What Licenses Are Needed to Start a Cleaning Business? All You Need

what licenses are needed to start a cleaning business
Image source: Janitorial Manager

A vendor’s license and a Doing Business As (DBA) registration are both needed before you can start your cleaning business. Before delivering your services, make sure you have both of these licenses. Additionally, you could be required to buy specific surety bonds, such as janitorial bonds. 

Do I Need A License To Start My Cleaning Business?

Yes, in order to run your cleaning service legally, you will need both a vendor’s license and a general business license. You also need to decide on the structure of your company. Additionally, it would be in your best interests to get particular bond types that are required to run cleaning businesses. These will safeguard both your clientele and your company.

What are bonds, licenses, and permits for businesses?

A license is a general license given by government organizations that enables business owners to run their operations in a particular geographic area. A permit, however, is more explicit in stating that you have complied with specific laws (for example, restaurants frequently require them in order to serve food). 

A bond is a last-resort measure to be able to compensate clients who have been injured by your company (and is frequently mandated by state law).

Why Do I Need These For My Business?

You could be perplexed as to why your company would require bonds, licenses, or permits. The most obvious response is that you must work with the government in order to run your firm. 

In addition to allowing the government to better track the business’ finances for tax purposes, business licenses serve to identify the business so that customers will know who to sue if the need arises. 

If you don’t obtain the necessary licenses, permits, and bonds, you’ll be subject to harsh fines. You run the risk of having your place of business padlocked and being subject to heavy fines and liens. If you don’t have the required permits and licenses, your company won’t have any legal safeguards either.

What Licenses Are Needed To Start A Cleaning Business?

You may require a service contractor’s license, a cleaning business license, or both, depending on the rules of your state:

License for Service Contractor

A contractor is merely a person contracted to carry out certain tasks or supply specific goods. Even if a client hires you to clean their home once a week, you are still considered a contractor because they aren’t paying you directly. Instead, they are paying you to provide a service. 

Before you start your cleaning firm, several jurisdictions demand that you obtain a contracting license. To learn more about how to apply for and obtain your contractor’s license, you can contact the small business administration in your state.

License for Cleaning Business

Anyone wishing to work in the cleaning industry must have a cleaning business license. 

You can again get in touch with the Small Business Administration to learn about any paperwork or applications you must complete if your state requires you to obtain one of these (this information may also be available on their website). 

In some circumstances, obtaining a cleaning business license may be contingent upon purchasing a janitorial surety bond.

Business Janitorial Bonds

For a cleaning company, janitorial bonds serve as a way to safeguard clients from any damage done to their property while you are cleaning it. 

You might think of it as insurance that will compensate clients whose property your staff members or firm inadvertently damaged. You must purchase a janitorial bond before establishing your cleaning company in several states. 

It’s crucial to remember that these surety bonds ARE NOT business insurance. Your business is shielded against the financial repercussions of things like worker’s compensation, general liability, and professional liability by commercial insurance. 

Similar to how you would apply for insurance, you must submit an application for a surety bond. Find the best surety bond firm for you by doing some research. After you submit an online application, the majority of these organizations will provide you with a price for the cost of your bond. 

The amount of your coverage, the number of employees, and the controls in place for your business operations will all affect how much the bond will really cost. 

The Value of Licenses for Vendors

You can lawfully own and run a cleaning company if you obtain a vendor’s license. You are obliged to possess a vendor’s license, regardless of the city and state in which you reside. One of the main justifications for having a vendor’s license is for sales tax purposes.  

The city clerk’s office or another administrative office in your area is where you can submit your application for a vendor’s license. The business is responsible for paying the sales tax on all non-wholesale revenue. You can legitimately charge a sales tax for your services if you have a vendor’s license.  

Before your business license has been granted, your vendor’s license won’t be given out.  As a result, you must choose whether to operate as a limited liability company (LLC), a Doing Business As (DBA) registration, or some other kind of corporation.

Registration as a DBA

When you apply for your vendor’s license, you can also submit your DBA registration application. When operating under a business name without separating your personal assets from your business assets, you should use a DBA name. This means that if the company fails, you run the danger of losing your personal assets because you will be held “personally” accountable. It might be a good idea for you to register a DBA name if:

  • You are just getting started. Using a DBA is OK if you don’t expect to have many clients or if you’re just starting your cleaning company.
  • You intend to work independently for a time – If you don’t want to hire more staff when your company first starts out, a DBA is an excellent option.

Even while employing a DBA, it is essential to keep your personal and professional finances distinct. Your cleaning company might do better as an LLC or corporation.

Corporations and LLCs: The Distinction

Because they legally protect your personal assets, limited liability companies, or LLCs, are the best choice for small business owners. Your local government office is where you can submit an LLC application.  More suited to smaller businesses, LLCs can be taxed in a variety of ways, such as the following:

  • Sole Proprietorship
  • Partnership (as an LLC or Corporation)
  • S Corporation
  • C Corporation

You might have to pay self-employment taxes depending on how your cleaning firm is set up.  This frequently happens in single proprietorships and LLCs.

Corporations are a little different. Because businesses are subject to corporate income tax in addition to other taxes, your cleaning business may be subject to double taxation. To avoid double taxation, you can always establish your company as a S Corporation; but, any of your shareholders will still be subject to personal income tax. Similar to LLCs, incorporating your business protects your personal assets. 

Which Is Better?

LLCs might be a better choice for a small, neighborhood cleaning company. Think about the following:

It would be simpler for you to set up your company as an LLC if you want to operate as the solo proprietor or with a business partner.

  • Compared to filing fees for corporations, those for an LLC are far less expensive. The more shares you start out with when forming a corporation, the more money you’ll have to pay in filing fees. An LLC would be your best option if you wanted to keep your firm small.
  • A company has many specifications.  An operating agreement and annual payments are all that are required for an LLC to operate a business. A corporation must have yearly meetings, keep detailed minutes, have rules, and more.  It would not be worth the trouble to set up your cleaning company as a corporation if it is a tiny operation.

When choosing your legal business structure and applying for your vendor’s license, keep these in mind.  There are additional things you can apply for, but they are not required even though they are very helpful. Our cleaning company would benefit greatly from getting bonds because they add additional protection.

In Conclusion

Because of the potential for entrepreneurship, many people are thinking about owning a cleaning company. What licenses are required to start a cleaning business legally are frequently questioned.  Simply put, you’ll need a general business license as well as your vendor’s license. You will need to choose whether you want to operate your company as a limited liability company (LLC), a corporation in its fullest sense, or a doing-business-as (DBA) registration. For additional security and employment prospects, you might also want to think about licensing and permit bonds as well as surety bonds. Avoid penalties and legal issues. If you adhere to the regulations in your region, you can obtain a cleaning license.

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