During the first weekend of August every year, Chicago floods with travelers heading to Grant Park for one of the biggest noncamping festivals in the country: Lollapalooza. As a festival largely overrun by out-of-towners, Lolla is a weekend during which many Chicagoans tend to flee the city limits.
With this high demand for housing during the weekend of July 31-Aug. 2, many Chicago residents take the opportunity to rent out their homes to festival travelers. To stay within regulatory boundaries and in compliance with taxation laws, Chicagoans can utilize platforms like Avalara MyLodgeTax.
Formerly known as HotSpot Tax, Avalara MyLodgeTax provides owners of short-term rentals with a platform that enables them to track and manage occupancy-related tax, obtain required licenses, file tax returns, track rate changes and collect appropriate taxes.
HotSpot Tax was acquired by Avalara in March. Avalara has created multiple products for different industries over the past decade using developed, purchased or licensed databases with tax data.
“Approximately 85 percent of our customers are single-property owners,” said Rob Stephens, general manager of Avalara MyLodgeTax. “Hotels and institutional operators have accounting and legal staff who figure out and manage these tax and license requirements. These are business taxes designed for businesses with resources to manage that are not straightforward.”
Avalara MyLodgeTax costs an average fee of $15 to manage registration and licensing documents, as well as take care of taxes. It requires some data entry upfront to set up appropriate accounts; the platform then has automated filing for tax returns, as well as automated notifications for tax rate and law changes.
The target demographic for this product is small operators of vacation rental properties because much of the documentation to stay in legal operation is ongoing. License and registration renewals can lead to fines and penalties if not kept up-to-date.
Neighborhood content image via Shutterstock.
Although Stephens recommends about 30 to 45 days to register for all the required licenses, he says it’s better late than never for Chicagoans.
“When there are time-sensitive issues, we can prioritize and complete faster, in some cases. The largest time-sensitive part of the startup process is typically waiting for government agencies to process forms and return information we need,” he said
Inman Connect San Francisco is right around the corner — register now and save $200!
Learn secrets from top agents to grow your business — attend Agent Connect!