What is TOT and how do I track it?
TOT stands for Transient Occupancy Tax. It’s a tax that cities and counties charge on short-term lodging, typically stays of 30 days or less. If you rent out a vacation home, run an Airbnb, or operate any kind of short-term rental in San Diego, you’re responsible for collecting this tax from guests and remitting it to the city.
In San Diego, the TOT rate is 10.5% of the rental amount. The city also requires a Tourism Marketing District assessment that varies depending on the zone where your property is located. Before you start renting, you need to register with the City Treasurer’s Office to get a TOT certificate.
How you track TOT depends on how guests book. If you rent exclusively through Airbnb or VRBO, those platforms collect and remit TOT on your behalf for San Diego properties. Your responsibility is mainly documentation and keeping records that show the platform collected the tax. You still need to register with the city.
Direct bookings are different. When guests book through your website, by email, or over the phone, you collect the 10.5% from them directly and remit it to the city yourself. This means calculating the tax on each booking, collecting it at the time of payment, and filing returns on schedule.
In your accounting software, set up a liability account specifically for TOT. When you receive a payment that includes tax, split the transaction. The rental portion goes to income and the tax portion goes to your TOT liability account. A San Diego payroll service that handles bookkeeping can configure this correctly so the reports make sense and you always know what you owe.
Reconcile monthly by adding up the TOT you collected and comparing it to your liability account balance. The number should match what you’ll owe on your next return. Hospitality businesses running multiple properties or mixing platform and direct bookings need especially careful tracking to avoid errors.
San Diego requires monthly filing if your collections exceed a certain threshold, quarterly if you’re smaller. Penalties and interest start immediately after the due date, so staying on schedule matters.
Common mistakes include recording TOT as income instead of a liability, forgetting to collect it on direct bookings, and not reconciling platform-collected TOT with your records. Your Airbnb payout already has TOT removed, so if you record the gross booking amount as income, your books will be wrong. Getting the structure right from the beginning prevents issues at tax time and makes filing TOT returns straightforward.
San Diego's Small Business Bookkeeper
The Next Step:
A Short Conversation
A quick call to tell us about your business. We'll listen, answer your questions, and give you a clear price quote.
More Questions
What is the difference between employees and contractors?
The core difference is control. Employees work under your direction while contractors control how they complete the work. This distinction affects taxes, paperwork, and legal liability.
Read answerWhat records should I keep for my small business?
Keep financial records like bank statements, receipts, and invoices for at least seven years. You'll also need tax returns, business formation documents, contracts, and employee records if you have staff.
Read answerWhere can I find a bookkeeper in San Diego?
Check the QuickBooks ProAdvisor directory, search Google, or ask for referrals from your CPA or other business owners. Once you have candidates, evaluate based on industry experience, software expertise, and pricing structure.
Read answerWhat happens if I miss a sales tax filing?
Missing a sales tax filing triggers penalties and interest that grow the longer you wait. In California, you'll face a 10% late filing penalty plus interest on unpaid amounts. The best move is to file as soon as possible, even if you can't pay the full amount immediately.
Read answerCan a bookkeeper fix years of neglected books?
Yes. Bookkeepers regularly handle catch-up work for businesses with years of neglected records. As long as bank statements and basic documentation exist, the books can almost always be reconstructed and brought current.
Read answerWhat is the difference between a bookkeeper and a CPA?
Bookkeepers maintain your financial records throughout the year. CPAs are licensed professionals who prepare taxes and can represent you before the IRS. Most small businesses need both.
Read answer