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?

[Jacqueline228]

@Inna22 you seem to be in know about starting an LLC. I'm thinking of starting one and being the property manager of my own cottage that I rent out on Airbnb. I then want to put the name of my cottage under my LLC but as someone else noted the mortgage company may not allow it. Have you happened to run into any of these issues? Also do you have any suggestions for a bank that does business accounts? Thanks

[Inna22]

@Jacqueline228 I have an S-corp, not an LLC and rules for those are greatly different do I do not want to misinform you. Your best bet is to contact your accountant, an attorney who will file for you and run your courporate book (or will you do that yourself?) and your bank

[Jacqueline228]

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@Inna22 wrote:

@Jacqueline228 I have an S-corp, not an LLC and rules for those are greatly different do I do not want to misinform you. Your best bet is to contact your accountant, an attorney who will file for you and run your courporate book (or will you do that yourself?) and your bank

Honestly the concept is so new to me that I'm still collecting information being that i don't have an accountant and I'm not familiar with what a corporate book is. I have yet to contact the bank as of yet but plan on doing so because i heard from others that they may not let me transfer the mortgage over. Thanks for the advice I will get a hold of my attorney for direction. 

[Ephrain0]

What if you leased a property from a landlord using a business entity the then sublet as Airbnb through the same business entity.

[Augustin61]

Good question. Looking for others to share their perspective. 

[Amy-and-Brian0]

We are setting up an LLC next week and then transferring our property into it, opening a new bank account for the LLC and then doing all business thru it. 

Will it completely shield us from every possible lawyer and law suit? No.

Will it, along with short term rental property insurance shield our personal assets from every possible lawyer and lawsuit? No.

Will it make getting to our personal assets more difficult for a lawyer and lawsuit to "pierce"? 100% yes it will.

An LLC is a tool like any other, similar to a firewall. And like all firewalls, it's just another hoop that someone will have to hop thru at their expense, time and burden of proof to get at our personal financial situation.

For a few hundred a year, it's worth it to us.

EDIT to say: we came to this conclusion by talking to several lawyers we know and two accountants. Their answers to all our questions were basically always "Well...yes and no..." - very noncommittal. There is no absolute sheild from liability.

But all agreed - having an LLC for liability shielding was better than not. 

[Carol831]

If the property you are using for the BnB, is your primary residence and you transfer it to any entity, LLC or S Corporation, you will  lose the $250,000 Capital Gain Exclusion (person person), in the event you want to sell  the property in the future.

Carol L Archibald, EA

[Jean174]

If you have no plans to ever sell the property but plan to pass it on to your heirs (gift it) before you die., the advantage of an LLC is that you can keep that Airbnb income safe from taxation and maximize your retirement savings by putting $55,000 a year into a SEP retirement plan.  You have to have a bookeeper, pay all taxes quarterly, and jump through all of those hoops, including paying yourself quarterly, but this seems to be a big benefit.

[Amna22]

Hi @Carol831

I am in the same situation. 

I have a primary residence and I Airbnb my basement. 

I want to convert that Airbnb into an LLC instead of hosting under my own name. 

I also plan to sell the primary residence in one and half two years. 

Can I talk to you privately?

My number is

**[Phone number hidden due to safety reasons - Community Center Guidelines]

[Augustin61]

Wondering if you any traction on your inquiry. 

[Patrick303]

I know this thread is 2 years old but I want to ask, did you also put the deed into the LLC's name and if so how significant of an increase was that in your homeowners insurance policy?

[Keith760]

Hey Patrick, 

Did you ever get an answer to this?  I was wondering if it was possible to keep the deed in my name rahter than transfer it into the llc.  

[Dave1222]

Hello Amy-and-Brian0,

We have the same questions regarding LLC for liability shielding for our Airbnb. We found that your answer is very helpful. Thank you so much!

Since 4 years has pasted, we want to know if you have any new insights regarding this issue? 

Best,

Dave 

[Cozy-Cabins0]

Hi there!

I have an LLC set up, but I'm a little confused as to how my Airbnb hosting account needs to be set up in relation to this. We're doing this for tax benefits and Airbnb only does payouts to the business account. Does this mean my account needs to be switched to a "company" account or can it stay as an individual account with all my payouts/tax infor going towards the LLC?

Any help would be appreciated!!

[Wendy1168]

@Cozy-Cabins0   Did you ever find an answer to your question? I'm wondering the same thing.