Possible change to LLC for S.F.Arbnb

[Dawn97]

Any thoughts and advice on creating an LLC for my AIrbnb (also primary residence) income?

[Rebecca]

Hello @Dawn97 👋

Great question and we've had some posts about this in the past:

👉 To LLC or not LLC that is the question
👉 Extra insurance or LLC?

@Inna22, @Debra300 & @Dimitar27 I hope you don't mind me tagging you here as you were active in these threads, so wondered if you would be able to pop by and give some more current points of views and advice. 😊

[Inna22]

@Rebecca thanks for the tag. This is too of an opened ended question for me to chime in. If @Dawn97 wanrs to provide any specifics of the purpose behind thinking doing it, I can see if I can answer. Without many details, considering it is at the primary home, I don’t see a reason to complicate life and have additional expenses 

[Dawn97]

Thank you for the input.

[Debra300]

@Dawn97,

It would be helpful if you would provide more details regarding why are you considering an LLC vs. a sole proprietorship.

[Dawn97]

@Debra300 Thanks for the response. My son is contemplating trying an STR in his home and we are considering purchasing an additional multiunit property. All properties are in CA but different cities. I was thinking there maybe some advantages taxwise to creating an LLC to manage them as one small business. Am I crazy? What would be the disadvantages? Any thoughts or advice would be appreciated. 

[Debra300]

@Dawn97,

I am not an accountant or a lawyer, LLCs offer flexibility on how it's taxed and its membership, but I don't think taxes will be simpler or less with an LLC.  In my opinion, LLCs are better suited for hosts who are business partners because of pass-through taxation.  Each LLC member will be individually responsible for their portion of the profit or losses.  An LLC's primary benefit is that it provides its members limited liability for debts and liabilities. 

You and the other members will have determine how much administrative work effort you want to put forward or pay for.  There is quite a bit of paperwork and record keeping required for maintaining a LLC, e.g. by-laws, listing of members and their roles, meeting minutes, a business bank account, disbursement statements, etc.  The state requires ia formal process to dissolve the LLC, if you decide to end the business.

[Dawn97]

@Debra300 Thank you. This helped and gave me more to think about. Time for more research.