Genuinely, it may seem like becoming an Airbnb host is less complicated than beginning another type of business. However, it is crucial to understand the time, work, and investment required to launch a profitable Airbnb business. Here are the essential steps for starting an Airbnb business.
List of Contents
- What Exactly Is Airbnb Business?
- 6 Steps to Start an Airbnb Business
- How Much Can You Earn As an Airbnb Business Host?
- Taxes of Airbnb Business
What Exactly Is Airbnb Business?
Airbnb (ABNB) is a website that combines people who desire to rent out their homes with people looking for lodging in specific areas. Since 2007, when co-founders first proposed inviting paying guests to sleep on an air mattress in their living room, the company has gone a long way. Airbnb has over six million listings in over 100,000 cities and towns across 220 countries.
6 Steps to Start an Airbnb Business
STEP 1: Determine whether you need permission
If possible, you should obtain approval from your landlord, co-op board, or homeowners association.
STEP 2: Discover and set up your Airbnb area
Whether you rent a single room with a shared bathroom, a separate wing with its entrance, or your entire home while you are away for the weekend, you will certainly need to invest in the area. The following are the costs to consider.
- Adding keyless locks to facilitate check-in
- Purchasing items that enhance the comfort of the area for long-term guests, such as a refrigerator, microwave, and Coffeemaker
- Constructing a wall to enclose a room
- Building a separate television area with furnishings
- Stocking clean mattresses, towels, and toilet paper
- Paying increased utility costs
- Offering cleaning services between bookings
- Indemnifying a co-host
- Covering taxes and the Airbnb host fee
STEP 3: Set your price
- The typical Airbnb fee for hosts is 3% of the booking total. The cost is higher if you are an Airbnb Plus host in Italy or have a particularly tight cancellation policy. Your guests’ price on your listing is higher than what you earn.
- Other factors, such as weekly or monthly discounts, weekend or seasonal pricing, payment for co-hosts you recruit, and VAT (value-added tax) in certain non-U.S. regions, may alter your earnings.
- Airbnb charges visitors before arrival and 24 hours after your guest checks in. It sends you payment via the method of your choice, PayPal or direct transfer. You cannot accept cash for your Airbnb listing. Visa, Mastercard, American Express, Discover, debit cards, Apple Pay, Google Pay, and PayPal are accepted.
- Airbnb’s data indicate how your nightly rates compare to other Airbnb in the region. It also indicates whether you might consider lowering your rates on particular days of the week or during demand spikes. You can set a minimum number of nights for guests to stay at your location, which might offset the cost of re-letting the space. Moreover, you should consider charging extra visitors or for additional services, such as cleaning, equipment rental, pet-friendly accommodations, or tours.
STEP 4: List your area
Do not overstate or hide facts regarding issue areas in your listing.
- Emphasize what makes your place unique to stand out from other listings
- Notate the accessibility features that allow guests to navigate the venue with ease
- Include high-quality images to help your guests comprehend the space’s dimensions and amenities
STEP 5: Hire a co-host
You may want at least one additional person’s assistance as follows.
- Urgent issues
- Repairs or requests at the site
- Emails and communications
- Neighborhood-specific tips for guests
- The check-in process
You can add up to three co-hosts to your listing. You should ensure they understand Airbnb’s co-host terms of service. You and your co-host will choose their per-reservation compensation. If you cannot find a reliable co-host, third-party companies can assist hosts with inquiries, cleaning, and more.
STEP 6: Host an Airbnb business
If you cannot rent a home, you can instead host an Airbnb experience.
- Airbnb is the platform’s tour-guide service, connecting guests with expert hosts for one-of-a-kind, hyperlocal activities. You should consider yoga courses beneath the Eiffel Tower, surf lessons on Venice Beach, a Harry Potter walking tour in London, and pasta-making classes in Rome. However, Airbnb experiences are not accessible in all cities.
- You choose your schedule, the frequency you can host, the size of the group you can manage, and your fee.
- You must submit an application to Airbnb to evaluate your qualifications and expertise. Typically, Airbnb responds within a week. Depending on your local laws and whether your gig matches your region’s definition of business operations, you may need to register as a business or obtain a business license. Pay close attention to the applicable laws if your planned activity involves alcohol, food, or transportation.
How Much Can You Earn As an Airbnb Business Host?
On average, Airbnb reports that hosts in the United States earn more than $9,000 annually. Some hosts purchase or lease many apartments or houses and rent them out permanently. Your earning potential is contingent upon the following.
- What is the charge used for your space is.
- How often the property can be rented.
How much time and money you invest in the decoration and upkeep of your place will determine these factors.
Taxes of Airbnb Business
1. Sales tax
Your town may ask you to collect sales tax or gross receipts tax from guests. You must inform them of the actual amount before booking. You may collect this tax from guests at the time of booking.
2. Income tax
From the perspective of the IRS, operating an Airbnb can qualify you as a small company owner. Therefore, you must declare your Airbnb income and costs on your federal tax return. Airbnb would give you a Form 1099-K if you earned more than $600 in a calendar year. A 1099-K Form allows you to determine and report your business income.
3. Tax deductions
You may be allowed to deduct some Airbnb-related business expenses on your tax return. These costs could include the following.
- The mortgage or rent on the property
- Utilities consumed during stays
- Property insurance
- Repairs to the property
- Cleaning service
Beginning an Airbnb business involves planning and forethought. Before you can begin receiving your first guests, you must perform several procedures such as locating the ideal location and familiarizing yourself with local rules, regulations, and tax issues. Therefore, dividing the entire process of creating an Airbnb business into smaller, more manageable segments is advisable. As a result, you are less likely to forget an essential component or become depressed.
Yu have to examine the specific characteristics of your own property and alter the price accordingly to remain competitive. When selecting your price, don’t forget to add in cleaning costs and other charges.
Effective Airbnb marketing strategies include optimizing your listing with high-quality photos and detailed descriptions, offering competitive pricing, promptly responding to guest inquiries and reviews, utilizing social media and other online platforms for promotion, and providing incentives such as discounts for longer stays or referrals.
It is important to speak openly and calmly, document any complaints or damages, consult Airbnb’s customer support service as needed, and consider publishing an honest review to alert other hosts about troublesome guests. In severe circumstances, it may be essential to ask the visitor to depart early or engage the local authorities.
Among the legal considerations associated in running an Airbnb business include zoning requirements, municipal rental legislation, and liability risks. Tax considerations may include rental income tax, occupancy tax, and sales tax.
Read more: Investing
Source: Nerdwallet, Investopedia