Choose an Entity Type
Fortunately, incorporation can be done online within all 50 states. While it is easy to incorporate, there are three distinct entity types that you need to consider, especially if you plan on hiring employees. These entities will include LLC, S-Corp, and C-Corp.
An LLC provides the best tax benefits for business owners and is an ideal choice for most businesses. If you plan on having shareholders or you want to be void of any debt or legal liabilities, a C-Corp will act as a separate legal entity and provide these benefits. An S-Corp provides more in the way of tax benefits to business owners, but this entity type does not act as a separate legal entity.
Each of these entity types has its own benefits and should be researched or discussed with a lawyer or CPA before starting a cleaning business in your respective state.
Prepare Contracts and Agreements
One of the biggest mistakes new business owners make is not using appropriate service contracts when working with new customers. As a business owner, a contract will provide you with a legal safeguard against clients that do not want to pay fees after work has been completed, or clients that have unrealistic expectations of the work that is to be done.
There are a few documents that, as a cleaning business, you should have ready to be printed and signed at all times. These documents include:
- Janitorial Contracts: A general contract that includes payment terms, the services that will be rendered, and the term length.
- Housekeeping Contracts: This agreement will state the description of the work that will be done, payment terms, and any other pertinent agreements both the employer and housekeeper agree to.
Obtain Proper Insurance
One of the first steps in learning how to start a cleaning business is understanding that you are legally liable for any damages you may cause. As an owner, you will need to obtain the proper insurance so that if a lawsuit is filed against you, adequate insurance will cover legal fees and settlements.
When starting a cleaning business, you will need to procure the following insurance:
- Liability insurance
- Worker's compensation insurance (where applicable)
- Auto insurance for all business-owned vehicles
These basic insurance types are a necessity and will allow you to operate your business with less risk involved.
Once you have incorporated, gathered your contracts, and obtained your insurance and proper licenses, you can start cleaning those homes and hopefully growing your business along the way.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.
