rafeeg

How to Start a Cleaning Business in 6 Steps

Starting a cleaning business offers huge profit potential with minimal startup costs. To start, you just need a business plan, proper licenses and insurance, some cleaning supplies, and a solid marketing strategy. A savvy entrepreneur who doesn’t mind doing dirty work can start a profitable cleaning company for $1,000 to $2,000.

When starting your own cleaning business, it’s important to separate your personal and business finances. Chase Business Checking offers one of the most competitive fee structures, unlimited cash deposits, and you can open an account with a minimum of $25. First-time Chase Total Business Checking account holders are being offered up to a $300 bonus for opening a new account.

1. Create a Budget

You will need to spend a little to start your cleaning business. But, it is possible to start a cleaning business for less than $1,000. Your budget will mostly consist of licenses and permits, basic cleaning products, and advertising. In the beginning, you may work by yourself. But if you plan on hiring a cleaning staff, be sure to budget for labor.

Here’s a breakdown of the estimated costs for starting a cleaning business:

• Licenses and permits: $30 to $60 if you register as a sole proprietor or $100 to $500 if you register as a limited liability company.
• Insurance: $500 to $3,500 annually depending on number of employees. Expect to pay a few hundred dollars per month.
• Cleaning equipment and products: $300 to $600 depending on the type of tools. High-quality vacuums can cost $200 to $300, $10 for several large all-purpose cleaning solutions, $10 for a broom, $20 for a mop, and $20 for dusting supplies.
• Advertising: $100 to $200 for print and online marketing.
• Labor: Roughly $11.63 per employee, per hour.

With these numbers, you can launch an operational cleaning business for as low as $930. While it’s possible to start your business for less than $1,000, it’s always a good idea to have more funds available. With any new business, it can take time before you start seeing a profit, so having funds to cover a few months’ worth of expenses or any incidentals that pop up is a smart business move.

2. Choose the Right Business Structure

Prior to launching your cleaning business, you need to have it registered. Registering your business is necessary for opening a business bank account, applying for loans, and hiring employees. Registering your business involves choosing a business or legal structure, a name, and planning for taxes.

Best Business Structures for Cleaning Companies

The two most popular business structures for small businesses are sole proprietorships and limited liability companies (LLCs). Many bootstrapped startups register their business as a sole proprietor. There’s not a lot of paperwork involved under this business structure. Plus, as the owner and sole proprietor, you have absolute control over your business.

The biggest disadvantage to a sole proprietorship is that there is no distinction between your business and personal assets. That means you are held liable if your business goes under due to debt, and your personal assets could be at risk.

Other cleaning businesses register as a limited liability company (LLC), which gives owners some protection from personal liability. So, if your cleaning company were to go out of business due to debt, your personal assets are more likely to be protected. However, the tax structure of an LLC is a little more complicated than a sole proprietorship, and LLCs have higher startup costs.

If you opt to form an LLC, we recommend working with a solution like Incfile to save money while registering your business. With Incfile, you can register your business for just $49. Visit Incfile to learn more.

How Taxes Work for Cleaning Businesses

Your taxes will depend on the type of business you register. If you registered as a sole proprietor, you won’t have to submit a separate tax report for your company’s profits and losses. You will just have to file a form for individual income tax where your personal and business incomes are considered the same. With a sole proprietorship, you are subject to regular personal tax rates, instead of corporate tax rates.

Taxes under an LLC are much more complicated. Your company can be taxed as a sole proprietor, partnership, S corporation (S-corp), or C corporation (C-corp) depending on certain variables and what makes the most sense for your individual business. There are certain pros and cons for each tax treatment. You can find more information in our small business owner’s guide to LLC taxes.

Choosing a Business Name

Naming your business is a crucial step that requires careful consideration. Ideally, your business name will be around for a long time, so make sure it is something you truly love. The name of your company can reflect your name, the services your business provides, or company ideals or promises.

To help you out here, we created the ultimate business name generator. You just have to enter your services, area, and your name as the founder. The tool generates multiple suggestions which you can use as a starting point to come up with your own unique idea. Once you have the final list, head to the United States Patent and Trademark Office to check which names are still available.

Franchise Option

Franchises are another popular and profitable option to consider when starting a cleaning business. With a franchise, you have the benefit of name recognition, regional or national marketing efforts, and established procedures and guidelines already in place. One disadvantage of starting a franchise is that you give up a lot of the creative freedom that comes with owning a small business, and have less of a say when it comes to operational procedures.