Why Run Your Airbnb Through a Company?

Running your Airbnb property through a company offers several advantages over managing it as an individual host in Australia:

1. Liability Protection: When you operate as an individual host, you are personally liable for any legal issues or claims that arise from your Airbnb operations. However, if you run your property through a company, such as a proprietary limited company (Pty Ltd), your personal assets are protected. Any claims made against your Airbnb business are limited to the company’s assets, reducing your personal risk.
2. Tax Benefits: Managing your Airbnb through a company can provide tax advantages, depending on the structure. Companies can deduct business-related expenses such as maintenance, cleaning fees, property management costs, and home office expenses. Additionally, companies may be eligible for different tax rates compared to individual hosts. Be sure to consult a tax professional to ensure compliance with the Australian Tax Office (ATO).
   Important Note: The income you receive from renting out all or part of your home is considered residential income, which means you do not pay GST on this kind of income. This remains true even if you are carrying on another GST-registered enterprise. However, many of the expenses related to running your Airbnb business, such as cleaning, maintenance, and supplies, do include GST. Understanding this distinction is important when managing the financial aspects of your Airbnb business.
3. Scaling Your Business: As your Airbnb portfolio grows, managing multiple properties as an individual can become overwhelming. Running your properties through a company gives you the ability to scale efficiently. You can hire employees, streamline operations, and use professional tools such as property management systems and dynamic pricing software to maximise occupancy and revenue. For more on how professional Airbnb management can help you scale your business, visit our management services page.
4. Professional Image: Running your Airbnb through a company enhances your professional credibility. Guests may feel more secure booking with a business entity, and this approach can help you establish a strong brand and improve guest trust.

Legal and Compliance Requirements in Australia

While running an Airbnb through a company offers benefits, it also comes with increased legal and compliance requirements under Australian law:

1. Company Registration: If you choose to run your Airbnb through a company, you’ll need to register your business with the Australian Securities and Investments Commission (ASIC). This process involves choosing a business structure (such as a proprietary limited (Pty Ltd) company), filing the necessary paperwork, and applying for an Australian Business Number (ABN).
2. Licensing and Permits: Depending on the state or territory you’re operating in, there may be additional licensing or permits required to operate an Airbnb as a company. In New South Wales (NSW), for example, if you manage properties on behalf of other owners, you’ll need a real estate license. In NSW, professional hosts must also have a trust account for handling guest funds and meet strict compliance and auditing requirements enforced by NSW Fair Trading.
3. Tax Compliance: Operating an Airbnb through a company means you’ll need to comply with Australian tax obligations. This includes filing corporate tax returns, and if your income exceeds the GST threshold (currently AUD $75,000), you’ll need to register for Goods and Services Tax (GST). It’s crucial to maintain accurate records of income and expenses and consult with an accountant to ensure full compliance with the ATO.

How to Set Up a Company for Airbnb in Australia

If you decide to run your Airbnb through a company, here’s how you can get started in Australia:

1. Choose a Business Structure: Many Airbnb hosts in Australia opt for a proprietary limited (Pty Ltd) structure, which offers liability protection and tax benefits. Alternatively, you may choose to operate as a sole trader or partnership, but these options offer less personal liability protection.
2. Register Your Business: You will need to register your business with ASIC, and obtain an Australian Business Number (ABN). You may also need to apply for a Goods and Services Tax (GST) registration if your business is expected to generate more than AUD $75,000 per year.
3. Obtain Necessary Licenses: In states like NSW, if you manage properties on behalf of others, you’ll need a Class 1 real estate agent license. To obtain this license, you must complete a Cert IV in Real Estate Practice, along with four years of practical experience, before qualifying to manage properties and handle trust accounts. Check your local regulations to see what licenses or permits may be required.
4. Set Up a Trust Account: In NSW, property management companies must have a trust account to handle guest funds such as deposits and booking payments. Trust accounts are strictly regulated, and you’ll need to comply with auditing requirements set by NSW Fair Trading to ensure transparency and legal compliance.

Advantages of Professional Airbnb Management

If managing a company feels overwhelming, partnering with a professional Airbnb management company can help streamline the process. Professional hosts handle day-to-day operations, legal compliance, and even dynamic pricing, allowing you to focus on scaling your business. Consider booking a free consultation to see how professional management can benefit your Airbnb company.

Conclusion

Running an Airbnb through a company in Australia can provide significant advantages, from liability protection to tax benefits and scalability. However, it’s essential to stay on top of local compliance, licensing, and tax obligations. If you’re considering making the switch, it’s a good idea to consult with legal and tax professionals to ensure you’re compliant with Australian law. For more insights, download our free eBook to learn how to maximise your Airbnb revenue through professional management.