How to Start an LLC for Airbnb (Step-by-Step Guide)

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by Team
Last updated: July 21st, 2024

Setting up an LLC for your Airbnbs doesn’t have to be complicated, read on for simple steps to get started.

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As the popularity of vacation rentals and Airbnbs has risen, so has the number of people looking to make this a main source of income. Whether you’re renting out a room in your house or have multiple properties, an LLC is a strategic way to streamline operations while protecting your personal assets. Airbnb provides a platform, a secure payment system, and some insurance, but setting up an LLC provides more protection.

Starting an LLC for Airbnb step-by-step

Keep in mind that these steps will each vary by state and be sure to follow your specific state’s guidelines.

Choose a business name

Before you can move forward with registering your LLC, the business needs to have a name to include on all paperwork. In addition to things like your own branding, LLC names must be unique within the start where an LLC is formed and follow other guidelines.

This typically means including a designator, like “LLC” or “Limited Liability Company” within the name and avoiding misleading or inappropriate terms.

Each state has a search set up that allows you to see what company names are taken. If you find the right one but aren’t ready to file yet, you may be able to reserve the name for a small fee.

Appoint a registered agent

A registered agent is a person or business entity designated to receive legal documents and official correspondence on behalf of your LLC. Here’s what you need to know:

  • The registered agent receives important legal documents, such as service of process, state filings, and compliance notices.
  • They must have a physical address in the state where your LLC is formed and be available during normal business hours.
  • You can appoint yourself, another member of the LLC, or hire a professional registered agent service. Using a professional service can provide privacy and ensure reliable handling of important documents, but does have a fee.

Register your LLC

To officially form your LLC, you need to register it with the state where you plan to operate. This involves filing Articles of Organization (or a similar document, sometimes called a Certificate of Formation) with the state’s business filing office, usually the Secretary of State.

This document includes essential information about your LLC, such as its name, address, purpose, and the names of its members or managers. There is typically a filing fee, which varies by state.

Once your Articles of Organization are approved, your LLC is legally recognized, and you will receive a Certificate of Formation or a similar confirmation document.

Obtain an Employer Identification Number (EIN)

An Employer Identification Number (EIN) is a unique identifier for your LLC, similar to a Social Security number for individuals. It is required if you are going to hire employees, and many banks or investors will also require one. EINs are free, and you can apply on the IRS website to be granted one instantly.

Draft an operating agreement

Operating agreements are documents designed to outline the structure, management, and operating procedures of a business. Most states don’t require LLC operating agreements, but it is highly recommended you have one in place, especially for multi-member LLCs. Single-member LLCs may not need an operating agreement depending on the specifics of the business.

Many templates are available online, but in a more complex business, hiring a lawyer could be helpful in ensuring the agreement stands up to scrutiny. 

Obtain business permits and licenses

To legally operate an LLC, you will likely need at least some permits and licenses in place. The exact requirements will vary widely based on location and type of business, so always be sure you know which licenses apply to you.

  • General business licenses: Some states require a general business license to operate any type of business within the state. Check with your state’s business licensing office to understand the specific requirements and application process.
  • Tax permits: You may need to obtain specific tax permits, such as a sales tax permit, depending on your state’s regulations. This is essential for collecting and remitting sales tax on any taxable goods or services you provide through your Airbnb business.
  • Occupational licenses: Some states require occupational licenses for short-term rental operators. These licenses ensure you meet certain professional standards and comply with industry regulations. Check with your state’s licensing board to determine if this applies to your Airbnb business.
  • Local permits and licenses: In addition to state requirements, you may need local permits and licenses, such as a short-term rental property permit or zoning permit. These ensure your business complies with city or county regulations regarding short-term rentals. Contact your local city hall or county office to find out the specific requirements and application process for your area.

What to consider with an Airbnb LLC

Forming an LLC for your Airbnb business is a critical step in setting up your small business, but you should be sure to protect yourself in other ways too. These are just some of the important factors to keep in mind as a business owner and keep your Airbnbs in good standing.

Business bank account

The personal liability protection that comes with an LLC has some limitations – one of them is an assumption that owners are operating their personal finances separately from the business.

The best way to do this is to have a dedicated, separate business bank account for all business income and expenses. Not only does this maintain your LLC protections, it can make tax preparation and bookkeeping simpler.

Insurance coverage

Any Airbnb owner should have insurance protection in place to safeguard their investment against damages, lawsuits, disruptions, and to protect their guests. The exact type of insurance you need can vary, but generally you should consider:

  • Liability insurance
  • Property insurance
  • Business interruption insurance


Taxes are a big part of why many Airbnb owners choose the LLC structure, but it doesn’t stop at pass-through taxation. You may need to consider these forms of taxes:

  • Income taxes: As an LLC, you may benefit from pass-through taxation, where business income is reported on your personal tax return. However, you will still need to file an informational tax return for the LLC.
  • Self-employment taxes: If you actively manage your Airbnb properties, you will need to pay self-employment taxes, which cover Social Security and Medicare contributions.
  • Employer taxes: If you hire employees to assist with property management, cleaning, or other tasks, you’ll need to handle employer taxes, including: Social security and medicare taxes (Withhold and contribute the employer portion for each employee), Federal unemployment tax or FUTA (Pay FUTA taxes to fund unemployment benefits), and State unemployment tax or SUTA (Depending on your state, you may also need to pay SUTA taxes).
  • Sales and occupancy taxes: Many states and municipalities require short-term rental and Airbnb hosts to collect and remit sales and occupancy taxes.
  • Estimated taxes: As an LLC owner, you may need to pay estimated taxes quarterly to cover your income and self-employment tax burdens. Failing to make these payments can result in penalties and interest charges.

Ongoing compliance

Maintaining your LLC’s good standing requires ongoing compliance with regulations, which will vary by state and locality. This includes filing annual reports (like the BOIR), paying necessary fees, and keeping your business information up to date with the state. Regularly reviewing and adhering to these requirements ensures your LLC remains in good standing and avoids penalties.

What is the best business structure for an Airbnb?

When starting any type of business, one of the first decisions you will make is what business structure is the right option. The structure you choose can affect tax structure, management of the company, pricing and speed of formation, and other regulations that you need to follow. The most common business structures in the United States are sole proprietorships, corporations, and Limited Liability Companies.

Sole proprietorships

Overview: The simplest and most common form of business entity, where the business is owned and operated by a single individual. The two are considered a single legal entity. Partnerships function similarly, with multiple owners instead of one.

Pros: Easy to set up with minimal paperwork and costs, with complete control over all business decisions and operations. This structure also allows for straightforward tax filing, as business income is reported on the owner’s personal income tax return.

Cons: Sole proprietors take on unlimited personal liability for business debts and obligations. Additionally, sole proprietorships may be seen as less credible and struggle with finding investors.


Overview: A more complex business structure that is a separate legal entity from its owners (shareholders). Companies can choose between a C-corporation and an S-corporation for different tax benefits.

Pros: Limited personal liability for shareholders, meaning personal assets are generally protected from business debts and legal actions. Corporations can also find it easier to raise capital through the sale of stock and have a perpetual existence.

Cons: More expensive and complex to set up and maintain, with extensive record-keeping, reporting requirements, and compliance obligations. Corporations face double taxation, where profits are taxed at the corporate level and again at the individual level. This structure may also have less operational flexibility.


Overview: A hybrid structure that combines the benefits of a corporation and a partnership/sole proprietorship. LLCs are a separate legal entity from their owner, which offers personal asset protection but are eligible for pass-through taxation.

Pros: Limited personal liability for owners (members), protecting personal assets from business debts and legal issues. LLCs benefit from pass-through taxation, avoiding the double taxation faced by corporations. This structure offers a flexible management setup and fewer compliance requirements.

Cons: May be more expensive to establish than a sole proprietorship or partnership, with varying state regulations and fees. Depending on the state, there may also be ongoing reporting and franchise taxes to consider. Liability protection is also limited, so owners can be liable in some scenarios.

Compared to other options, LLCs offer a balance of protection, tax advantages, and operational flexibility that is deal for Airbnb property owners.


How does an LLC protect my personal assets?

An LLC protects your personal assets by creating a legal separation between your business and personal finances. This means if your Airbnb business faces legal action, debts, or liabilities, your personal assets like your home and savings are generally protected and cannot be used to satisfy business obligations.

Can I form an LLC if I own multiple Airbnb properties?

Yes, you can form an LLC if you own multiple Airbnb properties. You can either use a single LLC for all properties or create separate LLCs for each one. Using one LLC simplifies management, while separate LLCs provide additional liability protection by isolating each property’s risks.

How do I handle income from Airbnb rentals in my LLC?

Deposit all Airbnb rental income into your LLC’s business bank account and pay business expenses from this account. This ensures clear financial records and simplifies accounting. Report the LLC’s income on your personal tax return (for pass-through entities) and pay self-employment taxes. Always consult a tax professional like a CPA for compliance and tax optimization.

How do local zoning laws affect my Airbnb LLC?

Local laws around zoning determine where short-term rentals are allowed, impose restrictions, and may require specific permits or licenses. Compliance with these laws is essential to avoid fines or legal issues. You should research local regulations or consult with local authorities or a real estate attorney to ensure your Airbnb operations are legal.

What insurance coverage do I need for my Airbnb LLC?

Consider liability, property, and business interruption insurance for your Airbnb LLC. Liability insurance protects against guest injury claims, property insurance covers damage to the property, and business interruption insurance covers lost income if the property is uninhabitable.

How can I form an LLC for Airbnbs as a non-US resident or as a foreign LLC?

Non-US residents can form an LLC for Airbnb with the same steps as US residents. However, they may need to obtain an Individual Taxpayer Identification Number (ITIN) and require a US-based registered agent.

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