In addition to calculating rental costs, you’ll want to consider other expenses that come with renting, such as linen and towel costs and outfitting the property. If you decide to offer meals, then a grocery budget will also need to be considered. 

Step 3: Choose your rental market

Before you start an Airbnb business, one of the most important things to consider is who your rental market will be. It’s best to make this decision based on your location. If your property is near popular attractions, then people looking for a vacation rental will probably be your primary client base. If the property is near a corporate hub, then business travelers will be popular clients.

Step 4: Name your Airbnb business

All business owners should create a catchy and memorable name for their company. There’s no harm in doing some research to see what other similar businesses are calling themselves to get some ideas. It’s a good idea to name yours based on your location or the type of renters you’re looking for.

Adding your own name to the title gives it a personal touch as well. Something like “Samantha’s Hosting Company” or “David’s Beach Getaway” can work. That said, if you’re solely hosting on Airbnb and not seeking bookings elsewhere, your business name won’t matter as much because the Airbnb platform and brand is so well-known and powerful.

Step 5: Form a legal business entity 

Businesses come in different forms and structures, and deciding what yours will be will take time and consideration. Many Airbnb hosts choose the limited liability company (LLC) structure since it offers various protections for personal property. If you’re a real estate investor that happens to own many Airbnb rentals, then you can put all of your properties under a single LLC entity. Our LLC service, which starts at $0, plus your state’s required fee.

Step 6: Register your Airbnb business for taxes

Like with any business, you’ll have to pay taxes for your Airbnb business. Property taxes are a given, as is the case for everyone that owns real estate properties. You’ll also be subject to sales taxes and even a local occupancy tax. The latter is often known as a hotel tax. Get in touch with an accountant for help with this. 

Step 7: Get all necessary permits and licenses for your Airbnb business

You’ll need to make sure that your business has all the necessary permits and licenses. Since you’re running a rental business, you’ll need a specific business license. This might be called a Lodgers Tax License or a Transient Occupancy Tax (TOT) certificate.

You’ll have to register your Airbnb business with your local county agency that collects hotel taxes. One thing to know is that Airbnb businesses cannot operate in areas where local zoning laws prohibit them from using properties for short-term rentals. 

Step 8: Open a business bank account

Having a business bank account is important since it makes tracking your business expenses easier and streamlines your tax work. It also helps you maintain your LLC’s limited-liability protections and safeguard your personal property. If your Airbnb rental generates over $20,000 a year or if you conduct over 200 transactions through the business, then Airbnb will send you a 1099-K form. 

When the time comes to do your taxes, you can deduct certain expenses like fees charged by Airbnb. These include reservation fees, which can be up to 20%, depending on your property’s nightly rental cost. The bottom line is that having a business bank account instead of a personal one makes your business taxes easier to complete and helps you comply with business laws.

Step 9: Buy a property if needed

An Airbnb business doesn’t always require you to purchase a property. You can use your own home, but if you decide to avoid this, then you’ll have to do some homework and research. You can start off by checking out some Airbnbs in your area.

This will give you an idea of the size and amenities they offer. You can also see what feedback customers are leaving. Are they saying it was spacious, cramped, old, needed remodeling, etc.? Take all of these into account when choosing a property for your Airbnb business. You’ll definitely want to make sure that it’s near local attractions and hotspots, too. 

Step 10: Set your Airbnb house rules

As the host and property owner, you can set any rules you’d like. Just be sure that they’re fair and agreeable. You can also decide if pets will be allowed, how many guests can stay per unit, and list check-in and check-out times. It’s also a good idea to set a rule for quiet periods so guests don’t disturb others during the evening and early morning. 

How Airbnb Hosting Works

Airbnb is a customer-service-centric business model. In order to stay in business and attract future guests, you’ll have to run your operations like a hospitality business. Guests will check in, allowing you to meet or message with them and get a feel for how to keep them happy with their stay. Payments for your rentals will be made through Airbnb.  

Positive feedback is an important incentive to keep guests happy, so be quick to respond to their needs and questions. Keeping your property spotless is also important, as is following COVID-19 protocols. These are musts to do business with Airbnb.