How to Start an Airbnb: 11 Steps for Beginners

ByJulija A.
March 14,2022

Airbnb allows property owners to rent out accommodation to the public for a fee. Anyone with extra space, such as a spare bedroom, annex, or even a whole property, can start earning extra money from the platform. As such, Airbnb offers a tremendous economic opportunity for those looking to supplement their pension or wages. 

In this post, you’ll learn how to start an Airbnb business and what you need to do to make it lucrative. Read on to learn more.

Why Should You Start an Airbnb Business?

Before we dive into the “how” of starting an Airbnb business, it’s helpful to ask why you would want to start one in the first place. While everyone is different, most people share the following motivations for doing so: 

  • It allows you to earn an extra income on the side for minimal effort on your part.
  • You can list properties for free. You only pay Airbnb when you make a successful rental.
  • You give guests a more personalized experience compared to hotels. Many travelers want a home-away-from-home-style stay when they visit another country.
  • You get protection. Airbnb provides up to $1 million in property damage protection to its clients.

Airbnb has a vast market. While it is popular among vacationers, many people on business trips also use it. There are many opportunities to build a thriving Airbnb business, even if you don’t live next to a tourist hotspot. 

What Responsibilities Do You Have as an Airbnb Host? 

With Airbnb, you can be as hands-on as you want. However, you should always prioritize guest satisfaction. If you get bad reviews, you may have to lower your prices or reconsider how much (or little) you get involved in running the place, making sure it’s clean, and so on. 

Most hosts welcome guests and introduce them to their accommodation. They also answer quick questions and tell guests how they can get in touch with them if there is a problem. Other than that, the majority of hosts leave their guests alone for the duration of their stay. Once the rental ends, they clean the rooms to prepare them for the next guests. 

If you don’t want to manage your Airbnb rental (or you’re going to be away), there are alternatives. For instance, you can leave keys in a coded key box that guests can access when they arrive. You can also hire a cleaning company to come in and prepare the rental for the next guest if you don’t want this responsibility. 

How to Start an Airbnb

In this section, we will present a step-by-step process for starting an Airbnb rental. Please note that some areas of the country do not permit short-term rentals. Airbnb should tell you immediately whether your address is eligible or not. 

Step 1: Find Your Property

If you already own the property you’d like to rent out, then you can skip this step. If you don’t, you’ll need to set your budget and choose a location. 

Learning how to start an Airbnb business without owning a house is easier than you might think. Start by asking yourself the following questions: 

  • What do I want my rental market to be? 
  • What type of customers would enjoy staying in this accommodation?
  • Is the accommodation close to any important landmarks, historical sites, tourist traps, or business hubs? 

Once you know who you’d like to target, the next step is to set a budget. You’ll want to approach this just like any other real estate investor, thinking about the yield on any property you are considering. 

In many cases, you will find that the yield for Airbnb properties is higher than you expect. For example, a property that requires a $20,000 deposit could possibly generate $100 per night (compared to just $1,000 a month if you rented it out as a regular apartment). However, you may need to check occupancy rate limits in your area. There may be rules on how long you can do short-term rentals in your area. 

Step 2: Set Up Your LLC for Airbnb

If you’re setting up an Airbnb business as an investor, it’s good practice to form an LLC. Having a brand name for your rental makes it more memorable and encourages people to recommend you via word-of-mouth. It also protects you from certain business-related losses.

Don’t go for something generic like “Lakeside Cabins.” Instead, choose something original that will stick in people’s minds, such as “Cara’s Tree-Top Retreat.” The more authentic you are, the more bookings you’ll get. 

Step 3: Talk To Your Accountant

Airbnb properties let you generate a large second stream of income (alongside your primary day job or pension), generating taxes. Airbnb calculates these taxes for you, depending on your location. 

However, you will need to keep track of expenses associated with running your business, such as cleaning and repairs. Accountants can help you determine your net taxable income more accurately. They can also help you manage the tax implications of renting out accommodation you own (including advising you on sales tax and the local occupancy tax).

Step 4: Get Your Business License

If you want to operate a rental business, you’ll need a business license. Depending on where you are in the US, this could be called either: 

  • TOT certificate
  • Lodgers Tax License

Make sure that you register your rental business with the agency that collects the local occupancy tax. This way, they’ll have a record that you’ve paid, even if you do it through Airbnb.

Step 5: Set Up Your Accommodation to Receive Guests

Once you’ve chosen a property to rent out and set up an LLC, the next step is to prepare it for guests. Good furnishings allow you to charge a higher nightly rate. However, you will need to invest more money upfront. 

The quality of the décor and finishes you use will depend primarily on the type of tenants you want to attract. Budget accommodation is highly sought after in some locations, so you might want to look for deals on furniture from a thrift store or on Craigslist. In other places, people may want accommodation that helps them have fun or entertain guests. You may also want to set up the rental space to be family-friendly, particularly if you operate in an area popular with vacationers. 

Step 6: Open a New Business Bank Account

Whenever you start an Airbnb business, it’s always a good idea to open a business bank account. This way, you can save yourself the hassle in the future as your enterprise grows. 

If you make more than 200 Airbnb transactions or $20,000 from rentals every year, then Airbnb will send you a 1099-K form. This form helps you comply with tax law by reporting all your transactions to the IRS. Keeping your business transactions in a separate account makes this process easier. 

Step 7: Get Rental Insurance

Insurance is a part of Airbnb startup costs. Here’s what you’ll need as a minimum: 

  • Homeowners insurance: Homeowners insurance covers damage to the property on vacant days. 
  • Airbnb damages insurance: Airbnb provides up to $1 million in coverage for damages caused by guests to your property while it is being rented. 
  • Workers compensation insurance: You’ll need to take out this insurance if you hire workers to manage your Airbnb, such as cleaners. This insurance protects you against liability suits.
  • Business insurance: Business insurance protects you against a range of legal risks associated with running your Airbnb operations. General liability and property and casualty insurance protect you if you’re found legally liable for injuries incurred in the accommodation you own.

Don’t skip on insurance. If you do, you could be putting your livelihood at risk and may face hefty fines for non-compliance.

Step 8: Put Together Your Airbnb Dream Team

Running an Airbnb business often requires assembling a team. While most owners do at least some of the jobs themselves, they outsource others. 

You’ll need to consider hiring the following people: 

  • Photographers to take photos of your accommodation that appeal to users
  • Cleaners to change bedding and prepare accommodation for the next guests
  • Interior designer to create attractive spaces that encourage guests to stay and return
  • Handyman for odd jobs around the property
  • Accountants to help you keep track of your business revenues and expenses
  • Emergency contacts – people who can step in and help if you’re not there
  • Property management company to welcome guests on your behalf

Many Airbnb owners do all of this work themselves. However, some prefer a hands-off approach. 

Step 9: Check Your Business Plan

Just like any other enterprise, Airbnb LLCs need well-considered business plans, particularly if you’re learning how to start an Airbnb with no money. 

Set out your business plan by first defining the business structure: 

  • Who is in charge?
  • Who will you hire to help you manage or run the property? 
  • Who will handle customer complaints? 
  • Who will interact with customers via the Airbnb platform?

Next, calculate your income predictions. Find out the going nightly rate for accommodation similar to yours and then subtract any expenses you expect to incur, including taxes, to determine your net profits. Consider all your recurring costs, such as equipment and furniture replacement, cleaning costs, and utility bills. 

Step 10: List Your Airbnb Property

Once you’ve completed all these preliminaries, getting started on Airbnb is incredibly easy. The platform provides you with most of the digital tools you need to make it happen. 

As you build your profile on the platform, you’ll need to consider the following: 

  • How much you’ll charge guests to stay per night.
  • How many people you can comfortably fit in your accommodation.
  • You’d like to attract (i.e., families, businesspeople, backpackers, etc.)
  • Whether you’ll allow guests to book immediately.
  • The details of your cancellation policy.
  • The title of your property listing.
  • The photos you’ll include, and in which order you will present them.

Once you’ve completed your listing, get somebody you trust to look it over and tell you whether they would rent it out, depending on the information provided. Ask for honest feedback and what you can improve. 

Step 11: Collect Feedback

Airbnb rentals depend on guest ratings. The more positive feedback you can acquire, the more demand there will be for your accommodation. 

Here are some tips for getting good Airbnb reviews:

  • Specify your location clearly so that guests can easily find you. If you’re off the beaten track, experiment with different location instructions to see which your guests find easiest to understand.
  • Provide guests with a check-in message, providing them with details about their stay.
  • Send a check-up message after a few hours, asking if everything is to their liking.
  • Send a check-out message, thanking the guests for using your accommodation for their trip.
  • Leave a welcome note.
  • Write a house manual that explains how to use everything.
  • Make sure that you always follow your cleaning checklist.
  • Allow guests to book instantly.
  • Supply goodies for children and pets.

Wrapping Up

You can start an Airbnb out of your home or approach it very much as you would a conventional real estate business. The goal is to find projects that afford you the highest returns on the cash you put into the business. 

If you already own a property, the cost to start an Airbnb is generally quite low. Expenses will rise if you decide to take out a mortgage, but the returns are still good. Once you learn how to start an Airbnb, it can be a real money-spinner. 

Frequently Asked Questions
How do I start Airbnb legally?

Airbnb hosting is easy, but you need to do it legally. Ensure that you check short-term rental rules in your area and acquire any necessary permits and licenses. Check the tax code and comply with insurance and health and safety regulations. 

How much does it cost to run an Airbnb?

Running a rental Airbnb is cheaper than you might think. Generally speaking, Airbnb takes a three-percent service fee from regular hosts. You can then expect running costs of around $1,500 per bedroom per year.

Is having an Airbnb profitable?

If you own an Airbnb, you can generally make more money than if you rented out the property to a regular long-term tenant, depending on the area of the rental. On average, Airbnb's monthly income is around $900 to $950. 

Are there hidden fees in Airbnb?

People wondering how to start an Airbnb often ask this question. Airbnb is upfront about its service fees, including them in the price that guests pay. However, you will face additional fees if you pay for cleaning or other services. If tenancies are short (just two or three nights), the relative cost of these services will increase.

About the author

Julia A. is a writer at SmallBizGenius.net. With experience in both finance and marketing industries, she enjoys staying up to date with the current economic affairs and writing opinion pieces on the state of small businesses in America. As an avid reader, she spends most of her time poring over history books, fantasy novels, and old classics. Tech, finance, and marketing are her passions, and she’s a frequent contributor at various small business blogs.

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This means having a platform that is integrated with all of your other selling channels and that provides a consistent experience for customers regardless of how they shop.  Environmental Sustainability Will Play a Big Role As we become more and more aware of the impact our consumption has on the environment, sustainability is becoming an important factor in purchasing decisions. Customers that follow new online shopping trends want to know if the products they’re buying have been ethically sourced and if the company they are buying from is taking steps to reduce its carbon footprint. In order to stay ahead of the competition, businesses need to make sure they’re considering environmental sustainability in all aspects of their operations. This includes everything from the sourcing of materials to the packaging and shipping of products. Customers are now more willing to pay extra for sustainable products, so there is a big opportunity for businesses that are able to meet this demand. How To Make the Best Use of ECommerce Trends ECommerce is constantly evolving, and it can be difficult to keep up. However, by staying informed and making sure your eCommerce platform is up to date, you can ensure that your business is able to stay ahead of the competition. To make the most of the latest eCommerce developments, consider the following: 1. Keep Up With the Latest Trends To stay on top of your game, you must be proactive and regularly seek out new information. There is a number of ways to do this, such as reading industry news, following relevant blogs and industry influencers, and attending eCommerce conferences. You can get to know what’s going on in the industry and find inspiration for your own business.  Read up on the research data and statistics that are available on eCommerce growth trends. This can help you understand the current landscape and make informed decisions about where to focus your efforts.  2. Take Advantage of Digital Tools There are a number of digital tools that can help you improve your eCommerce business. From marketing automation software to customer relationship management systems, there’s a variety of features that can make it easier to run your business and provide a better experience for your customers. Check the data and sales figures, and invest in analytical tools so you can understand where your customers are coming from and what they are looking for. 3. Learn From Your Competitors It’s important to keep an eye on your competitors to see what they are doing and how they are reacting to the latest eCommerce retail trends. You can learn a lot from observing their strategies and understanding their strengths and weaknesses. Should they fail, you can learn from their mistakes. If they succeed, you can try to replicate their success. Final Words As the global eCommerce ecosystem continues to grow and evolve, it's important to stay on top of the latest trends. Instead of leaning on traditional shopping methods, more and more consumers are turning to the internet to purchase items. Mobile phones play a big role here, as they provide a convenient way to shop on the go. What's more, consumers are getting more comfortable with new technologies such as AI, AR, chatbots, and voice search. These eCommerce trends in technology are changing the way we interact with eCommerce platforms and retailers. With all that said, we're confident that you now have a solid understanding of the current eCommerce landscape. Just remember to keep your eyes peeled for new trends so you can stay ahead of the curve.
By Danica Djokic · September 15,2022
As a business owner, you are likely responsible for overseeing all aspects of your company’s operations. This includes setting your own salary. This decision can be difficult to make, especially if you’re not sure what’s standard or how to determine what’s appropriate for your situation. In this article, we’ll discuss some factors you should consider when deciding how much to pay yourself as a small business owner. What To Consider When Setting Your Salary Setting your own salary can be daunting, especially if you’re a freelancer or small-business owner. After all, you need to make enough money to cover your expenses and earn a profit, but you don’t want to price yourself out of the market. So, what factors should you consider when paying yourself from your business? Business Structure One of the first things you should consider is your company’s business structure. Are you a sole proprietor? Do you have a business partner? Are you an S corp? Your company’s business structure will affect how much money you take home and how much in taxes you need to pay. For example, if you’re a sole proprietor, you’ll likely take home less money than if you’re running a corporation because you’ll be paying taxes on both your business income and personal income. On the other hand, if you’re running a corporation, you’ll only be taxed for your corporate income. This means that more of your business profits will stay within the company, which can be reinvested or distributed to shareholders. Business Expenses Another factor to consider when paying yourself as a small business owner is your business expenses. How much does it cost to run your small business? You should consider expenses like rent, utilities, payroll, and marketing. You’ll need to make enough money to cover these costs, plus your personal living expenses. One common mistake small business owners make is not accounting for all of their business-related expenses. Make sure you have a clear understanding of all the costs associated with running your business before you start setting your salary. Personal Living Expenses In addition to business-related expenses, you also need to account for your personal expenses, such as housing, food, transportation, and health care. Again, one common mistake people make is not accounting for all their personal expenses when calculating the business owner’s salary. Industry Standards Another factor to consider is industry standards. What do other businesses in your industry pay their employees? This will help you determine a reasonable salary for yourself as the business owner. Of course, you don’t want to undervalue your services.  Ultimately, setting your salary comes down to determining what you need to earn to cover your costs and make a profit and then finding the right balance between pricing yourself too high and too low. By taking the time to consider all the relevant factors, you can ensure that you set a fair and competitive price for your services. How to Calculate Your Owner’s Pay You should consider a few balance sheet items when calculating your salary as a small-business owner. These include your monthly net income, all business-related taxes and fees, and business expenses.  According to some small business revenue statistics, 86.3% of small business owners earn less than $100,000 a year. However, this does not mean you must stay within this bracket. Below are some steps you can take to get a clear picture of a small business owner’s salary and how to calculate it yourself. Calculate Your Monthly Net Income Your monthly net income is the total revenue your business brings in minus any taxes or fees. This number can fluctuate from month to month, so it’s important to take an average over a period of time to get an accurate number.  Next, you’ll need to subtract all business-related taxes and fees. This includes income taxes, self-employment tax, and any other business-related expenses. Once you have your monthly net income minus taxes and fees, you’ll be left with your profit.  Calculate Your Tax Savings The next step in calculating owner pay is determining your tax savings. This includes any deductions you can take for business expenses, home office expenses, and health insurance premiums. You can consult with a tax professional or use a tax calculator to get an accurate number. Once you have your tax savings figured out, you can add this amount to your monthly net income to get your total monthly compensation. Calculate Your Business Expenses The final thing you’ll need to consider when setting your salary is your business expenses, including office rent, utilities, supplies, and employee salaries. Once you know how much it costs to run your business each month, it will be easier to calculate how much to pay yourself as a small business owner. One mistake many small business owners make is not accounting for their salary when calculating their business expenses. This can lead to severe financial problems down the road, so be sure to include yourself in the equation. By following these steps, you should be able to come up with fair and reasonable compensation for yourself as a small business owner. Remember to avoid common mistakes, and you’ll be on your way to success.  Ways To Pay Yourself As a business owner, you have two options: Either pay yourself a salary or take distributions from your small business. Here are the pros and cons of an owner’s draw vs. a salary.  Paying Yourself a Regular Salary To pay yourself a regular wage, just like you would an employee, you’ll need to set up payroll for your business and withhold taxes from your paycheck. One advantage of this method is that it can help you separate your personal and business expenses and make it easier to track your business expenses come tax time. The downside of drawing a salary is that it’s subject to payroll taxes, which can eat into your earnings. Additionally, if you have a slow month or two, you may find yourself struggling to cover your personal expenses if you’re relying solely on your business income. An Owner’s Draw If you are self-employed and paying yourself a salary, an owner’s draw is another method you can use. This method is often used by small business owners with irregular or variable income. With an owner’s draw, you simply draw money out of your business bank account as needed to cover your personal expenses. One advantage of this method is that you don’t have to worry about payroll taxes. Additionally, it can give you more flexibility regarding how much money you take out of your business each month. However, one downside is that it can be challenging to track your small business expenses come tax time. So, which method is right for you? How to pay yourself as a sole proprietor? Ultimately, it depends on your circumstances and the needs of your business. If you have a stable and predictable income, having a regular salary may be the best option. However, if your income is variable or unpredictable, an owner’s draw may be a better option. Final Thoughts Paying yourself as a business owner can be a tricky task. And there’s no universal rule on how much business owners should pay themselves. However, by following some simple guidelines, you can ensure that you are fairly compensated for your work without putting your business finances at risk.  What’s most important is to find a method that works for you and your business. And, of course, to avoid any common pitfalls.
By Nikolina Cveticanin · September 14,2022

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