Cleaning businesses provide services to both residential and business customers. Although big companies are typically large-scale janitorial services, there are plenty of opportunities for small-business owners to clean houses and offices.
TL;DR (Too Long; Didn't Read)
Housecleaning license requirements vary according to state and local regulations. You may need a general business license and a license specific to the cleaning business.
Housecleaning License Requirements
Depending on where you live, you may only need a general business license or service contractor's license. Some states require a specific cleaning license. Talk with someone at your local Small Business Administration or Small Business Development Center to find out what's required. Your town or county clerk can also offer guidance on licensing requirements in your location.
Unlike a regulated trade, such as plumbing or carpentry, there are no training requirements for becoming a housecleaner, nor are there formal regulations you must meet in the performance of housecleaning duties. Standards and expectations are negotiated between you and the client.
Health and Safety
Although running a cleaning business is not a dangerous operation, there are some hazards. Many cleaning solutions are toxic, and some may be flammable. You may need permits or disclosures to meet the local fire code or have to comply with regulations governing the handling of hazardous materials and wastewater discharge.
The federal Occupational Safety and Health Administration (OSHA) has regulations pertaining to eye and face protection, ventilation, and hand and foot protection. Some states, such as California, require you to have an Illness and Injury Prevention Plan if your business has employees. Check with local authorities to find out the local, state and federal regulations that apply to you and your cleaning business.
Why Not Just Clean for Cash?
When considering the procedures for registering a business and complying with regulations, you may be tempted to skip all that and run a cash-only business. There are risks in doing so:
- Failure to report income to the IRS is fraud. You could be subject to penalties and even jail time. Why take a chance?
- Failure to register a business could mean you're violating local or state laws. Again, why take a chance and risk having to shut down your business and pay penalties?
- You can't get business insurance if you're not registered as a business. Insurance protects you and any employees in the event of injury, and it protects your finances in the event a client files a claim.
Using an Assumed Name or 'Doing Business As'
You want to use a name for your business that immediately identifies the services you provide. You may register a business in your own name — George A. Smith, for example — but use the name George's Cleaning Service so that customers can easily find you. Some states call this using an assumed name, while others call it "doing business as" (DBA). Check with your town or county clerk's office to find out how to register your business name.
Applying for a Vendor's License for Cleaning
A vendor's license is necessary for any business that sells goods or services and collects sales tax. Whether you need to collect sales tax for your cleaning services depends on where you live. Again, visit the town or county clerk's office for information specific to your jurisdiction.
Housecleaning Insurance and Bonding
- General liability insurance is a necessity for most small businesses to protect them from lawsuits resulting from client injuries or property damage. You might also add a rider to your policy to pay for the cost of replacing a client's locks in the event you lose the key.
- Hired and non-owned or commercial auto insurance is necessary if you or your employees use personal vehicles to travel to and from cleaning jobs. Personal auto insurance may not cover you in the event of an accident. If you own vehicles titled to the cleaning company, commercial auto insurance is usually required by law.
- Workers' compensation insurance is required in most states, even if you hire only one employee. It helps cover a worker's medical bills and provides reimbursement for lost wages as a result of an injury on the job.
- License and permit bonds may be required by your local government. These protect government agencies from lawsuits that clients could file in the event of unsatisfactory work performance by your cleaning service. Surety or janitorial bonds reimburse clients if the cleaning business fails to deliver services promised in the contract or if the business owner or an employee is accused of theft.
Talk with your insurance company about insurance and bonding options. Costs vary depending on where you live, the number of employees you have, and the scope of your business. In some states, you must be bonded and insured before you can obtain a business license.
If you're in business for yourself and have no employees, the IRS considers you to be a self-employed sole proprietor. Your Social Security number serves as your tax identification number. You report your income on Form 1040, Schedule SE, and use Schedule C to deduct money spent on supplies from your gross income.
However, it makes sense to use a business structure such as a limited liability company (LLC) or S corporation to separate your personal assets from your business assets. Talk with an attorney or an accountant to find out how to go about it. You need a tax ID number, also known as an Employer Identification Number (EIN), which you can get for free on the IRS website.
Setting Your Policies
Depending on where you perform cleaning services, you're subject to regulations. You must also establish policies that set clear parameters for you and your clients. For each cleaning contract, you should reach an agreement with clients in regard to the following:
- Who purchases the cleaning supplies
- How chemicals are disposed of
- Who supervises children or pets while you're performing cleaning services
- Rules related to operating electrical equipment, such as dishwashers, washing machines and dryers
- Rules about answering doors or phones
- Rules about sharing clients' personal information
- Requirements for adequate heating, cooling and ventilation
When reporting business income, you're allowed to take deductions for supplies and equipment. Supplies include items that are consumed and regularly replaced, such as soaps and disinfectants. Equipment refers to items that you can use over several years, such as vacuum cleaners and stepladders. Talk with an accountant about which items you can deduct from annual income and which you can depreciate over time.
Licensing Gives You Credibility
Although word-of-mouth can get you some clients, licensing of your business gives you more options for reaching potential clients through advertising. Until people know and trust you, they can be reluctant to allow you into their homes and places of business. When you advertise as a licensed cleaning service, you'll likely build your client list faster and may be able to command higher prices for your services than those charged by unlicensed cleaners.