What Are The Legal Requirements For Starting A Cleaning Business In 2021?

What Are The Legal Requirements For Starting A Cleaning Business In 2021?

Interested in starting a cleaning business?

Starting a cleaning business involves commitment, hard work and most importantly passion.

However, before diving into all the exciting parts of starting your business, it's critical that you understand and meet all the legal requirements.

In this guide, we'll cover all of the prerequisites you need to fulfill, such as:

  • Licenses and certificates required to start a cleaning business
  • Insurance requirements required to start a cleaning business
  • Permits needed for your cleaning business
  • Establishing your cleaning business (formation and legal)

At the end of this article, we provide you access to a step-by-step guide on how to start your cleaning business.

List Of Legal Requirements For Starting A Cleaning Business

Just like any other business, it’s critical that you establish the proper licenses, permits and insurance so you can legally operate your cleaning business.

Let’s dive into these requirements and regulations.

Licensing Required To Start A Cleaning Business

Obtain A Vendor License For Your Cleaning Business

  • A vendor license essentially allows a business owner to make money from selling their product
  • The cost of a vendor license ranges anywhere from $20-$50
  • Some states require different types of vendor licenses, so check with your municipality first to see the exact vendor license(s) you are required to have.
  • To apply for a vendor license, go to the website of the municipality you plan to operate your cleaning business in. You can learn more about applying for a vendor license here

Bonds Required To Start A Cleaning Business

There are two bonds that you. may be required to obtain for your cleaning service. This requirement varies state-by-state.

  1. Surety or janitorial bonds
  2. License and permit bonds

Obtain A Surety or Janitorial Bond For Your Cleaning Business

  • This bond essentially protects clients if one of your employees steals from them or if a cleaning service was not provided
  • This type of bond is usually not required by law, but they’re often included in client contracts.
  • Apply for a janitorial bond here

Obtain A License And Permit Bond For Your Cleaning Business

  • This bond is only required by certain states.
  • This bond states that your business will comply with all state and local laws.

Insurance To Get When Starting A Cleaning Business

There are three main types of general business insurance that you may want to consider getting to manage risks for your cleaning business:

  1. General Liability Insurance: this insurance protects your business from lawsuits.
  2. Professional Liability Insurance: covers claims of malpractice and other business errors (typically used for providers such as consultants or accountants.
  3. Workers Compensation Insurance (usually required if you have 1+ employees): provides coverage for employee's job-related illnesses, injuries, or deaths.

How Much Does Business Insurance Cost?

The cost of small business insurance depends on the type of insurance your business needs, but typically ranges between $700 and $3,800 a year.

You can get a free quote for your business insurance here.

Setting Up Your Cleaning Business (Formation and Legal)

When it comes to setting up your business, you may find yourself in a place where you have to make some financial and legal decisions.

The first thing you'll want to decide on is whether you want to be an LLC, S-Corp, or C-Corp.

These three options are found to be the most common when starting a small business, and all serve to protect your personal assets and also provide you with certain tax benefits.

  • LLC: All income and expenses from the business are reported on the LLC personal income tax return.
  • S corp: Owners pay themselves salaries + receive dividends from profits.
  • C Corp: C Corps are separately taxable entities that file a corporate tax return (Form 1120). No income tax is paid at the corporate level and any tax due is paid at the owners individual expense.

Depending on where you're conducting business, you'll also want to consider securing the proper permits, licenses and liability insurance.

Learn more about securing the right permits and licenses ➜

Need to start an LLC? Create an LLC in minutes with ZenBusiness.

How long will it take to form my LLC?

If you submit and make payment for the articles of the organization online, the formation will be immediate.

If you file by mail, this could take 5-7 business days.

Do I need a DBA?

A DBA is a new name a business operates under their legal name. DBA can also be referred to as a fictitious name, assumed name, or trade name.

If you are forming an LLC, you have already registered your business name and do not need a DBA.

However, if you would like to conduct business under a different name, you can register a DBA.

Learn how to file a DBA here.

Is it required to get an EIN for my LLC?

If you have operate an LLC with employees or with more than one member, it is required by the IRS that you have an EIN.

Conclusion (+ Free Guide)

As you can see, there is a lot that goes into starting a cleaning business. Once you have secured all the proper licenses, permits and insurance to operate your business, there is still plenty of work to be done.

We put together a step by step guide on how to start a cleaning business, with real life examples and data points here

Pat Walls,  Founder of Starter Story

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