Don’t let the seeming dryness of business licensing trick you – it’s a critical piece of starting your cleaning business, and an important step to protecting your personal assets (and those of the business). Getting a cleaning business license is a necessity. And in an industry like cleaning – with so many fly-by-night operators – being properly licensed and bonded can help you stand out from the crowd – and it might even help you get more cleaning jobs.
It’s also daunting. That’s why we put together this (friendly, informative) guide. We’ll explore different topics related to obtaining a cleaning business license.
- Registering your company as an LLC, applying for an Employer Identification Number (EIN)
- Understanding state licensing requirements and local regulations
- Securing insurance coverage tailored to your needs
- Bonding employees to ensure trustworthiness
- Registering fictitious names if necessary
- Determining your North American Industry Classification System (NAICS) number
Compliance is a word that we hope you learn to love. Even if not, it might save your fledgling business from bankruptcy, lawsuits, and sanctions.
We should mention that technically, there is no such thing as a single cleaning business license. House cleaning licensing is really just setting your business up to operate legally within state and local laws, as well as to be protected (IE insured) against damage or losses as a result of your services. I hate to disappoint, but we do have a plan for you to get your quote-unquote cleaning business license.
We’re putting together state-by-state how-tos, since some of the regulations (like business structure and fictitious names) are unique by state.
Registering Your Cleaning Business as an LLC
If you are thinking about starting a cleaning business, you’ll want to register as an LLC (limited liability company). It’s a wise move, especially for cleaning businesses – providing protection to your personal financial assets. It also establishes credibility with potential clients. By structuring your business as an LLC, you can separate your personal assets from those of your business, protecting yourself in case of any unforeseen circumstances.
Side note, I’m not a doctor, lawyer or tax attorney. Please continue your research and talk to a lawyer or tax attorney if you are unsure after reading your state or county websites.
Benefits of Choosing an LLC for Your Cleaning Business
- This is important – it limits your liability: shock: a limited liability company limits your liability. Get sued? They can’t go after your personal assets if you’ve structured your business as an LLC. This means that if your cleaning company faces any debts or lawsuits, only the assets owned by the company will be at risk – not your personal property.
- Tax flexibility: With an LLC, you have options when it comes to taxation. You can choose to be taxed as a sole proprietorship, partnership, or even a corporation, depending on what works best for your situation.
- Credibility: Registering as an LLC gives your cleaning business more credibility in the eyes of potential clients and partners. It shows professionalism and commitment to long-term success.
The Process of Registering as an LLC
- Select a unique name for your cleaning company that complies with state requirements regarding naming conventions for businesses. Learn more about picking a suitable name here.
- Contact local government agencies like Secretary of State offices or county clerks’ offices where you plan on operating to check availability and reserve chosen names before proceeding further. You may also need to conduct a trademark search to ensure that your chosen name does not infringe on any existing trademarks.
- Prepare and file the necessary documents, such as Articles of Organization or Certificate of Formation, with the appropriate state agency. These forms typically require basic information about your business like its name, address, and purpose. Discover more info on establishing an LLC by exploring this resource.
- Create an operating agreement outlining management structure and member roles within the company. While this may not be legally required in every state, it’s still recommended for establishing clear expectations among members.
- Obtain all necessary permits/licenses needed for running a cleaning service in your area. This may include general business licenses or specialized permits, depending on local regulations.
Key Takeaway: Starting a cleaning business as an LLC can limit financial exposure and establish credibility with potential clients. Benefits of choosing an LLC include limited liability protection, tax flexibility, and increased professionalism. The process involves selecting a unique name, filing necessary documents with the state agency, creating an operating agreement, and obtaining all necessary permits/licenses for running a cleaning service in your area.
Obtaining Employer Identification Number (EIN)
OK, on to the next step of getting your cleaning business license (wink, wink, now you know that doesn’t exist). Obtaining an Employer Identification Number (EIN) from the Internal Revenue Service is necessary for cleaning business proprietors to fulfill tax requirements, open financial accounts, and apply for licenses or authorizations. This unique nine-digit number is essential for tax purposes, opening bank accounts, and applying for licenses or permits.
How to Apply for an EIN
You can easily apply for an EIN online through the IRS website. It’s cost-free and takes a short time to finish. Alternatively, you can fax or mail Form SS-4 to the IRS. Knowing about EINs is really the hardest part of the process – the rest is just paperwork.
Applicants without an SSN or ITIN from abroad can still apply with the IRS and get their EIN quickly.
Importance of Having an EIN
An active EIN is crucial for running a successful cleaning business. Here’s why:
- Tax Compliance: An EIN ensures that you meet all federal tax obligations related to your employees’ wages on time, avoiding penalties or fines. (Guess what money pays for fines – that’s profits, which ideally, you use to get rich)
- Banking and Credit: You need an EIN to open a business bank account and apply for credit cards or loans under your company’s name, separating personal finances from business finances.
- Hiring Employees: With an EIN, you can legally hire employees for your cleaning jobs, ensuring proper payroll tax withholding and reporting to the IRS.
- Licensing Requirements: Many states require businesses to provide their EIN when applying for general business licenses or permits related to their industry-specific operations like house cleaning services.
Don’t overlook the importance of obtaining an EIN for your cleaning business. It’s a vital step that ensures tax compliance, proper banking practices, legal hiring, and meeting local licensing requirements. It’s a key part of getting your business structure correct.
State Licensing Requirements
Before starting a cleaning business, it’s important to research the necessary licenses and permits required to operate legally. Depending on your location, you may need additional permits such as vendor’s licenses or Doing Business As (DBA) registrations. Vendor’s licenses are often required if you plan on collecting sales tax on cleaning supplies used in providing services to clients.
Common Types of Licenses Needed by Cleaning Businesses
- General Business License: This is a standard requirement for most businesses and allows you to operate within a certain jurisdiction.
- Vendors’ Permit: If your cleaning company sells products directly to customers, this permit enables the collection of sales tax.
- Zoning Permits: Some jurisdictions require zoning permits for home-based businesses; check with your local government office for details.
- Surety Bond: While not technically a license, some states mandate that cleaning companies carry surety bonds as financial protection against potential claims from clients. We’ll get into the difference between bonds and insurance shortly.
Steps to Acquiring Necessary Permits/Licenses
- Determine which licenses and permits apply specifically to your cleaning business based on location and services offered. Check with your city or county clerk’s office for information about local requirements.
- Contact relevant agencies like the Department of Revenue or Taxation Office regarding any necessary applications/forms. They can provide guidance throughout the process and ensure all documentation is completed accurately before submission.
It’s essential to abide by all licensing regulations to prevent any potential legal issues. Don’t let paperwork hold you back from having a a business structure that protects you from any of the myriad of local and state laws.
Insurance Coverage and Bonding
Proper insurance coverage is crucial for house-cleaning services. Companies may want to carry hired and non-owned auto insurance, workers’ compensation insurance, and be bonded for added protection against potential theft or damage. Especially if you hire employees, insurance and bonding is a must.
Types of Insurances for House-Cleaning Businesses
- General Liability Insurance: This business insurance covers property damage, bodily injury claims, and advertising injuries that may occur during business operations.
- Hired and Non-Owned Auto Insurance: Protects your business if an employee gets into an accident while driving their personal vehicle for work purposes.
- Workers’ Compensation Insurance: This type of business insurance provides medical benefits and wage replacement to employees who are injured on the job.
- Bonding: A surety bond protects clients from financial loss due to dishonest acts or negligence by your cleaning staff. It works slightly differently than insurance. Bonding needs to be paid back. The advantage here is that clients get paid faster than with insurance. This comes in handy when a client is upset that something was damaged.
The Advantages of Bonding for Establishing Trust with Customers
Bonding offers several benefits for cleaning businesses and their clients. It demonstrates professionalism, provides financial protection, and sets your business apart from competitors.
- Credibility: A bonded cleaning company shows commitment to customer satisfaction, building credibility among prospective clients.
- Financial Protection: If an employee causes damage or theft while working, the bond covers any financial losses incurred by the customer.
- Competitive Advantage: Being bonded sets your business apart from competitors who may not have taken this step, giving you an edge in securing new contracts and retaining existing customers.
In summary, obtaining appropriate cleaning business insurance and bonding is essential for protecting your house cleaning business and its clientele. Comprehending the multiple forms of insurance and their advantages enables you to make informed decisions that will secure your business’s standing while ensuring its longevity.
If you’d like to learn more, check out our detailed article on insurance and bonding for house-cleaning businesses.
Fictitious Name Registration and Publication
As a cleaning business owner, you want to make sure you’re operating legally and protecting your company’s identity. Registering a fictitious business name with the Secretary of State is essential if you intend to use an original title for your cleaning company.
Process of Registering a Fictitious Business Name
- Choose a name that resonates with your target market (you have to love it as well because you will be saying it a lot)
- If you need help choosing a name, we’ve written a handy guide for naming your cleaning company
- Search your state’s Secretary of State website to ensure the name of your business entity isn’t already taken.
- The application may include such information as your EIN or Social Security number.
- Submit forms (and pay the fees) to finalize registration.
Note: Checking local rules is essential before taking any action since the regulations may differ from one state to another.
Importance of Publishing Your Registered Fictitious Business Name
Publishing your registered fictitious business name is crucial to notify potential clients and competitors of its existence and protect against fraud. After registering your name:
- You must publish it in an approved newspaper within the county where you’ll operate – the intervals might vary on this one, so check local regulations
- After publication, file an affidavit of publication with the Secretary of State or county clerk’s office.
By following these (admittedly old-school) regulations, you can establish a strong foundation for your cleaning company and ensure compliance with local laws governing cleaning businesses.
Obtaining North American Industry Classification System (NAICS) Number
Cleaning businesses need to obtain a North American Industry Classification System (NAICS) number for tax purposes and to comply with local regulations. The NAICS number helps categorize businesses by industry type, making it easier to file taxes and obtain necessary permits.
How to acquire an NAICS number for your cleaning business
Use the search tool provided by the U.S. Census Bureau to find the appropriate NAICS code for your house cleaning company. Include this information on all official documents related to your business, from permit applications to tax filings.
The role played by NAICS numbers in managing taxes
An accurate NAICS classification helps identify which deductions or credits may be available based on industry-specific rules set forth by federal and state authorities. By using the correct NAICS code when filing taxes, you ensure eligibility for any potential deductions specific to janitorial service providers, such as expenses for cleaning supplies or equipment.
- Tax Credits: Some states offer tax credits to businesses operating in certain industries. Accurate NAICS classification ensures that your house cleaning business can take advantage of any available incentives.
An accurate NAICS number also helps streamline the process of obtaining necessary permits and licenses by providing a clear indication of your company’s primary industry focus. This simplifies communication with regulatory agencies and reduces the likelihood of encountering delays or complications during the permitting process.
Obtaining an appropriate NAICS number for your cleaning business is essential for compliance with local regulations, managing taxes, and securing necessary permits. Don’t forget to include it on all official documents related to your business.
FAQs in Relation to Cleaning Business License
Is a cleaning business license required in Pennsylvania?
No, but you must register your business entity with the state and obtain any necessary permits or licenses for local regulations.
What licenses are needed to start a cleaning business in South Carolina?
You’ll need to register your cleaning business with the Secretary of State and obtain an Employer Identification Number (EIN), and check local regulations for any required permits or licenses.
Do I need a business license for a cleaning business in California?
Yes, California requires all businesses to have appropriate licensing, so register your cleaning company as an LLC or sole proprietorship and apply for any necessary local permits/licenses.
Is a license required to start a cleaning business in Texas?
Texas does not require statewide licensing specifically for housecleaning services, but research local rules and regulations before starting operations within that jurisdiction.
The thought of starting a cleaning business can feel overwhelming. Even though there’s no single cleaning business license, it’s crucial to take all these steps to protect your business and ensure its success.
Here are the steps, one more time:
- Register as an LLC
- Obtain an EIN
- Comply with state licensing requirements and local regulations
- Get insurance coverage
- Bond employees
- File for fictitious name registration and publication requirements
- Find the appropriate NAICS code for your business.
Remember, you don’t have to do these all in one go. Give yourself some dedicated time each night to get assemble a cleaning business license, and then get moving. You’re dealing with the government and large corporations, so completing these things might take a little time. Be kind to yourself, be patient, and don’t give up.
Don’t forget to keep accurate records and file taxes correctly to avoid legal issues down the line, and check out these 10 steps to start your business from the Small Business Administration for more guidance.