Do I need a business license to start Airbnb?

[Mario F.]

Hello, I just purchased a fourplex in Inglewood CA. I'll be living in one, my mom in another, while the two others will be STR. I'm wondering if anyone has any advice on how to proceed from this point as we will be starting with the rentals soon. Do I need to go to the city and pull a license to operate the airbnbs? Los Angeles has rental control but Inglewood does not. I'm thinking it will be a lot easier in Inglewood to run these airbnbs since its not tied to LA's regulations on short term rentals. Any advice would be appreciated!

thanks!

mario

[Carlos Carbajal]

Hi Mario-

So here is the deal as far as I can tell.  Pretty much any city/county in the United States has what is called an Transient Occupancy Tax (TOT) which is levied on visitors to a given area and normally collected via Hotels, B&Bs, etc.  The TOT tax in Inglewood is 14% just like Los Angeles.  

TOT tax is applied to any rental for less than 30 days.

If you were going to run your short term rental 100% by the book then yes you are subject to the  TOT tax and the traditional way cities (Inglewood included) enforce collection is by requiring business licenses.  So if you go down to city hall and say you've got a business renting accommodations for less than 30 days and ask them if you need a business license I am pretty certain they will say yes and be all too happy to take your money.

Now the more practical question is should you do this?  I would say no you should not go to city hall and get a business license for a few reasons:

1. You are Los Angels county.  AirBnB has a special arrangement in LA county where they will collect the 14% TOT on your behalf from every booking.  In fact there is no choice in this matter. Each AirBnB booking you receive will have 14% tacked on to be paid by the guest.  AirBnB remits that 14% on your behalf. You don't need to do anything.

2.  Inglewood has no STR laws. As far as I can tell Inglewood has no STR laws, permits or regulations. This almost always means there is no corresponding enforcement from the city to try and go after individual operators such as yourself. This is why point #1 exists - cities and counties know tax collection from individuals is very difficult. Getting platforms to do it for them is a very attractive solution.

 Inglewood is in the early stages of a progression we have already seen played out in other cities like San Francisco, Santa Monica, Paris, London, etc. Depending on several factors you will see a fair amount of debate in your city and local government on how to treat short term rentals. 

One extreme is to ban them altogether similar to what Santa Monica did.  Another extreme is to legalize them across the board which is what Arizona did across the state.  Most cities are landing somewhere in between where it's permitted but regulated meaning you need a license and there are restrictions.  My guess is that Inglewood will eventually adopt something similar to LA but you will have plenty of warning and notice of how that is leaning before it becomes law.

In summary I would say go for it and don't bother with the Biz license for now. List on AirBnB and VRBO and find the sweet spots for your area. I also recommending finding other STR folks like yourself in the area - they can be a font of great info on how to price and manage your STR. Good luck!