Starting a cleaning business involves navigating through various legal requirements, including obtaining the necessary licenses.
Understanding the licenses needed to start a cleaning business is essential, as this ensures compliance with local, state, and federal regulations, and builds trust with clients.
While specific requirements can vary depending on your location, there are common licenses and steps involved across most jurisdictions that are crucial for your business’s compliance and success.
Our Verdict
- Research your local and state regulations thoroughly.
- Obtain all necessary licenses and permits before starting operations.
- Invest in appropriate insurance coverage to protect your business.
- Keep accurate records of your business transactions and compliance documents.
- Consider consulting legal and financial professionals for guidance.
- Don't overlook the importance of obtaining required permits and licenses.
- Don't neglect to renew licenses and permits on time to avoid penalties.
- Don't operate without adequate insurance coverage, risking financial losses.
- Don't ignore safety regulations and protocols for handling hazardous materials.
- Don't hesitate to seek professional advice if you're unsure about compliance or business operations.
Before You Get Any Licenses…
Make sure you have a good sense of what you need. Your business could specialize in various areas. From starting a duct cleaning business to establishing your carpet and upholstery cleaning business, these licenses are applicable for every cleaning venture you start.
The first step is researching the specific licenses needed to start a cleaning business in your area.
This involves contacting your state’s department of revenue or department of taxation and possibly being redirected to your county clerk or city licensing board.
Essential Licenses and Registrations
Business License
A foundational requirement, the business license legitimizes your operations across almost all jurisdictions. This license is necessary for establishing a legal cleaning enterprise.
A general business license is required to register your business with the state government. Business licenses can be divided into two categories:
- Local Business Licenses: To obtain this license, start with your city or county clerk’s office or website. They can provide information on local business licenses you’ll need to operate your cleaning business. Sometimes this information is also available on the official city or county website under a section typically titled “Business Licenses” or “Permits and Licenses.”
- State Business Licenses: Check out the requirements for state business licenses found on your state’s official government website. Look for a section dedicated to business or commercial licensing. The Department of Commerce or Business Regulation is usually responsible for this area.
Doing Business As (DBA)
If you’re operating under a trade name different from your legal business name, a DBA registration is required.
This helps in branding and marketing your cleaning business. The requirement for a DBA varies by state.
Some states, like California, Florida, Georgia, Illinois, Minnesota, Nebraska, and Pennsylvania, mandate DBA applicants to publicly announce their new business names in local newspapers.
Other states, including Alabama, Arizona, Florida, Nebraska, and Ohio, do not require formal paperwork for a DBA but still have specific guidelines to ensure no other local businesses operate under the same name within the same industry.
It’s crucial to check both state and local requirements for a DBA, as the rules and renewal schedules can differ.
DBA is registered at the same time as when you’re registering your business.
Employer Identification Number (EIN)
An EIN is necessary for tax purposes if you plan to hire employees. It is a unique number that identifies your business for tax reporting to the Internal Revenue Service (IRS).
To obtain an Employer Identification Number (EIN), start by visiting the IRS website and navigating to the EIN application section.
Here, fill out the online form with details about your business, including its structure and ownership.
The IRS typically issues the EIN instantly or within a short time frame after submission. This number is crucial for various business operations, including tax reporting, employee payroll, and opening business bank accounts.
Specialized Cleaning Licenses and Permits
Depending on the services offered (e.g., industrial, healthcare facility cleaning) and local regulations, you may need additional permits related to health and safety standards, environmental considerations for chemical disposal, or specialized services like handling hazardous materials.
Specialized cleaning licenses and permits cover areas like carpet cleaning, window cleaning, and the disposal of hazardous materials.
The process to obtain these permits varies by locality and typically involves applying through local or state regulatory agencies.
Requirements may include passing examinations, proving competency in handling specialized equipment or chemicals, and demonstrating adherence to environmental standards.
You can usually start this process by contacting your city or state’s business licensing department or environmental agency for specific guidelines, necessary forms, and submission processes.
For specific types of cleaning, like medical facility cleaning or industrial cleaning, you might need further certifications, such as Health department permits, OSHA compliance training, or Hazardous Waste Operations and Emergency Response (HAZWOPER) Certification.
Vendor’s License
A vendor’s license allows businesses to legally sell goods or services. It is typically required for collecting sales tax on transactions. The process to apply for this license will depend on your state, as it involves your state or local government’s department of taxation or revenue.
To obtain one, you generally need to provide your business details and pay a fee.
Specific requirements can depend on the type of products or services sold and your business location. For detailed guidance, it’s best to consult your local or state government website.
Insurance and Bonding
Having the proper licenses not only increases your business’s credibility but also positions it for growth by meeting licensing standards.
Getting insurance and bonds is another foundational step that is more than a legal formality; it’s about setting your business up for long-term success and credibility, showcasing your adherence to professional and legal standards.
Bonds
Before getting into why you need to obtain these, it is important to understand bonds within the framework of licenses needed to start a cleaning business.
In the context of the licenses needed to start a cleaning business, a surety bond reassures clients that they will be compensated for any losses resulting from theft by an employee or failure to fulfill a contract.
When applying for a bond, you’ll need to provide basic business information, such as the number of employees, the amount of bond coverage you’re seeking, and your business contact information. Usually, a credit check is not required for janitorial service bonds.
To obtain a bond, look for reputable bond providers or surety companies that offer janitorial service bonds. You can start your search online or consult with local insurance agencies. Be prepared to provide any required information to get a quote.
Types of Bonds
- Fidelity or Janitorial Bonds: Also known as employee dishonesty bonds, these protect your customers from losses due to theft or negligence by your employees. In the case of cleaning business, these fidelity bonds are called Janitorial bonds. These bonds offer reassurance to clients that they will be compensated if any theft occurs while janitorial services are being provided.
- Surety Bonds: They are a form of financial protection that involves three parties: the cleaning business (the principal), the client (the obligee), and the bond provider (the surety). These are often required in client contracts rather than by law. They protect clients in cases where an employee of the cleaning business steals from them or fails to provide promised services without covering basic property damage.
Insurance
Insurance is another crucial aspect of running a cleaning business, offering protection against various risks that the business might face.
For information on purchasing business insurance and surety bonds, it’s a good idea to consult with a professional insurance agent or company that specializes in business policies. They can provide detailed information on what’s required and recommended for your specific type of cleaning business.
You can also shop for insurance through online companies or work with agents. Make sure you compare quotes to find the best fit for your business.
Types of Insurance
- General Liability Insurance: Essential for all businesses, this covers damages or injuries caused by your company to third parties. It’s a fundamental policy that all cleaning businesses should have.
- Workers’ Compensation Insurance: Required in most states as soon as you hire your first employee. It covers medical bills for employees who get injured or sick on the job.
- Commercial Property Insurance: Important for businesses that provide employees with equipment or have a physical office space. It covers repairs or replacements for your business assets after events like fire, theft, or natural disasters.
- Commercial Auto Insurance: Necessary for businesses that own vehicles used for business purposes. It covers legal costs, medical expenses, and property damage in case of accidents.
- Hired and Non-Owned Auto Insurance (HNOA): Covers personal, leased, or rented vehicles used for work, protecting against the cost of damages from accidents.
- Business Interruption Insurance: Compensates for lost revenue and other expenses when your business cannot operate due to covered reasons like fire or severe weather.
Integrating Bonds and Insurance with the Licenses Needed to Start a Cleaning Business
For entrepreneurs in the cleaning industry, understanding the integration of bonds and insurance with the licenses needed to start a cleaning business is fundamental.
These elements collectively ensure the legal and financial stability of the business. They not only comply with regulatory requirements but also build a foundation of trust with clients and protect the business’s assets and reputation.
Securing the right bonds and insurance coverage is as essential as obtaining the necessary licenses and forming a comprehensive approach to business preparation and risk management.
Cost of Getting Licenses, Insurance, and Bonds
The cost to register your business can be less than $300, but this varies by state and business structure. Costs for obtaining a DBA are usually less than $100, but vary depending on location.
You can get an EIN for free. For other permits and licenses, such as cleaning permits, vendor’s license, etc., costs may vary depending on factors such as the type of cleaning services you offer and state regulations.
The cost of a janitorial service bond varies based on the coverage amount and the number of employees. As an example, prices can range from $125 for $10,000 of coverage for 1-5 employees, to higher premiums for larger coverage amounts or more employees. These costs are indicative and may vary between bond providers.
Similarly, the cost of a fidelity bond largely depends on the coverage amount, which can vary widely from as low as $5,000 to as much as $10 million. Generally, a fidelity bond might cost about 1% of the total bond amount annually.
For example, a $2,000 bond could cost $20, while a $10,000 bond might cost $100 per year. Factors like your industry, credit history, and the amount of sensitive information handled can also affect the price.
Other costs, such as OSHA training for HAZWOPER certification, might add to your budget.
You can expect $1,000 to $5,000 on various licenses, permits, certifications, insurance, and bonds.
How to Obtain Insurance and Licenses Needed for a Cleaning Business?
- Research Local and State Requirements: Licensing requirements can significantly vary. It’s crucial to check with your local government offices or the Small Business Administration for specific requirements in your area.
- Gather the Necessary Documentation: Be prepared with personal identification, detailed business plans, proof of business address, and financial records for your license application.
- Contact Relevant Authorities: Start with your state’s department of revenue or taxation, which may direct you to the county clerk or city licensing board for a cleaning or janitorial license.
- Apply for Insurance and Bonds: Once you’ve secured your business license, look into obtaining the necessary insurance policies and consider getting bonded, especially if your services require entering client premises.
- Renewal and Maintenance of Licenses Needed to Start a Cleaning Business: Once you have obtained the licenses needed to start a cleaning business, it’s crucial to stay informed about renewal periods and any changes in regulations. This ensures your business remains compliant and continues to operate legally. Renewal is simpler and much cheaper than obtaining a new license.
FAQs
- How much does it cost to register a cleaning business?
Costs vary by location and business structure but generally range from $50 to $300.
- What permits are needed for a cleaning business?
Permits depend on services offered and location; common ones include health and environmental permits.
- Do I need insurance for my cleaning business?
Yes, insurance protects against liability and property damage; general liability and workers’ comp are common.
- How much does insurance cost for a cleaning business?
Costs vary based on coverage needs, but general liability insurance can start around $500 annually.
- How do I obtain a vendor’s license for my cleaning business?
Contact your state or local government’s department of taxation or revenue for application details.
