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?

[Miriam143]

It costs an annual fee to have an LLC.  You need to do social accounting.  You will need an accountant.  And have Airbnb pay your money directly into your designated LLC account. 

[Edwin57]

One way or another you still wind up paying more if any thing happen to your guest,is always about the money you know what I mean

[Alice-and-Jeff0]

@Stephanie365 - on Airbnb you cannot be a "business" in a profile, you must always be a human which means you and your personal information as the host will always be attached to the listing. Having an umbrella policy to cover you and your belongings will cover you sufficiently should be anyone bring suit. You are still covered under Airbnb's umbrella with regards to lawsuits and then subsequently be covered under yours before typical property insurance kicks in.  Having the LLC doesn't not protect you from someone bringing a lawsuit or going after your personal assets because the platform is set up as you as the host (the business does not "host").

Additionally, once the property is governed by a business entity, you are now bound to business rules set by the state in your home. This includes being held accountable for sanitation, business licenses, inspections, and since you have a farm, agriculture and other government agencies that may be required to check up and inspect livestock, etc. You will likely be required, as the working host, to get a sanitation certification.  Being a casual at-home business as a regular human is much different than being a licensed business who rents a piece of property that is now beholden to the same standards as hotels. This is the biggest complaint of the big chains because casual renters are not held to the same level of control.

You absolutely must talk to a local attorney and business advocate to ensure that you know exactly your liability with regards to factors other than lawsuits. Most Airbnb hosts do not do this and do not realize the reach of their exposure. Just read about how quickly laws are changing in cities across the country. 

Good luck. 

[Rene-and-Zac0]

@Alice-and-Jeff0 I’m not sure that’s entirely the case in practice.

As an example, this listing is obviously run by a ‘business’. 

https://www.airbnb.com/rooms/22212951?location=Desert%20Hot%20Springs%2C%20CA%2C%20United%20States&s...

They have several listings in my area and they are direct competitors in the level and quality of listing that I have. 

‘You know it’s hard out here for a Host’

[Alice-and-Jeff0]

@Rene-and-Zac0 - Officially, they are not allowed to list like this.  They are the "co-hosts" and the owners of the properties, the actual people who pay for this company to manage them, are the hosts.  Make sure you report listings and hosts like this to Airbnb since, strictly-speaking, in setting up the profiles this way, they are not within the terms and conditions set out by Airbnb.  

Additionally, I'd report them to Desert Springs Health and Sanitation and Business License department, because by setting up the profile in this way, they are saying that they are the "hosts" for all the properties and only "hosts" can own and lease their homes.  That means, IF they own all of them, the local government will likely be bound to treat them with the same B&B criteria - meaning licensing, inspections, etc. But likely they are a third-party administrator who handles all the maintenance and advertising - which is not unlike a hotel business where "Hotel Intercontinental" owns or leases the building but "Access Hospitality" maintains that property for their benefit.  It's companies like this, the "management" organizations that used to have to maintain websites for hundreds of properties are now acting like hotels which is the complaint of local governments and local hotels. http://accesshospitality.com/

[David126]

Often I see listing where the profile is the person who may be the equivalent of the front desk person, not sure this is an issue, they are doing so under the instructions of the property owner.

[Sandra126]

Alice & Jeff, Are you sure this is against the rules? Over half (if not most) of the listings my way are run by agencies like this one. Seems like it's the norm.

[Alice-and-Jeff0]

@Sandra126 - based on the policies still in place today, which would be different than when this thread first started, yes, the listings are still person-based.  That does not mean that the co-host cannot be responsible for everything - thus becoming the Listing Admin. But the rules of sub-renting are still on the owner. 

[Wendy335]

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[Diane663]

it is hard to be a host, alot of realtors in my area are using airbnb for their rentals, this is disapointing because i love to actually host, and meet people,,, realtors are commercializing it, my past guest did not like and will not stay if it is not the actual owner. not liking realtors, they have mls to use and need to leave air bnb for home owners 🙂

[Laura2563]

Evolve is a business that runs vacation rental homes on behalf of owners. The owners are not mentioned at all in the listings. They can do everything from reservations through managing on ground staff for cleaning etc...

[Gloria776]

Very interesting comments! In addition to carrying ample insurance coverage (home + unbrellla) Do you recommend placing the property in a trust? Would that limit liability? 

[Stephanie365]

Thank you for the input. That's why I came here to ask questions as part of my research into forming an LLC.

In Virginia it's very easy to form an LLC and only costs $100 up front then $50/yr to stay registered with the SCC. I am also registered with my county as a Bed and Breakfast under my name (which didn't cost anything; they don't require a license) because if you operate unregistered, the fines can be impressive. I will have to pay a nominal tax on my income. I will take that over a big fine. This county does do due diligence looking for unregistered businesses so I'd rather not take the chance.

FYI - Farm Bureau insurance actually has a rider specifically for AirBNBs, so I do have that coverage as well. For any of you with rural property.

[Michelle343]

My accountant just told me I need to set up an LLC for the reasons you stated. I also have short term rental homeowner's insurance so I need to figure out how the LLC can be listed on that insurance too. 

[Carin27]

Hi Stephanie365,

Thanks for your input.  I appreciate your thoughts.  LLC, S Corp... It can get confusing.  There are many people, attorneys, CPA's and such with the exact opposite opinions on how to set up.  

Did you find out anything else that is more recent?  August 28, 2019

Good luck.

Carin in Winchester, VA