Airbnb Accounting: Best Practices for Hosts

airbnb accounting

By The Hospitable Team

Airbnb is a great way to earn additional income by renting out a spare space in your home to guests. However, owning a vacation rental property also brings unique challenges for hosts, especially when managing your finances and maximizing your profits.

You need to keep track of your income, calculate expenses, take advantage of tax deductions, and make financial projections. That’s where Airbnb accounting comes in, and it’s an essential part of running a successful short-term rental business.

As a host, you have many responsibilities. They include maintaining and cleaning your property, managing bookings and cancellations, updating your prices, communicating with guests via messages, ensuring they have a great experience, etc.

As a result, running a short-term rental can be very time-consuming if you do everything yourself. So, a smarter approach is to outsource some of your responsibilities, such as vacation rental cleaning, to professionals and automate your daily repetitive tasks using vacation rental software like Hospitable.

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What Is Airbnb Accounting?

Put simply, Airbnb accounting is about recording income and expenses related to your short-term rental property. Although this sounds easy, making accurate calculations can be tricky, especially when you manage several Airbnb listings.

Some hosts may have problems with tax returns because their Airbnb accounting is based only on payouts received from the platform. But it’s your net income, and you must also report your gross income (completed payouts) and allowable expenses.

Determining your Airbnb income solely from what’s received in your bank account is a big mistake. When you do this, you are under-reporting your revenue, which can flag an audit. At the same time, you’re ignoring Airbnb service fees and refunds for write-offs—keep in mind that the platform’s service fees and refunds are subtracted before sending you a payout.

All your transactions should be organized into a consolidated record of accounts called a general ledger. It should include all your rental income (credits) and expenses (debits). You need to categorize each entry in your record, ensure the accounts balance, and turn all this information into financial statements for tax authorities.

Tracking everything at once can be challenging, but you need to do it to minimize your tax bill on the gross rental income. Since your Airbnb tax report only includes gross earnings, withholdings, and adjustments for using the platform, you’re responsible for keeping a record of the rest.

In the US, most Airbnb income is subject to federal and state taxes, and the best way to lower the taxable income is by deducting expenses related to operating a short-term rental. And this is where Airbnb accounting becomes crucial.

Vacation Rental Accounting Software: Why Should You Use It and What Are Your Options?

Running an Airbnb is a business; business accounting isn’t always straightforward for hosts and property managers. Luckily, you don’t have to be an accounting expert to handle bookkeeping and accounting for your STR business.

Many user-friendly vacation rental accounting software tools can help you automate your bookkeeping and accounting and allow you to forget about using spreadsheets. Vacation rental accounting software can streamline your financial management, so you should definitely consider making it a part of your tech stack.

And if you combine it with comprehensive vacation rental software like Hospitable, you’ll have a unified view of all your business operations and benefit from advanced analytics & reporting features. With Hospitable, you’ll be able to see the performance of your short-term rentals at a glance from our Metrics Dashboard and make intelligent business decisions based on data.

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Hospitable allows you to analyze your revenue by channel and calculate taxes. You can filter all of your key data and get insights based on property and much more. You can also download reports to dig deeper with your favorite tool. Additionally, Hospitable has integrations with two vacation rental accounting software tools—Clearing and VRPlatform.

Clearing is trust accounting and automated bookkeeping software tailored for property managers that allows you to track all your transactions in one place. The software matches booking information and bank account deposits to automatically reconcile your accounts and helps you close your books faster.

VRPlatform is an automated solution for vacation rental managers that reduces the manual accounting workload and delivers actionable financial data. This app allows you to automate all your accounting processes—from creating invoices to sending owner statements. It reduces the time and cost of manual data entry, reconciliations, and more.

You can connect your Hospitable account with an account with any of these platforms. We will feed all your booking data directly to vacation rental accounting software to automate your bookkeeping and accounting.

Vacation Rental Accounting: Tips for Hosts

Vacation rental accounting software can make your life easier and ensure that your financial data is always accurate and up-to-date. However, there are also some things you should keep in mind regarding vacation rental accounting.

Separate your personal and business finances

You should open a separate bank account for your Airbnb business and use it exclusively for business transactions. This approach will allow you to keep your personal and business finances separate. This way, you can ensure accurate Airbnb accounting, and it will be easier to assess the profitability of your STR business.

Keep track of all your expenses

As an Airbnb host, you’ll have such expenses as cleaning and maintenance costs, utilities, mortgage, insurance, furniture, appliances, Airbnb supplies, the platform’s commissions, etc. It’s important to keep track of these expenses to deduct them from your taxes and reduce your taxable income.

If you are looking for more tips on saving on your taxes, you may want to watch a masterclass hosted by the Hospitable team. Experts from Keystone CPA Amanda Han and Matt MacFarland shared their insights on correctly filing tax returns for short-term rentals to ensure you’re not overpaying.

Keep accurate records

Using a spreadsheet or accounting software, you should track your rental income, expenses, receipts, and invoices. This practice will help you stay organized and make tax time much easier. You should also maintain separate books for each vacation rental property you own or manage.

Understand your tax obligations

The income you get from renting out your property on Airbnb is taxable, so it’s important to understand your tax obligations as an Airbnb host. You may be required to pay federal and state income tax and taxes that apply to short-term rentals on the local level. You are also required to report all your Airbnb income to the IRS.

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