I am renting the basement of our house as a two bedroom apartment on Airbnb. Should we have this set up as a LLC? Right now we just have the rental income going into our personal bank account and a lot of the things we bought/did to the basement is mixed within our personal receipts. Hopefully in the future we have more rental properties that are not house hacking but that is a year or two away. Any thoughts?
Setting up in an LLC at this point is really not needed. I would make sure you have a hefty umbrella liability insurance policy and that should suffice. An LLC May be a correct choice down the road but right now your LLC won't be owning the property. Try the app Hurdlr to track your expenses. Take care!
@Eric Teran you shouldn't need an LLC for this. Just make sure you have enough liability coverage ($1M if possible) to cover any sort of potential issues. Once you have a few other properties going then you can think about the need for an LLC for property asset protection. Chat with your insurance agent to make sure you are adequately covered for your house hack and you should be fine.
From a business standpoint, I always recommend separating your STR financials into a dedicated checking account. You can read some of that here if you like: https://www.biggerpockets.com/blogs/10042/64713-9-...
Best of luck!
Not a CPA or attorney, but can't imagine an LLC being necessary at this point. As others have said, take out a minimum $1M insurance policy that covers your liability (make sure it covers short-term rental activity) and you should be fine.
DO keep your receipts/expenses separate - like @Jon Crosby said, open a dedicated checking account (you should be able to get a free one) and use it for your AirBNB income/expenses. If nothing else it'll make for a much easier tax time and make sure you can take full advantage of your write-offs.
Agree with everyone go with umbrella.. and its really not expensive..
Hi @Eric Teran , Airbnb offers a 1M liabililty insurance to hosts. You may not even need an insurance policy.
Everyone thanks for the great responses! I'll wait until I have a few more rentals to think about a LLC. Will definitely separate expenses and will open a checking account. I'll check Airbnb insurance policy and if I need to I'll look for an umbrella policy. Thanks again!
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