How do I set up an LLC for AirBNB?

[Stephanie365]

Hello All,

I have been hosting for a few months now and want to add a layer of liability protection. I want to have guests go through an LLC instead of me as a person. I have already discussed with my insurance company and they have no problem adding my LLC as an additional insured.  I am currently registered with my county under my name for the AirBNB, and I would be changing that over as well. I will be setting up a separate bank account as well.

I will still be owning the home, but the Homesharing (AirBNB) would be going through the LLC.

Has anyone done this and does it cause any problems with my AirBNB listing?

[David126]

I am sure that each State in the US has its own variations so what might work in one will not apply in another.

I agree that if there was a law case then you would expect that everybody and their dog to be listed, so an LLC would not likely to be of any help as the Property owner/operator would be included.

In my State the activity determines what you need to do as far as licensing etc is concerned, you can operate your business under  a variety of legal headings including that of an individual, any permitting etc is the same.

[Blythe2]

I tried to do this.. set up an LLC, ect... should have checked first to see if my bank would allow me to transfer mortage to LLC- they won't. So it was all for nothing. 

[Inna22]

@Blythe1 your mortgage should have nothing to do with this

[Maggie447]

So, @Blythe2 , what did you do? I'm told you can do a quit claim deed, sell the property to the LLC for $1, then refinance before your mortgage holder files a "due on sale" making you pay the mortgage note in full. Problem is, not sure any other mortgage company will want to finance the property in an LLC either. 

[Inna22]

I bought the property in a name of a land trust, I manage it through an S corp that I am a president of. I have a mangement agreement in the corporate book (and yes, I do have conversations with my self- I recently did not give myself a raise so I told myself I will quit, we then made up:)) If anything happens, the liability would be limited only to the value of the property

[Dado1]

Inna, I am also in Chicago, were you able to have the trust be the earner of income? How did you do that?

[Inna22]

@Dado1

a trust is not a company so it can not earn money and file taxes. The money goes into a separate account opened by my management S corp. So the S corp has two accounts- one for itself, one for the airbnb (sort of like when attorneys open a separate account in their name to hold escrow for a client-it is in attorneys name but it is not their money). My accountant feels that for as long as I have a mortgage he can depreciate everything and not show profit. When he will need to show one, it will be piped through the S corp.

I hope this makes sense!

[Deborah75]

Hi Y'all, and thanks. This is helpful. My accountant is also encouraging me to convert to an LLC given changes in the tax laws.

My recent 8-day jury duty (4 weeks ago) may be related. The plaintiff fell at work and got hurt. He sued his employer. The property owner, which leased the facility to the defendant, was listed as a co-defendant. Evidence admitted showed that the lease stated the property owner holds no responsibility for the upkeep of the building or what those who leased it moved into the building. I'm not a lawyer, but it didn't seem as if the property owner was going to have to pay in the wake of negligence we jurors declared of the defendant. Even if the owner was forced to pay, the owner's lawyers seemed to have laid the groundwork for a subsequent lawsuit to recover lost funds. It all seemed like a headache to me. Maybe one that could likely be avoided with steps described here. Still, just thought I'd mention this experience.

[Janet188]

Thank you, I hadn't even considered a land trust. Maybe you can give me some advice . Between my partner and I, we're not married, we own three properties two of them have homeowner's exemptions the other one is an investment property we would like to Airbnb all of them would a land trust make sense for us?  Are you considered self-employed then if your trust does not earn money?I'm trying to find a way to lower my tax base.

[Lance3]

I too am looking for insights to lowering our tax basis and wondering if an LLC affords some more control on how the taxes are determined/collected. 

Am I right that AirBnB has 1 million of liability coverage inherent in the booking?

L

[Inna22]

@Lance3 the liability through Arbnb is fluff and a whole separate conversation. You can read up about it on the boards- there are plenty of threads covering it. Get your own insurance, pretend this one does not exist

[Laura2563]

If you're looking to set up a trust, do lots of research on land trusts v. regular real estate trusts.  Siblings and I inherited property in a land trust and it has proven to be a headache and my attorney said they're not used much anymore as they were more. 

[Jay131]

Hey Everybody!  Similar but slightly different question?

Hosting as an individual, did you do the "W9" through your:

1.  Social security number or

2.  LLC using our TIN/EIN?

Thanks!

Jay

[Kateryna45]

@Jay131 Did you find an answer to this?

[Inna22]

@Jay131 Your question needs clarification. Did you create an LLC or did you not? As you can see in this thread, this is your decision to make. If you created one, than that is how you file. If you did not- you are an individual