Learn how to start a cleaning business. The cleaning business has endless opportunities – everyone needs detailed cleaning (from their home to their business), but few have the time and resources to clean well. Operating a cleaning business might seem straightforward, but there are legal requirements you must consider. Use our foolproof checklist to make sure you’re protecting your business. Legally you need an LLC, contracts, and a business license. Drafted Legal can do the first 2 for you and show you how to do the third with Cleaning Services LLC and Contracts Bundle (select cleaning services from the drop down).
Cleaning Business “To-Do”
1. Set up an LLC
When you start accepting money for services you perform; you’re in business. If your business entity is not set up with the state, you are a sole proprietor. Don’t be a sole proprietor. If you do, you have no liability protection. Take the time and effort to set up an LLC or another liability shielding form of business. If you don’t, you’re running a dangerous risk. Drafted Legal can file your LLC for you here.
2. EIN and Taxes
Before you accept money for a job, you’ve got to set up an EIN. It’s the social security number for your business and how the IRS tracks your company. Set up your EIN before you start working by going to IRS and filling out basic information about your business (tip: do not use any website other than irs.gov when getting an EIN). This EIN process takes about 5 minutes. Email Drafted Legal if you have any questions.
3. Business License
Every state and locality has a different set of rules, but don’t fret. While there is no uniform process, navigating them is usually pretty simple. Check with your city or county to make sure you have a proper business license – and yes, there are taxes and fees (associated with these licenses).
4. Client Contract
If you don’t have a client contract, get one. Contracts can be tricky so it’s best to use trusted online templates from a company like draftedlegal.com or a local lawyer. Some of the essential items to include are clearly defined services, terms of payment, a time frame for completing the contract, waivers, a rescheduling policy, and other particulars. It must be specific enough to cover your business and communicate to both parties, but not so inflexible you cannot modify the terms. Contacts don’t need to be long and complicated, but they do need to be done correctly to avoid ambiguity. Use Drafted Legal’s bundle so you have everything you need.
5. Employee or Independent Contractor Agreements
Cleaning services rely on employees or independent contractors to perform some or all of the cleaning services. It’s imperative to clarify the expectations of these workers including payment and other provisions. Most states even require certain payment terms be made to employees in writing. You also want to prevent workers from poaching your clients. You also want to set performance expectations. Clarify this in writing to prevent any problems.
6. Partnership or Operating Agreement
Any company with multiple owners needs an agreement. If you use an LLC, this agreement is called an Operating Agreement in most states. What it does is set out who owns what, how income and debts will be divided, what happens in the event a partner leaves or dies, each partner’s responsibility, and other essential agreements. Too often people go into business without clear expectations. An operating agreement makes sure everyone understands the terms of the partnership. Visit Drafted Legal for more information and easy-to-use templates.
Your company should work with a trusted insurance agent to make sure you have the proper coverage. Cleaning might seem straightforward, but accidents happen. If you accidentally break something, let a cat out of the house, or poison an expensive plant, you’ll need insurance to help make things right.
Pro Tip: When naming your company, make sure you are not infringing on another company’s trademark. If someone else is using the same name in the same industry, you might want to stay away. Learn how to avoid naming issues and much more with the Business Law 101 course.
Business is hard, but it does not have to be overwhelming. If you follow these tips and partner with either a lawyer or use a reputable online legal platform, you will be set up for success.
Legal Checklist for Cleaning Businesses
EIN and taxes
Employment and Contractor Agreements
Partnership or Operating Agreement