Starting a cleaning business goes far beyond hiring an employee or two and stocking up on supplies. On the front end, it requires looking into, and obtaining, proper licensure, permits and insurance — all of which should be done before getting your first client, notes Ronnie Kendrick, founder of Company Clean in Denver.
That being said, your location, along with other factors, such as your type of cleaning business, will ultimately determine what’s required. “Licensing requirements and procedures vary state by state, so it’s important to research the specifics in your area,” Kendrick notes.
From what licenses are needed to start a cleaning business to how to obtain them, here’s what cleaning entrepreneurs need to know before they get going.
What licenses are needed to start a cleaning business?
Business license and EIN
When starting a cleaning business, you’ll first need to obtain a local business license and register for an Employer Identification Number (EIN) if you plan to hire employees, explains Kendrick. While specific licenses vary by state, a general local business license is always required, as it registers your business with your particular state.
Doing Business As (DBA) license
If you give your business a name (i.e. you’re not simply operating under your first and last name), “you’ll also need a ‘Doing Business As’ license in your state,” adds Kendrick.
“I recommend consulting with a business attorney to establish proper financial, business and tax systems for smooth operations. It can be difficult to afford this as a small business, but it’s invaluable to do the exercise.”
—Ronnie Kendrick, founder of Company Clean
Local tax license
If you’re required to charge sales tax for your services, you’ll also be responsible for obtaining a sales tax permit, notes John Selkow, director of integration for Office Pride Commercial Cleaning Services. Depending on your location, the name for this may vary. For instance, in New York, the license is called Certificate of Authority.
Business-specific licenses and permits
There also may be differences depending on whether you’re starting a commercial or residential cleaning business. The tasks you perform with the former, along with the materials you’ll be handling, can affect the permits and licenses required. “For instance,” Selkow points out, “certain licenses may be required if you are cleaning specialized areas such as healthcare or food processing plants.” Again, though, these regulations will vary by location.
“I recommend consulting with a business attorney to establish proper financial, business and tax systems for smooth operations,” Kendrick says. “It can be difficult to afford this as a small business, but it’s invaluable to do the exercise.”
How to obtain licenses for your cleaning company
According to Kendrick, those interested in starting a cleaning company “can get the appropriate licenses by applying through your secretary of state, local city or county clerk’s office or their official websites.” That said, a bit of research will likely be required to find out where exactly you need to go.
“The EIN is easy to obtain and can be done through the IRS website and will only take a couple minutes. Other licenses can take anywhere from a few days to a few weeks.”
—John Selkow, director of integration, Office Pride Commercial Cleaning
For instance, the city of Newark, New Jersey, breaks down licensure requirements by industry. For example, what’s required to open a pet store is different from what’s involved, permit-wise, in opening an arcade.
In most cases, once you know what you need, you can file for licenses via online portal, Selkow notes, but some may require in-person applications. “The EIN is easy to obtain and can be done through the IRS website and will only take a couple minutes,” he adds. “Other licenses can take anywhere from a few days to a few weeks.”
For folks looking to streamline the process, Kendrick recommends using a service like Incfile (now Bizee) or hiring a local attorney.
Can you start operating before obtaining proper licensure?
Both Kendrick and Selkow advise against it. ”You can be fined or lose your business by running afoul of local regulations,” Kendrick says. “Take the time to do it right.”
Do cleaning businesses need insurance?
Yes, and this is perhaps one of the bigger differences of operating a residential versus commercial cleaning company. “Commercial clients will usually require higher minimum levels of insurance, where residential cleaning clients will require the company to not only be insured, but also bonded to protect both the owner and client from theft,” explains Selkow.
”You can be fined or lose your business by running afoul of local regulations. Take the time to do it right.”
—Ronnie Kendrick
Other forms of insurance Kendrick recommends getting are workman’s compensation insurance, if you have employees, as well as a separate liability policy. “This protects you and the business in case a home is damaged, or a customer hurts themselves by slipping on a wet floor, for instance,” he explains.
The bottom line
Obtaining the proper licenses is crucial before starting to operate your business, as it not only protects you, but in many cases, your clients, as well.
However, cleaning licenses are not federally-regulated, so some research on your end will be in order. “Every state is unique, so it is important to check with your local government to make sure you are compliant,” Selkow says, adding that is “best practice to obtain all licenses and insurance before any work is performed.”