If you’ve been thinking about launching a house cleaning business, now could be a great time to start. By 2024, 80% of two-income households are expected to use a professional house cleaning service according to the U.S. Department of Commerce.
Commercial cleaning has seen a lift, too. The average rate for deep cleaning offices and other commercial spaces has doubled since the beginning of the pandemic.
If these sound like trends you want to take advantage of, there are some things you should know before you begin.
Whether you plan to lighten the load of time-starved homeowners or overworked business owners, it’s important to find out what cleaning business licenses, permits and insurance you may need to operate your business legally.
If you don’t set up your business correctly from the get-go, you could face fines or other penalties.
Here are some things to consider when you’re getting started.
Are there occupational licenses for cleaning businesses?
In general, you don’t need an occupational license to start a cleaning business — with one exception. Some areas require pressure washers to have an occupational license, so check your local laws if you plan to offer these services.
Even though you probably won’t need a cleaning business license specific to the cleaning industry, you will typically need a business license, and you may need some other permits.
How do I get a license for a cleaning business?
Since license and permit requirements vary by location, it’s good to check with your city or town’s government agencies to make sure your company complies with local laws and regulations.
Here are some common licenses and permits that are often required no matter where your business is.
Almost all companies need a business license to operate legally in the United States. You can usually apply for one with the city or county where your business is located.
The cost of a business license varies based on where you live but typically ranges from about $50 to a few hundred dollars.
Employer Identification Number (EIN)
An EIN is a tax ID for your company. You can probably skip this step if you're running a solo shop and setting up your business as a sole proprietorship or single-member LLC (limited liability company).
But if you have employees or establish a multi-member LLC, partnership or corporation, you'll need one to file your tax returns. Without it, you may face stiff penalties from the IRS.
Getting an EIN is easy. You can apply online or complete form SS-4 and fax or mail it to the IRS.
DBA or fictitious business statement
If you plan to operate your business under an assumed name, you need to file a “doing business as” (DBA) form, also known as a fictitious business statement.
So, what exactly is an “assumed” name?
If you’re a sole proprietorship or partnership, it’s anything other than your legal name. If you set up your business as an LLC or corporation, it’s a name other than the one listed on the company’s articles of organization or articles of incorporation.
For example, let’s say your name is John Smith and you’re operating as a sole proprietor. But your business card and website list your company’s name as Smith’s Sparkling Cleaning Services. You’d need to file a DBA to operate under “Smith’s Sparkling Cleaning Services.”
If, instead of cleaning the interior of houses and commercial buildings, you opt to clean the exterior by starting a pressure washing business, you may need a wastewater permit in some states.
When using soap or other cleaning solutions when pressure washing, you can’t just let the water drain into the sewers and storm drains. You need to follow the EPA's guidelines for collecting and properly disposing of wastewater.
Check with the department of the environment in your state for more information.
Some cleaning solutions are flammable. If you plan on maintaining a stockpile of them for your business, you may need a permit to store them.
Local fire departments or the fire marshal's office typically issue fire permits, and they may need to inspect the building where you store the products before issuing a permit.
Some locales require permits no matter how many cleaning supplies you have. Others only require a permit if the volume of liquid you store exceeds a certain threshold.
If you need additional information about the types of licenses and permits you might need based on the kind of business you run and where you live, check with the small business administration.
Insurance vs. bonds
You’ve probably heard the term bonded and insured, but do you know the difference between insurance and bonds?
If you’re just getting started, you may not. Both protect your business from a financial loss, but they work differently.
An insurance policy is a contract between you and the insurer. You pay the insurance company a premium to purchase a policy. If you need to file a claim, the insurer pays you to cover the cost of the damage.
A bond is a contract between you, your client and the surety (that’s the company issuing the bond). You pay the surety to take out the bond. If something goes awry while you’re working for a client, the client files a claim with the surety, and the surety pays your client — not you.
To note: While NEXT offers an easy option to get business insurance within a few minutes online, it's important to note that we don't currently offer cleaning bonds.
What types of insurance does your cleaning business need?
Your state may require you to maintain certain types of insurance, while others may be optional, depending on where you live. But even if insurance isn't a legal requirement in your state, it can help protect you from lawsuits and financial losses.
Here are some of the most common types of insurance to consider when starting a cleaning business.
- General liability – General liability insurance covers claims for third-party injuries and property damage. And it can help pay for legal and court fees if someone files a lawsuit against you.
- Tools and equipment – This type of coverage is available as an add-on when purchasing general liability with NEXT. Tools and equipment coverage pays to repair or replace your gear if someone steals or damages it.
- Professional liability – Also known as E&O, professional liability insurance protects you if a client accuses you of not completing the work as agreed or doing something that causes harm to their business or property.
- Workers' compensation – If you plan to hire employees, most states require this type of coverage. Workers’ comp helps pay medical bills and lost wages when an employee experiences a work-related illness or injury.
- Commercial auto – You need a way to haul your cleaning supplies from one place to another. Your personal auto insurance policy won't cover you when you're driving for work, but a commercial auto insurance policy can.
Cleaning business bonds
Janitorial bonds aren’t usually a legal requirement for running a cleaning business, but some clients may only work with you if you’re bonded. In general, there are two main types of bonds your clients may want you to purchase.
A surety bond is a contract between at least three parties that protects against losses caused by one party not meeting contractual obligations.
For example, let’s say while cleaning the home of a regular client, one of your employees nicks a bracelet from the client’s jewelry box. Later that day, your client notices it’s missing.
The surety will pay the client for the cost of the bracelet.
License and permit bond
You typically only need this type of bond if you're working for a government agency. It guarantees that you will follow all local, state and federal laws and regulations when conducting business.
How NEXT helps cleaning businesses thrive
At NEXT, getting cleaning business insurance is fast, easy and affordable.
In about 10 minutes, you can complete an application, see your policy options, get a quote and purchase coverage. As soon as your purchase is complete, you'll get access to your digital certificate of insurance.
If you have questions at any time, our licensed, U.S.-based insurance professionals are ready to help.
Get your free quote today.