Real Estate Agent · Golden, CO · Member since 2017 · 20 posts · 10 votes
We're starting the process for getting our Airbnb going, so we need to jump through Denver's hoops. Out of the gate I have a question... Do we register for the Lodger's Tax ID License, STR Business License, etc. as a business or personal (sole proprietor)? If it's as a business we'd have to go through the added steps of forming a business entity first of course. But Denver only allows one STR so is it worth forming one? Pros, cons or what's the standard route?
Hey @Jason Henning - I echo @James Carlson on this being a tax and risk decision. The city just wants to collect their taxes and I want to say they use the same form for many different businesses, hence why they allow you to register under a business name.
First off, congrats on getting into it. I love Airbnb in Denver and think done right, it can be a great revenue stream.
It sounds like you're really asking a tax question. As in, does it make tax sense to register your Denver Airbnb property under your own name or under an LLC? I'll let any accountants or lawyers jump in and answer that.
Are there other factors besides taxes you think should be considered when deciding whether to register as an LLC vs. an individual?
Yeah @James Carlson, the taxation piece is definitely a consideration. I can ask our accountant. I was thinking too from a liability standpoint as well so I suppose I should be asking that of an attorney. And then there's insurance... so I'll ask my insurance agent. Looks like I won't be going through Denver's STR Licensing steps today ;)
Hey @Jason Henning - I echo @James Carlson on this being a tax and risk decision. The city just wants to collect their taxes and I want to say they use the same form for many different businesses, hence why they allow you to register under a business name.
@Jason Henning - which route did you end up taking? I've spent the last year remodeling my house and am finally ready to apply for the lodger's tax and Denver STR application. Started the process today...and here we are
@James Carlson - I know from attending one of your AirBNB presentations last year that you're very up to speed on CO & Denver AirBNB best practices. Are there any resources or refined views you've been guiding new AirBNB hosts to?
@James Carlson - Apologies for the vague wording! Updated thoughts/resources specifically relating to the Sole Proprietorship vs LLC discussion. Just want to make sure I'm heading in the right direction from the start. Seems like tax treatment is the main difference. Less concerned with liability - between insurance on the home, umbrella policy and AirBNB's host insurance - I feel comfortable with my coverage. Also, even with an LLC in place, I'd think the owner of the home is still the target for any potential mishaps.
I stopped by Treasury offices at the Webb Building a few days ago. They see a pretty even split between Sole Proprietorships and LLCs in applications for Lodgers Tax IDs. My guess is your average Denver AirBNB host isn't setting up an LLC and that those applications are from companies who operate multiple AirBNBs on behalf of homeowners?
The actual Denver application process seems straightforward so I'm set there. Good step by step guides on the .gov website for both the tax ID and STR License applications.