How to Start an Airbnb Business

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Our guide on starting an airbnb business covers all the essential information to help you decide if this business is a good match for you. Learn about the day-to-day activities of an airbnb business owner, the typical target market, growth potential, startup costs, legal considerations, and more!

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Start an airbnb business by following these 9 steps:

You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple step guide to starting your airbnb business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

STEP 1: Plan your Business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

  • What are the initial costs?
  • Who is your target market?
  • How long it will take you to break even?
  • What will you name your business?

Luckily we have done a lot of this research for you. Skip on ahead to the Business Overview for more detailed answers to all your questions.

Choosing the right name is very important. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.

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STEP 2: Form a legal entity

Establishing a legal business entity such as an LLC prevents you from being personally liable if your airbnb business is sued. Consider using a registered agent service to help protect your privacy and stay compliant.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

STEP 4: Open a business bank account

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

STEP 7: Get Business Insurance

Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.

STEP 8: Define your brand.

Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.

STEP 9: Establish your Web Presence

A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.

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Select your state below for an in-depth guide on completing each of these steps in your home state.

Business Overview

An Airbnb business supplies guests with a place to stay within a person’s home. Many travelers are looking for lodging which is a little more personal and unique. Airbnb rentals offer a home feel, versus that of a hotel or motel. Guests may stay as short as one or two days or extended stays up to two weeks.

Who is this business right for?

An Airbnb is a great way to add some extra income, especially if you have unused rooms or lots of space in your house. You will have guests staying in your home, so you should be comfortable talking and interacting with guests. Some homeowners, who travel often, will also rent out their homes when they are out of town. This allows them to receive income and have someone watching their home when they’re not around.

What happens during a typical day at an airbnb business?

Airbnb businesses are very popular right now, so demand is fairly high. Once you are registered with Airbnb and have listed your space, you will begin to see requests from potential renters. Your job will be to manage the rental requests, interact with potential customers, and make your rental space as hospitable and customer ready as possible.

  • Advertise your space through your pictures and descriptions on the Airbnb site.
  • Be detailed in your listing and discuss all of the pros (and potential cons) of your space.
  • Take clear pictures which show off the space, yet also let customers know exactly what to expect.
  • Research surrounding rentals to learn what customers like and don’t like. Read the reviews, as well, and understand your customer base.
  • Clean the space regularly and update with modern amenities, whenever needed.
  • List nearby attractions, events, and activities for potential renters.

You want to be a good host, yet unobtrusive at the same time. By explaining much of the particulars up front, you will have given your guests much of the information they need before they arrive. Once they are staying, be available, yet respectful of the renters and rental space.

What is the target market?

Typical customers for Airbnb spaces are looking for a more personal touch than a hotel/motel. They may also be looking for a space in an area which doesn’t have hotels available. Most customers are looking for a brief stay, usually between 2 and 5 days. For renters who offer their entire home, the clientele may be groups staying for special events, such as business trips or seminars, large sporting events, or music/concert events in the area.

How does an airbnb business make money?

Airbnb renters make money through the rental of rooms in their house or the whole house. Renters will pay a daily rental fee. Some renters may choose to charge different rates for weekdays and weekends or for extended stays versus a few days.

What is the growth potential for an airbnb business?

Airbnb rentals are fairly popular currently and seem to be gaining popularity daily. Many renters have moved to Airbnb rentals over the traditional tenant/landlord situations. The profits for Airbnb rentals are larger than annual/semiannual rental agreements and the wear and tear of the space is often significantly diminished.

What are some skills and experiences that will help you build a successful airbnb business?

To be a successful renter of Airbnb spaces, you should be a personable individual, who is comfortable interacting with others. If you have any experience in the hotel, service, or even retail industries, the Airbnb business may be a good fit. You should also be adept at balancing your finances and resources, pertaining to the rentals. It would also prove beneficial if you were able to perform handyman services around the house, in order to make minor repairs or upgrades, without paying an outside source. Photography and writing skills will also come into play, as your description and accompanying photos will be your advertisement for your rental space.

What are the costs involved in opening an airbnb business?

Because you’re renting out your own space(s), much of the costs involved will be maintenance and necessary upgrades. Cleaning supplies and amenities for guests will also be a relatively inexpensive cost, depending on what you offer. Airbnb also charges some fees to the renter and customer.

Business costs include:

  • Guest service fee: Guests are charged 6%-12% fee, through Airbnb, whenever they reserve a space.
  • Renter service fee: The renter is charged 3% fee any time a space is rented through their site. This is subtracted from the reservation subtotal.
  • Security deposit: This charge is a deposit from the customer to you to cover any damages, repairs or lost items, such as keys.
  • If you offer amenities, such as coffee, tea, or snacks, you’ll need to replenish after each guest.
  • Any new or used furniture to add to the comfort of your guest’s stay will also fluctuate, depending on necessity.

Where can I find a business mentor?

One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.

Having a support network in place to turn to during tough times is a major factor of success for new business owners.

What are some insider tips for jump starting an airbnb business?

Getting started in the Airbnb business is fairly easy. Managing customers is the real trick. Here are some pro tips from successful Airbnb entrepreneurs:

  • Keep your rental space clean and renter-ready at all times. This includes the outside of your home. Appearance rates high in customer satisfaction.
  • Offer amenities which enhance the customer’s experience.
  • Provide information about local attractions to help show off your region and promote return visits.
  • Respond to customer inquiries regularly. Your response rate will tell Airbnb you’re interacting with the customers and will build up your customer satisfaction stats.
  • Maintain a good acceptance rate and always have an up-to-date booking calendar. The acceptance rate refers to how many bookings you regularly accept. The calendar helps potential customers to determine when your space is available. Both of these customer features will help streamline the process. Happy customers leave happy reviews.
  • Make your rates competitive, yet fair. The lowest price isn’t always the best, so do your research to determine an average price for similar rooms/rentals in your area.
  • When in doubt, refer to Airbnb’s help center. An extensive and growing database of related information for customers and renters.

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Growing Your Business

How to promote & market an airbnb business

Since Airbnb’s site is responsible for listings and bookings, much of your marketing and promotion will come from positive customer reviews. Word of mouth is still a very powerful marketing tool, especially in this business. Keep tabs on what works for other renters and customers through customer reviews and adjust to renter needs or wants, as applicable. You have to be flexible to customer needs, especially when building your reputation.

Many Airbnb entrepreneurs have found the power of social media to be one of their best marketing tools. Tweets, links to business pages, and activity within the Airbnb site itself will help generate more interest in your listings. And, as mentioned before, make sure your booking calendar is up-to-date and you’re regularly communicating with your customers. Keeping abreast of your rentals and reviews will keep you on the front line for more customers.

Recommended: Get started with local advertising for your business with a $300 credit from Yelp.

How to keep customers coming back

Attracting and retaining customers all has to do with the customer experience. Make your rental attractive, furnished, and as professional feeling as possible. Ask customers for opinions and ideas for making future stays more comfortable. And if there is a problem, be attentive and quick to solve it. Your reputation will be the biggest retainers for customers.

How and when to build a team

Much of the team for an Airbnb will be yourself and possibly a few other family members, friends, or professionals, such as plumbers or electricians. Some Airbnb renters also hire cleaning services to tidy up after a customer has vacated. If you decide to take on multiple properties, you may want to delegate a chain of command, in case you are not available or in the area. Have emergency contacts for your renters, so any problems can be solved quickly and efficiently.

Legal Considerations

State & Local Business Licensing Requirements

Many states and cities have their own zoning laws that may require you to obtain a license or pay a fee before being able to legally put your residence up for short-term rentals. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.

Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.

For more information about local licenses and permits:

Maintain Personal Asset Protection

Don’t think that just forming an LLC, or any other type of business, will save your personal assets in case of a lawsuit or other matter by itself.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your LLC is sued. In business law, this is referred to as piercing your corporate veil.

Two of the simplest steps that will protect your business, and yourself, are to:

Open a business bank account

  • This separates your personal assets from your company's assets, which is necessary for personal asset protection.
  • It also makes accounting and tax filing easier.

Get a business credit card

  • This helps you separate personal and business expenses by putting your business' expenses all in one place.
  • It also builds your company's credit history, which can be useful to raise money and investment later on.
A smiling man sits at a computer and learns about corporate veils


To learn more about maintaining your LLC's corporate veil, read our guide and protect your personal assets.

Earning Potential

How much can you charge customers?

Rental rates vary, depending on the size of the rental and the location. Most rates are comparable to hotel rates in the area, but you will need to conduct some market research to determine what the appropriate rates are for your area.

What are the ongoing expenses for an airbnb business?

Regularly re-stocking amenities in your rental(s) and periodically updating towels and linens will constitute a portion of your expenses. Any repairs, cleaning services, or maintenance fees will be incurred, as needed.

How much profit can an airbnb business make?

Your Airbnb business will generate profit, based on the number of customer rentals. For instance, a customer rental, booked three times a week at a rate of $100 per booking would generate $16,000 net, annually. The rental rates can fluctuate considerably, depending on the location, so check out comparable rentals in your area, when string pricing.

How can you make your business more profitable?

An Airbnb business makes its money off of the renter’s reputation and customer reviews. Therefore, interacting with customers is a must. Return customers and long-term customers can be a great bonus, once you’re established as a valued renter. Remember to keep your rental updated and the photos on your page should be updated to reflect the positive attributes of your rental. Finally, take advantage of social media and market yourself in your own spaces. Reaching customers and having them return is key to a successful business.

Next Steps

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