Hello. Welcome back to another great episode. My name is Sarah Karakaian.

I'm Annette Grant, and together we are. Thanks for Visiting and this is the Hosting Hotline

If you wanna get your hosting questions answered here on the hosting hotline, go to hostinghotline.com, ask your question and help thousands of hosts across our Great globe with the answer to your question, or at least some thoughts for you so you can move forward. Really no business question, no hosting question is off limits. So hostinghotline.com, we love doing these episodes, and today we're gonna help. Jennifer.

Hello, my name is Jennifer and I am new to the short term rental game. I will be beginning my hosting journey on August 1st with a new property. And my biggest question is, and apprehension is do I need an LLC to protect myself and the other assets? My husband and I have worked very hard to accumulate over the years and keep them away from lawsuits, et cetera, or is that not necessary? I will be contacting proper insurance as well based on your recommendations. And just wondered that additional piece though in regards to LLCs and how they work in regards to my short-term rental. Thank you guys so much for everything you do and all the answers to questions that you have for all of us newbies out here. Thanks again,

Jennifer. You're quite welcome. Thanks for listening in.

Yeah, and congrats on the new property. We totally understand what you're saying, that you do definitely wanna protect, uh, everything that you have worked so hard for. So we're gonna start this episode out by saying we are not, not, we are not attorneys, we are not CPAs, we are not tax advisors, we are not, uh, insurance brokers, companies, et cetera. However, you do need to ask those preferred partners of yours, your attorneys, your tax professionals. You do want to let them know about your new business endeavor, and then you wanna go a step further. You wanna key them into, do you wanna have more short-term rentals? Do you wanna have more long-term rentals, mid-term rentals? What are your long-term goals? I feel like a lot of us. Fall short, and we give our tax professional and our attorneys the very, um, zoomed in close up look because that is what's right in front of us. But it helps them be better strategist for us. And so I think that's a key term too. You wanna let them know that you are looking for strategy on protecting yourself and how you could grow your assets, uh, your net worth and, and what those decisions are. So we wanna start off by saying that, but we can share with you that. We have experience doing both ways. Uh, some of the properties have an LLC, some of them don't. And we have, we have went to our advisors in each of these situations independently and then cumulatively, um, looking at all of our business endeavors.

Jennifer, speaking to your CPA, might have an hourly implication for you. Definitely speaking to an attorney, totally worth it, but that's what I was gonna say. It's totally worth it. So, the first thought that you have, anyone listening is, well, that's gonna cost money. Well, yes, 'cause we're talking about protecting hundreds of thousands, maybe millions of dollars of just like Jennifer said, assets that you've worked very hard to accumulate. So don't let the investment of chatting with these professionals hold you back from having conversations where ultimately you'll have to make the decision that's best for you. And that's the thing, you can't talk to them in silos. You have to talk to your lawyer, take notes. And today with AI it's never been easier so that when you go and meet with your CPA, you can say, Hey, my attorney suggests this, this, and this, and this what you know about my tax implications. What do you think about what they said? And do you have anything for me to go back to the attorney and and bring up an address? Right? And if you can get your CPA and your attorney on the same zoom call even better. And I'll layer in a third person. Jennifer mentioned that she's going to be speaking to proper insurance. If you can also loop in your insurer to this conversation, those three individuals are the ones that you wanna have in your back pocket. For, for any business endeavors that you have an insurance broker, a CPA, and an attorney, because they'll have different viewpoints of how to protect you and why you might need something. And it, it might take a few conversations to put those puzzle pieces together. Right. Um. Let's talk Annette about why some hosts Ultimately decide to form an LLC for their property.

Yep. Just again, for that liability protection. It can, it can, depending again on the, uh, situation, separate your personal assets from your business assets, your business risk. It does. There is a, also just this, um, upleveling of you being a business owner. Again, getting like your business banking account, there are some things as a business owner that you have, um. That you have access to, that you can only have access to if you are an actual business. So having that LLC and you're, you know, generating income and there's things that you wanna take advantage of as a business owner, you're gonna have to tell them what your EIN number is.

An EIN number is like a social security number for a business. In case you don't know.

Yeah. And some places are like, oh, if you have a business account, it is required that you Show them that. For us, like I was saying, that is that mindset shift of yes, I am a business owner and it helps you, silo, compartmentalize, have everything in underneath that business, and it also could set you up for growth. Uh, if you're going to scale, if you're gonna hire, if you're gonna co-host. That way, you already have your business entity set up and you're ready to roll.

I do know, Jennifer, some attorneys might suggest that you have every property in its own LLC. That could be because maybe you own that property with different partners. So that helps just delineate if you're gonna own all your properties with the same partner. Then my, like my CPA suggested, he was like, well, you could just own them as individuals and then get an umbrella policy. That's where your insurance broker comes in to give you some extra protection there. Maybe you have a holdings company where you have multiple pieces of real estate under one entity. Uh, with that same partner, right. To make it, because remember, for every LLC you have or every entity. That could be higher cost when it comes to tax time.

Absolutely. There are a lot of things to, to keep and to consider when you're, when you're doing this, but the biggest thing here for, for everyone listening is it really is a mindset shift. I love that you're already thinking ahead, Jennifer, as we are business owners. How do you want to grow your business? What is the future of your business? How is it woven? I think the one thing that we all need to remember as business owners. Is our business is now woven into the fabric of our lives. So it is important that you're thinking about protecting all of the other assets that you have, how you're going to grow, how you're gonna file your taxes, how you are going to separate those funds. There are. The biggest thing we see is people co-mingling funds. Mm. Uh, piercing the veil. All of those, like, you know, thi those nomenclature are out there, but we want you to be set up for success in the beginning. But absolutely, these are great questions. Talk to your council. Make sure you get it dialed in. And I, for everyone out there that maybe you've been in business for a while. I don't think it's too late either. You can always start these things if, if you have been co-mingling funds, stop today. If you haven't, you know, you've never even talked to your accountant or anyone about an LLC because maybe it was a room in your house or you just did it for a week or two when there was high occupancy in your area. It's never too late to get to to see how you should move forward.

That is great feedback Annette. What commercial was that from?

The touch, the feel of cotton.

The cotton.

It like woven into the fabric.

Fabric of our lives.

I, and when I said it, I was like, oh, you're welcome.

I was like, why did that just take me back to like 1986

woven into the fabric of your lives?

I love it. Yeah.

Oh, the touch, the feel of cotton. Oh, the fabric of lives. With that fabric of our lives.

With that, y'all we're gonna sign off. Okay. Before she gets any more,

Jennifer, send us. The link to your property. Uh, we want to see it

and celebrate with you.

Yes,

August first guest. So exciting. But Jennifer, make that investment. Talk to those trusted advisors of yours. If you don't have them, ask your friends family for referrals. With that, I am Sarah Karakaian.

I'm Annette Grant, and together we are. Thanks for Visiting.