The need for cleaning services is on the rise, offering a great opportunity for those thinking about starting a cleaning business. However, before you can start working with clients and earning, it’s crucial to officially register your business.
Getting your business registered and obtaining a cleaning business license is a wise move to demonstrate its legitimacy and adherence to regulations. Though it might seem a bit overwhelming initially, with the right guidance, it’s manageable. In this blog, we’ll be covering how to register a cleaning business—from state and federal cleaning business requirements, to business structures, and more.
Why Do I Need to Register My Cleaning Business?
You may be wondering if registering your business is actually necessary. Well, there are a few key reasons why registering your cleaning business is crucial. It provides legal protection by making your business a separate entity from yourself—shielding your personal assets in case of legal issues or debts. Registering your cleaning business also ensures that it operates within the legal framework, complying with local and state regulations and licensing requirements to avoid penalties or fines.
Moreover, registering your business contributes to building credibility and trust with potential clients. It signals that you’re a legitimate business that has taken the necessary steps to establish a solid presence in the industry. All in all, registering your cleaning business is vital for legal protection, compliance, and establishing credibility.
Registering Your Cleaning Business
If you plan on running any official business, you will need to register your business twice;—a federal registration and a state registration. The same goes for a cleaning business! Let’s get into how to register a cleaning business and what each registration entails.
Federal Registration
The first step with your federal registration is to apply for an Employer Identification Number, also known as EIN, which can be done online. Your EIN allows you to do several important things for your business, like opening a bank account, paying employees, paying state and federal taxes, and more. Keep in mind that if you have already applied for an EIN online previously, you will have to apply for an EIN through a different method.
State Registration
Your state registration may vary depending on where your business is located and operated, so you may need to check your local guidelines. As a general rule of thumb, you’ll need to register either with your local Business Bureau, Business Agency, or Secretary of State’s office. You can find your state’s local office at this link here. Simply look up your state, and the Small Business Administration (SBA) will direct you to where you need to go.
As a part of the cleaning business requirements to complete your state registration, you will need to provide the following information:
- Business Name
- Business Location/Mailing Address
- Ownership, Management, or Directors Structure
- Register Agent Information
- (For Corporations) Number and Value of Share
Deciding on a Business Structure
Now that you know how to register a cleaning business, you’ll have to decide on your business structure. This will affect how you’ll set up your business, how much you’ll pay in taxes, how your business will operate, etc. Here are the four most common types of business structures.
Sole Proprietorship
A sole proprietorship is for individuals working independently, meaning you won’t be hiring employees and will have complete control of your business. If you’re just getting started with your cleaning business and don’t have a partner, this will likely be the most common business structure.
If you want to start a cleaning business from scratch with as little risk as possible, a sole proprietorship is the smartest business structure for you to start with. However, remember that your business assets and liabilities are not separated from your personal assets, so they can be at risk for repayment of a claim. No documents are required for a sole proprietorship.
Partnership
If you’re looking to start your business with a partner, this is likely the business structure for you. A partnership is one of the simpler structures for two or more people who want to own a business together. There are two different types of partnerships—Limited Partnership and Limited Liability Partnership. The main difference between the two is the amount of risk and liability.
- Limited Partnership (LP) – In an LP, one partner has “unlimited liability,” and the other partner(s) has limited liability, which also means they have limited control over the company. The partner with the unlimited liability will need to pay profits through personal tax returns, and the limited liability partner must pay off self-employment taxes.
- Limited Liability Partnership (LLP) – In an LLP, all partners are given limited liability coverage, which protects each partner from debts against the partnership. This also means one partner will not be responsible for the actions of another partner.
The documents you’ll need for this are a Certificate of Limited Partnership and Limited Partnership Agreement or Certificate of Limited Liability Partnership and Limited Liability Partnership Agreement.
Limited Liability Company
A Limited Liability Company (LLC) may be the most popular choice for starting a small business. Unlike a partnership or sole proprietorship, an LLC provides you protection from your personal assets. This means your personal assets, like your home, savings account, vehicle, etc., will not be at risk in the event that your business faces a lawsuit.
You should note that members of an LLC are considered self-employed and must pay taxes towards Medicare and Social Security. Each state varies in its rules and regulations for an LLC, so be sure to check with your local offices. For an LLC, you will need an Articles of Organization and Operating Agreement.
Corporation
The last business structure we will discuss is a corporation. What separates a corporation from the rest of the business structures is that it is a legal entity that stands separate from its owners. People choose a corporation because it provides the strongest legal protection to its owners from personal liability because it can make a profit, be held legally accountable on its own, and can be taxed.
Although a corporation has the most protection, it also comes at a cost. A corporation is the most expensive form of business and requires more operational procedures, records, and reporting to maintain a legal corporation. If you choose a corporation for your cleaning business, you’ll also be required to pay income taxes on your profits. To become a corporation, you will need one of the following documents: Articles of Incorporation or Bylaws or Resolutions.
There are several different types of corporations, so continue your research if this is the business structure you are most interested in for your cleaning business.
Choosing a Business Name
Choosing a business name is an essential step on how to register a cleaning business. When selecting a business name, you’ll want to make sure it is unique and memorable, and also relevant to the services you will be providing. For example, if you plan on starting a carpet cleaning business, consider including “carpet cleaning” in your business name.
You can be creative when coming up with your business name, but keep in mind many of your choices may already be taken by another company. You’ll also want to keep in mind that if you plan on creating a website, you’ll want to check domain name availability as well.
The Small Business Administration (SBA) shares four different ways you can register your business, and each serves a different purpose:
- Entity Name: protects you at a state level
- Trademark: protects you at a federal level
- Domain Name: protects your business website address
- DBA: doesn’t give legal protection, but may be legally required
Registering your business name will cost a small fee and will depend on where you live, but shouldn’t cost more than $100.
Obtaining Cleaning Business Insurance
You’ll want to consider another one of the essential cleaning business requirements—cleaning business insurance. Without insurance, you may have to pay hefty expenses out of your own pocket because, believe it or not, you face risks every day while on the job.
A professional carpet cleaner may accidentally stain a customer’s carpet and have to pay to replace it. Perhaps a customer trips on your window cleaning equipment and breaks their ankle. Someone may steal or damage your expensive cleaning equipment. These are just some of the common insurance claims in the cleaning industry, which is exactly why you’ll want an insurance policy in place.
Insurance Canopy offers cleaning business insurance available for as low as $26.67/month with general liability and professional liability coverage. Your policy is active for one year, and you can set it up to automatically renew, so you never go with a gap in coverage. Check out this complete guide to cleaning business insurance to learn more about how insurance coverage can protect your business.
5 Steps to Secure a Cleaning Business License
Securing your cleaning business license is crucial for establishing your business as legitimate and professional. It ensures legal compliance, building trust and credibility with clients. A license demonstrates that you’ve met the regulatory cleaning business requirements, offering peace of mind to potential customers.
Moreover, having a license can provide access to benefits like insurance coverage or exclusive government contracts. Securing your cleaning business license is essential for laying a solid foundation and earning the trust and confidence of your clients.Follow these detailed steps to navigate the process effectively:
1. Research Local Requirements
Begin by thoroughly researching the specific licensing requirements in your local area. Consult local government websites, regulatory bodies, or business chambers to gather accurate and up-to-date information.
2. Compile Necessary Documents
Gather all the cleaning business requirements before initiating the application process. This typically includes:
- Proof of business registration
- Employer Identification Number (EIN) if your business structure requires it
- Certificate of insurance, especially liability insurance
3. Complete Application Form
Obtain the official application form from the relevant licensing authority. Ensure you provide accurate and complete information, cross-referencing it with the list of required documents.
4. Submit Application and Pay Applicable Fees
Present your completed application along with the cleaning business requirements and necessary documents to the designated licensing authority. Confirm the submission method, whether it’s in person, online, or through mail, and adhere to any specific guidelines.
Be aware of any fees associated with the license application process. Promptly pay all required fees, keeping records of the transactions for your records.
5. Follow-up and Stay Informed
After submitting your application, stay informed about its status. Some licensing processes may take time, so periodically follow up with the licensing authority if necessary. Understand that the approval process takes time.
Once your cleaning business license is approved, you’re all set!
FAQs About Starting a Cleaning Business
Is Creating a Business Plan Necessary for My Cleaning Business?
While not obligatory, a well-crafted business plan serves as a valuable guide for operations, attracts potential investors, and outlines a clear path for growth. It proves beneficial for long-term success.
Is Insurance a Legal Requirement for Cleaning Businesses?
While requirements may vary based on location, many states mandate specific insurance types for businesses. Even if not legally mandated, opting for insurance is a prudent business decision to safeguard your assets and reputation.
What Insurance Coverages Are Essential for My Cleaning Business?
Essential insurance for cleaning businesses includes general liability insurance for accidents and property damage. Additionally, consider commercial property insurance, worker’s compensation, and business interruption insurance for comprehensive coverage.
Secure Success From Day One with Insurance Canopy
Now that you know how to register a cleaning business, you’re almost ready to start your journey! Let’s ensure your success together. Start strong, stay protected—launch your cleaning business with confidence today! Purchase your cleaning business insurance online today and get covered in 10 minutes.
