Two of my SCORE clients have successfully set up Airbnb businesses. Both are retired folks who needed to find a way to augment their income.
While it might seem like all you need to do is put up listings on the Airbnb or VRBO sites, there are several important steps that must be taken to establish this type of business.
The first and most important step is to make sure that your local zoning ordinances will allow this. A simple call to the zoning administrator of the township or city where the property is located will provide the answer. If allowed by zoning, a licensing fee might be involved as well as other approval steps. So, it is crucial to begin the process with this call.
Like any other type of commercial venture, the next steps include the normal kinds of business infrastructure details. The first of which is to determine what business structure you will operate under. I almost always recommend setting up an LLC through the state. This provides a layer of protection for liability purposes.
Once you have determined the name for your LLC, you can go to the Michigan.gov site to see if the name is available and set up your LLC online. It is an easy and inexpensive process.
After the LLC is confirmed, you will need to apply for a federal tax I.D. number through the IRS. With these two building blocks in place, you will be able to set up a business bank account. All expenses and income related to the Airbnb business should be channeled through this business account. Never commingle funds with your personal bank account.
To further protect yourself from potential liability, additional insurance coverage is recommended. This would include an umbrella policy that covers business related activities. Working with your insurance agent will ensure that you have the proper coverage in place.
These steps could take up to six weeks, so during this time you can be working on making your short-term rental unit an inviting option that will compete in the growing Airbnb marketplace. Buy new towels and quality linens, avoid clutter by making the décor sparse and clean and buy good quality accessories for the kitchen or eating spaces. Avoid garage sale items that look used and old. These are the simple touches that will help you earn higher ratings. Capture attractive photos with bright lighting.
Once the business structure is in place and you have created a warm and inviting space, it is time to develop your marketing plan. Think of a catchy name for your place, write emotionally rich copy to describe it, research comparable rentals to determine the perfect price point. Identify your local competition and figure out the competitive edge that will motivate a renter to choose you over others.
This is a broad overview, but a SCORE mentor can guide you in more detail to make sure that all the bases are covered.