Setting up an LLC for AirBNB

Stephanie365
Level 10
Fredericksburg, VA

Setting up an LLC for AirBNB

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?

65 Replies 65
Christian2481
Level 2
Austin, TX

I found ZenBusiness cheaper and better than LegalZoom 

Wei345
Level 2
Los Angeles, CA

@Christian2481  thanks for the link! Will check them out. I have 2 Airbnb and my lender suggested creating an LLC that will lease my two Airbnb and therefore I have a lease agreement with them, to show proof of rent. Some lenders wouldn’t take my Airbnb income. However, im worries about the tax implications since we’ll most likely set up as a partnership, so the savings on taxes might be minimal since it’s a pass-through entity and I will need to pay self employment taxes. Any insights?

Christian2481
Level 2
Austin, TX

I used ZenBusiness to create my LLC last year (https://www.zenbusiness.com/llc ) and they make it super easy (almost as easy as creating a gmail account). Everything is online. I like the idea of having an LLC to separate my Airbnb business from my personal assets in case anything happens. Also, it helps me keep a separate checking account and better track revenue and costs.

MaryLou24
Level 2
Tucson, AZ

Can anyone tell me if LLC is required in AZ to host an airbnb?

Lynda197
Level 2
Lehighton, PA

Excellent questions.  Where can I get help to do the same?  

Lynda

Andrea2805
Level 1
Houston, TX

When setting up your LLC for your business what did you use for your business name?

 

  ie., Jane Doe Airbnb?

or just

Jane Doe?

Kerry218
Level 1
Midvale, UT

I have considered doing the LLC thing as well, but really want to weigh the pros and cons and from what I read online, if you form a LLC for your AirBnB you will then be considered "self-employed" for your rental business and will also need to pay self-employment taxes for medicare and social security based on the income you make. In addition to the other fees and taxes and the very mild benefits the LLC MIGHT have that can quickly be thrown out the window if someone really wanted to come after you, this seems like another con to me.

James1519
Level 1
Los Angeles, CA

Hi,

 

Currently not sure of what type of business company to form. I have 8 Airbnb rentals but I don't own the apartments. So, I pay the rent back to the building owner. I was told that I should start an S-Corp to be able to write off the expenses which are the rents that I pay and the other expenses. Any help would be greatful. 

Traci42
Level 2
Duluth, MN

This is what I was afraid of an did  not want to hear.  My ABB rental bed has a thick foam matress with no pad between it and the 'clean' but not sanitized sheet, Ewww!  I don't want to know how often they don't wash the blankets and spread between tenents.  My host lives in the adjoining home and when I took out dishes to eat from and found them greasy and with stuck on food he admitted he owns a dish washer but doesn't use it  because it "wastes too much water".  The tiny bar sink and plastic dishpan which make up the kitchen are not going to induce milleniels who have all grown up with dishwashers to do a thorough job of cleaning the dishes that the next tenent is expected to eat off of.  Think of 60 - 100 different people eating off those dishes in a year.  Ewww again.  I think these rental schemes are unsafe and only actually make money for the corporation.  Owners properties are used and abused way above the level that long term tenents or owners would typically do.  Sad!

 

Cozy-Cabins0
Level 1
Atlanta, GA

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!!

Marc7867
Level 2
Westbrook, ME

I'm in the same boat. My plan was to set up the LLC and then open another account at another bank with the account named __________ LLC. Then have Airbnb send payments to that account. I'd then pay myself and all bills related to my properties from that account. 

Seems it still might be wise to talk to a lawyer first to confirm as well as my insurance agent and possibly an accountant.

I own my properties outright and was told if I get sued, I could lose everything . I was under the assumption that if sued, they could only go after the LLC, not me.

Also my taxes were done the other day is my tax person did say the LLC is the way to go to lower taxes.

Wendy1168
Level 3
null

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

Amy-and-Brian0
Level 10
Orlando, FL

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. 

 

Dave1222
Level 1
Fairfield, CA

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 

 

Patrick303
Level 3
Irvington, NJ

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?

Carol831
Level 1
United States

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

Amna22
Level 2
Independence, KY

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 913-325-7638 

Jean174
Level 4
Long Beach, CA

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.

Ephrain0
Level 2
null

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

 

 

Inna22
Level 10
Chicago, IL

@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

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