Airbnb is a community of people who share their space with travellers from all over the world. Airbnb is an excellent of a travel startup that has established its place in the list of most the famous startups. Airbnb connects hosts with travelers looking for a place to stay as allowed by their budget. You can stay at someone's home or rent a private home for yourself. Airbnb offers unique options like lofts, boathouse, camper vans, and even igloos.
The choices are limitless. When you travel with Airbnb, the living experience is totally worth it. Moreover, you get to build a deep connect with your hosts. Currently, 36% of Airbnb users are aged from 25-34.
What goes into starting an Airbnb type of business? What are the steps involved? Well, it's not too difficult. The Airbnb business model is an effective one which can make you money easily and legally.
Identify which portion of your house or what property you will put for accommodation. Decide on the age-group, etc. of the travelers you wish to host. If you know a bit of finance (it's not that difficult), make a blueprint of the initial costs, how long it will take to generate profits, and the time to break even. Consider other factors like the additional perks of staying at your place. Have a business plan document ready to have a structure and strategy in place. Including future prospects, estimations, and risk mitigation measures in your business plan is a must.
Creating A Legal Entity (CLL)
Though not necessary,incorporating a legal entity is highly recommended to save yourself from legal troubles that may arise from hosting people at your place. It's also a wise decision to set up a legal entity so that you can get access to a business bank account and have a comprehensive business profile. After all, this is what you want to achieve! You can hire professional services to help you establish a legal entity for yourself.
Registering For Taxes (EIN)
You have to file for an Employer Identification Number (EIN). The revenue department in your country requires every business entity to have this identification number. Once you have incorporated your legal business entity, register it with the Internal Revenue Service and generate an EIN. Registering for taxes is no rocket-science. Several resources are available online to educate you on the process.
Also read : Ithaka - Your Personalized Trip Planner
Opening A Business Bank Account
You can now go to a bank, hand over the required information, and open up a business bank account. Having a business bank account has several benefits. It allows you to maintain detailed account of your expenses. Moreover, it separates your personal finances from those related to the business.
You'll have to pay service charges to the bank for the account. But that's a small price to pay for something as sophisticated as a business bank account.
If you don't get Short Term Rental (STR) permits, this business model will get you into trouble. Without securing such permits, it's impossible to legally list your place for rental. If you proceed without securing the necessary licenses, you will be heavily penalized and may even face legal problems.
Ask the concerned authorities what is required for obtaining the STR permit. They will be more than happy to share the information.
This is important because you are going to end up having employees. Maybe you want to hire cleaners in the future. Do the research and understand what all types of insurance you need. For example, if you are doing rental arbitrage, you need to get renters' insurance. A host's verbal guarantee doesn't count in an insurance.
You can't expect a smooth sail journey at all times. And insurance means you can steer your way, come hell or high water.
Finally, take action on the steps listed above. If you have made up your mind to start an Airbnb type business, act soon. Don't wait for the perfect time.
With the Coronavirus situation in place, the hotel industry has taken a severe hit. And Airbnb is no exception with the travel restrictions in place across countries. However, this shouldn't deter you from launching your business model. Everything's going to be back to normalcy soon.
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