By combining sleeping rooms with a complete meal, a bed and breakfast company provides guests with an option to hotels and motels. Most bed & breakfasts also provide more distinctive and intimate settings than other types of hospitality.
Table of Contents
Follow these ten steps to start a bed and breakfast:
Make a plan for your Bed and Breakfast.
Create a legal entity for your bed and breakfast.
Register your B&B for tax purposes.
Create a Business Bank Account and a Credit Card
Create an accounting system for your bed and breakfast.
Obtain the Required Permits and Licenses for your Bed and Breakfast
Purchase Bed and Breakfast Insurance
Establish your Bed and Breakfast Brand
Make a website for your bed and breakfast.
Configure your Business Phone System
Starting a company entails more than just registering it with the state. This basic guide to beginning your bed and breakfast has been put together by us. These stages will guarantee that your new company is well-planned, correctly registered, and legally compliant.
STEP 1: Make a business plan.
A well-thought-out strategy is vital for entrepreneur success. It will assist you in mapping out the intricacies of your organisation and uncovering some unknowns. Consider the following crucial topics:
What are the initial and continuing expenses?
Who is your intended audience?
How much money may you charge your customers?
Fortunately, we have done a lot of the legwork for you.
What are the expenses of starting a bed and breakfast?
A bed & breakfast has considerable beginning expenditures. The cost of acquiring a home is by far the most expensive.
BedandBreakfast.com has a list of existing bed and breakfasts for sale. The inventory fluctuates, but there are usually homes for sale for between $200,000 and $5 million. The condition of the building, the size of the property, the location of the property, and the age of the company are all variables that influence the price. Most company owners must get a mortgage in order to purchase a property.
Alternatively, company owners may convert any big residence into a B&B. Old mansions and farmhouses are particularly appealing since they often have charm and lots of space. The cost of a property may vary from hundreds of dollars for a run-down structure to millions of dollars for a magnificent building in a prime location.
Those who buy a home that isn’t already a bed and breakfast will have to equip and decorate it. Licenses, insurance, and breakfast-making materials are among the other initial expenditures (which are minor in comparison to the other prices).
What are the continuing costs of running a bed and breakfast?
Mortgage payments, taxes, insurance, and property maintenance are the most significant continuing expenditures for a bed and breakfast company. Utility bills, culinary materials, and any licence fees are also expensive.
Who is the intended audience?
An ideal consumer is someone who travels often, generally for pleasure, and has extra money. Vacationers are more likely than business travellers to choose the intimate setting of a bed and breakfast. A substantial amount of discretionary cash is required to pay the prices of a bed and breakfast, which are often more than equivalent hotel or motel rates.
How does a bed and breakfast generate revenue?
A bed and breakfast generates revenue by charging customers for stay that includes breakfast. Guests may pay by the night, week, or month.
How much money may you charge your customers?
The usual cost for a bed and breakfast room varies greatly, with most asking between $75 and $400 per night. These prices are affected by location, amenities, and season. Business owners should investigate the going rates at various times of the year in the region where they want to open a B&B to see how much they could be able to charge.
What kind of profit can a bed and breakfast make?
The profitability of a bed & breakfast relies on the number of rooms, the amount per night charged, and the occupancy rate. The possibility for total profit varies substantially.
Assume a bed and breakfast has five rooms with an average charge of $125 per night. If all rooms were filled every night of the year, the bed and breakfast would earn $228,125 every year.
However, few bed & breakfasts are booked every night of the year. According to About Travel, the typical B&B has an occupancy rate slightly greater than 50%. At a 50% occupancy rate, the bed and breakfast in this example may anticipate annual income of about $114,063.
All operational expenditures must be deducted from this value. This covers all construction and utility expenditures, which might be significant.
How can you increase the profitability of your company?
A bed & breakfast may boost its profits by providing special packages to visitors and by making its meals available to the community. Some visitors are ready to spend a little more for anniversary, honeymoon, or holiday packages. Allowing non-guests to eat at your B&B also gives an extra income stream and, possibly, allows a bed and breakfast to utilise its kitchen and dining facilities to provide lunch and supper.
STEP 2: Establish a legal entity
Sole proprietorship, partnership, limited liability company (LLC), and corporation are the most frequent business structure forms.
If your bed and breakfast is sued, becoming a formal business organisation, such as an LLC or corporation, prevents you from being held personally accountable.
STEP 3: File your taxes
Before you can begin for business, you must register for a number of state and federal taxes.
To register for taxes, you will need to get an EIN. It’s really simple and completely free!
Taxes on Small Businesses
Depending on the business form you choose, you may have multiple choices for how your company is taxed. Some LLCs, for example, may benefit from being taxed as a S company (S corp).
These guides will teach you more about small company taxes:
Taxes on LLCs
LLC vs. sole proprietorship
Corporation vs. LLC
S Corp vs. LLC
How to Form a S Corporation
S Corporation vs. C Corporation
There may be state taxes that apply to your company. In our state sales tax guides, you may learn more about state sales taxes and franchise taxes.
STEP 4: Establish a company bank account and credit card
Personal asset protection requires the use of distinct business banking and credit accounts.
When you combine your personal and business accounts, your personal assets (your house, vehicle, and other possessions) are at danger if your company is sued. This is known as penetrating your company veil in business law.
Furthermore, understanding how to develop corporate credit may help you get credit cards and other financing in your company’s name (rather than your own), lower interest rates, larger lines of credit, and other benefits.
Establish a business bank account.
Opening a business bank account is not only required when asking for business financing, but it also:
Separates your personal assets from the assets of your firm, which is required for personal asset protection.
It simplifies bookkeeping and tax reporting.
Create a net 30 account.
Net 30 accounts are used to develop and grow company credit while also increasing cash flow. Businesses use a net 30 account to purchase items and refund the whole debt within a 30-day period.
Many net 30 credit suppliers submit information to the main business credit agencies (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how firms establish business credit in order to get approved for credit cards and other lines of credit.
Apply for a business credit card.
Obtaining a business credit card benefits you in the following ways:
Put all of your company’s costs in one location to separate personal and business spending.
Build your company’s credit history, which will be important for raising funds in the future.
STEP 5: Establish business accounting
Recording your numerous costs and sources of revenue is crucial to assessing your company’s financial status. Keeping precise and thorough accounting also makes yearly tax filing much easier.
STEP 6: Obtain all required permissions and licences
Failure to get appropriate permissions and licences may result in significant penalties or possibly the closure of your firm.
Requirements for State and Local Business Licensing
Operating a bed and breakfast may need the acquisition of certain state licences and licences. Visit the Small Business Administration’s reference to state licences and permits to learn more about licencing requirements in your state
The local health agency inspects food enterprises at random on a regular basis. These inspections will verify for compliance with local health rules, which are generally connected to food contamination prevention.
Bed and breakfast regulations are mainly implemented at the municipal level. This implies that licences must be obtained within the county, city, village, or township of the company owner. License requirements will typically be determined by the size of the bed and breakfast, as will the kind of fire and health department inspections, which will most likely be required on a regular basis.
For additional information on local licences and permissions, please visit:
Check with the clerk’s office in your town, city, or county.
Contact one of the local organisations mentioned in the US Small Business Associations database of local business resources for help.
Occupancy Certificate
A Certificate of Occupancy is required to run a bed and breakfast establishment (CO). A certificate of occupancy certifies that all building rules, zoning laws, and government requirements have been satisfied.
If you intend to rent a space:
In most cases, it is the landlord’s obligation to get a CO.
Before leasing, ensure that your landlord has or can receive a valid CO for a bed and breakfast company.
A new CO is often required after a big remodelling. If your location will be refurbished before opening, incorporate wording in your leasing agreement saying that lease payments would not begin until a valid CO is given.
If you want to buy or create a company location:
It is your responsibility to secure a valid CO from a local government entity.
Examine all building rules and zoning standards for your business’s location to verify compliance and the ability to acquire a CO.
STEP 7: Obtain commercial insurance.
Insurance, like licences and permits, is required for your company to operate safely and legally. In the case of a covered loss, business insurance protects your company’s financial well-being.
There are several sorts of insurance plans designed for various types of companies with varying risks. If you are unaware about the hazards that your company may encounter, start with General Liability Insurance. This is the most popular coverage required by small companies, so it’s a good place to start for yours.
Workers’ Compensation Insurance is another important insurance product that many companies need. If your company will have workers, your state may require you to purchase Workers’ Compensation insurance.
STEP 8: Establish your brand
Your company’s brand is what it stands for, as well as how the public perceives it. A strong brand will help your company stand out from the crowd.
How to Market and Promote a Bed and Breakfast
Because visitors are the primary customers of a bed and breakfast, marketing efforts should concentrate on where holidaymakers go for hotel information. A company should have a website and social media sites at the very least. Getting featured on bed and breakfast websites and providing reservations on hotel bargain websites will help you attract customers.
Encouraging customers to submit reviews on sites like Yelp and TripAdvisor will demonstrate to potential guests that a bed and breakfast provides pleasant accommodation and quality service.
How to Keep Customers Returning
A bed & breakfast may distinguish itself by providing a really unique accommodation experience. This might be done by selecting a home with outstanding views or a prominent location. You may also turn a less naturally appealing environment into a true draw by decorating with antiques from a certain era and location, or by specialising in a specific sort of food (e.g. Parisian breakfasts or organic meals).
STEP 9: Create your company’s website.
After you’ve defined your brand and designed your logo, the next step is to build a website for your company.
While developing a website is an important step, some may be concerned that it is out of their grasp due to a lack of website-building skills. While this was a fair concern in 2015, online technology has made significant advances in recent years, making the lives of small company owners considerably easier.
The following are the primary reasons why you should not put off developing your website:
Every genuine company has a website, period. When it comes to bringing your company online, it doesn’t matter what size or sector it is.
Social media accounts, such as Facebook pages or LinkedIn company profiles, are not a substitute for your own business website.
STEP 10: Install your company phone system.
Getting a phone for your company is one of the finest methods to keep your personal and professional lives distinct and private. That isn’t the only advantage; it also helps you automate your company, provides it legitimacy, and makes it simpler for prospective clients to identify and contact you.