Download the full transcript PDF.

[00:00:05] Sarah: Hello. Welcome back for another great episode. My name is Sarah Karakaian.

[00:00:10] Annette: I am Annette Grant. And together we are–

[00:00:11] Both Annette & Sarah: Thanks for Visiting.

[00:00:12] Sarah: And this is the–

[00:00:13] Both Annette & Sarah: Hosting Hotline.

[00:00:15] Sarah: If you want to get your hosting questions answered, which we love doing, please go to the hostinghotline.com, ask your hosting question, just like Madison has done, and we’ll answer it here on the podcast. Let’s hear from Madison.

[00:00:28] Question: Hi, Annette and Sarah. My name is Madison. I’ve got a quick question about direct bookings. I’ve just completed my first direct booking at a property that I own and manage, and I’m going through the process of remitting taxes to my county and state. So my question is, how do you all handle this for co-hosted properties? I’d like to offer direct bookings, but would I be in charge of remitting taxes on behalf of the owners? Or is that their responsibility? Thank you so much.

[00:00:56] Annette: Great question. Per our attorney, here is our asterisk, that we are not CPAs. We have no idea the rules and regulations, Madison, in your particular state and county, which all matters. But we are going to answer this with what we do and offer this up. But anyone listening, this is so location dependent.

[00:01:24] We want to make sure that you talk to your tax professional in your area and get their advice. But you can certainly take what we’re going to offer here to them and see if that would be best for you in your geographic location and business location. These are so not just geographic, but also business, the way that you run your business.

[00:01:46] Are you a licensed real estate professional? Are you a broker? Are you a property manager? There’s several layers to this. But we want to share with everyone, this question is wonderful, and you do need to know because we want to say congrats on that direct booking. We hope this is the first of many for you and your clients. So it is imperative for all of us to understand how we do need to remit those taxes.

[00:02:12] Sarah: Madison, you also sound like you’re a little bit lucky because you said it’s your first direct booking and you’ve attached that to remitting taxes, which leads me to believe that when you get a booking from Airbnb, that Airbnb will remit taxes for you. So when I became a co-host here in Columbus, Ohio, Airbnb has never remitted taxes on our behalf. We have to do that ourselves.

[00:02:38] So when I was a co-host, well, I am still a co-host, but when I started, I had to do this for no matter if it was Airbnb or direct booking, which may have made me a little lucky because I had to figure this out to begin with of what my role was. So Madison, also, at the time, I want to make my clients lives as easy as possible. So I have always remitted taxes on behalf of my clients.

[00:03:05] Now, in the state of Ohio, it’s still a really gray area in terms of whether you need to be licensed to do short stays, so stays less than 28 days. Definitely for me to do midterms for my clients, I had to get my license, and I just decided to get it anyway. But less than 28 days, it’s still a gray area. It might be a gray area where you’re from.

[00:03:26] So therefore, before I got licensed, I couldn’t have the money come to me. I had to have the money go to my clients. So I also don’t know how you’re handling money. If the money’s all going to your client and then you’re invoicing them a commission for co-hosting for them, that’s the way I used to do it.

[00:03:43] So I can speak to both ways. I would then, on my invoice, tell them how much I would have to send the county for taxes, and I would invoice them for that as well. It was just essentially like a pass through. So it’d be on my invoice, that’s because I needed to get that money from them so I could remit on their behalf.

[00:04:00] And then I was very careful to get a receipt every month when I submitted the taxes. We did it monthly, put it in a digital folder that was deemed secure so that if there are any questions or come tax time, I could give them all their receipts because they would need to do their own taxes for the property. And just in case there was any hiccups, we’d have receipts from that.

[00:04:22] Now I do trust accounting. So all that means is the money comes to me, and I have an account that is under my brokerage. But regardless, all the money comes to me so I can still remit on their behalf, but they don’t ever get the money. I don’t need to get it from them anymore.

[00:04:39] I can just remit it for them. I make sure it’s on their monthly owner statement, and I still save those receipts, so that, again, come tax time, they have a paper trail, so to speak, or a digital trail of those submissions each and every month. So Madison, if you’re able to remit tax on behalf of your client, I don’t see– again, ask your CPA.

[00:05:01] Your CPA may not know. You might need to ask a real estate attorney too, a question, but I think it’d be worth it to know for sure because I think making our clients as easy as possible is key to being really attractive to work with, Madison. It’s a little of administrative work on your end, but once you get in the cadence of it, it’s quite easy to do.

[00:05:24] And therefore I recommend you doing it so that your clients don’t have to worry about it. Because that’s what my mindset was becoming a co-host, was making my clients’ lives as easy as possible so they’ll want to work with me. I know how easy it is to do it. It’s not a big lift for me, so it’s no problem for us to do it. And it was baked into all the services that we offer. Did I miss anything, Annette?

[00:05:44] Annette: One thing. For non-Madisons that are not co-hosting, don’t think that this doesn’t apply to you. You need to know how you are remitting your taxes. Again, some states, Airbnb does it for you. Some they don’t. So this question actually should be at the top of mind for everyone. This is a great time of year to just double check, make sure everything you’re in compliance with, submitting those to your state. And we know that these change often also.

[00:06:14] Sarah: Yeah. I think that’s it. I think the lesson here too is, if you’re listening and you want a property manager or a co-host to be thinking about this, maybe you can ask them to do it for you if you’ve never thought of that. So that’s one less administrative thing you have to do. You still want to get a receipt so you understand what was submitted. Because at the end of the year, if the county audits you, you want to have a paper trail to make sure that you can do all your checks and balances. But yeah.

[00:06:39] So Madison, I hope that was helpful. So proud of you for getting that first direct booking. First of many. And at least for us, it doesn’t remit taxes for us either. So I don’t know what other channels you’re on, Madison, but it’s a little bit tougher to get those bookings these days.

[00:06:54] So the more channels you’re on, typically the better. So it’s good for you to find out anyway so that you can expose yourself and your clients to more channels as well so that you can give your properties as much opportunity as possible to get booked. All right. With that, I am Sarah Karakaian.

[00:07:10] Annette: I am Annette Grant. And together we are–

[00:07:12] Both Annette & Sarah: Thanks for Visiting.

[00:07:13] Sarah: Talk to you next week.