Starting a cleaning business for offices or homes has its own set of legal considerations. These include choosing the proper business entity, obtaining any required licenses or permits, dealing with health and safety, advertising, creating policy statements and contracts, getting insurance, and dealing with employees.
Choosing the Business Entity
While you could operate your cleaning business as a sole proprietorship or partnership, you should consider using a legal form that protects you from personal liability, such as a corporation or a limited liability company. Unlike many other types of businesses, such as certain professional or consulting businesses, your cleaning business will operate in other people’s offices or homes, and you likely will have employees engaged in a significant amount of physical activity. These facts increase the likelihood that an employee or other person could be injured, or that a customer’s property could be damaged by you or one of your workers—in which case you would want the business, not you personally, to be responsible for any liability.
Learn more about choosing a business structure.
Licenses and Permits
Even if you operate as a sole proprietor, you should consider obtaining a federal tax ID number, known formally as an Employer Identification Number (EIN). The process is easy and can be completed online at irs.gov. You should also check with your local government office and the federal Small Business Administration (SBA) to see if you need to obtain a business permit.
Health and Safety
Cleaning offices or homes may not be the most dangerous activity, but the people doing the cleaning may be working with cleaning supplies that are somewhat toxic, and when people are moving around a home or office accidents can happen. The Occupational Safety & Health Administration (OSHA) has a variety of regulations relating to, among other things, eye and face protection, hand and foot protection, toxic and hazardous substances, and ventilation. You should investigate both these and other federal and state regulations relating to janitorial services to ensure you are taking the required measures to protect your workers and yourself.
For more details on federal safety and health rules, check the cleaning industry section of the OSHA website.
While word-of-mouth is often the best way to get new customers, you will probably need to do at least some advertising if you are starting a new cleaning business. Regardless of how you choose to advertise (your own website, posting flyers in public spaces, Craigslist, the phone book), the best brief pieces of advice are (a) be accurate and (b) be very careful about describing special discounts or saying that something is “free.” If you offer something for free, but there are conditions, you must state what those conditions are; if you offer something at a discount, it must really be cheaper than your normal price.
Policy Statements and Contracts
Different customers may have different ideas about exactly what services your cleaning business will provide. It is in your own interest to make clear in advance—in writing—what you will and won’t do for your clients. If you have a website, you should post your policies there. Regardless of whether you have a website, you should provide a printed document containing the policy information to all of your clients before you reach an agreement and begin work.
For example, if you clean homes, you should indicate such things as:
- who will purchase the cleaning products
- how chemicals will be disposed of
- requirements for adequate heating, cooling, and ventilation
- requirements regarding unsupervised children or pets
- rules regarding operation of washing machines, dryers, and other electrical equipment
- rules regarding answering doors
- rules regarding sharing of clients’ personal information
Many of these same types of rules would also apply to cleaning offices and other commercial areas. Beyond a general set of rules, it is useful to work with each particular client to create a written plan for the specific services to be provided.
In order for a contract for services to be legally binding, (a) you and your client must agree on what the contract is for (there must be a “meeting of the minds”), and (b) there must be an exchange of value (also known as “consideration”—in the case of a cleaning business, usually the exchange of cleaning services for money). If the services involved will be completed in less than a year the contract need not be in writing; however, a written contract is always safer. You should consider drafting—or having a lawyer draft—a standard contract that you can modify for individual clients.
To learn more about policy statements, business contracts, and related matters, see Legal Guide for Starting & Running a Small Business, by Fred Steingold (Nolo)
There are particular risks associated with running a cleaning business, such as employees slipping and falling on the job, and inadvertent damage to, or destruction of, customers’ property. These are on top of more generic business risks to your own business property, such as through fire or theft.
Try to work with an insurance agent who has previous experience writing policies for cleaning companies. You will want excellent general liability coverage in case of damage or destruction to your clients’ property—or injury to clients themselves. For property coverage, try to make sure that all property of importance to your business, such as supplies and equipment, is fully covered. You will also want proper vehicle insurance to cover you and your employees travelling between work locations. And, finally, depending on local regulations and standards, you may want to investigate bonding for your business.
For more information, see Nolo's article on Obtaining Business Insurance.
Most cleaning businesses have employees and, in many cases, there can be relatively frequent turnover. You should inform yourself about basic employment law issues such as illegal discrimination, workers compensation, and how to handle the hiring process. With regard to hiring in particular, learn how to:
- create a useful job application that does not include illegal questions
- check references or make other preemployment inquiries—again without violating privacy laws or otherwise seeking illegal information, and
- ask interview questions that are both useful and legally permissible.
Keep in mind that there are some employment laws that may be particularly relevant to cleaning businesses, such as those related to minimum hourly wages, child labor, and required documentation of eligibility to work.
Also, if you are thinking of treating some people who do the actual cleaning work as independent contractors, proceed with extreme caution. The IRS has very particular rules about who can be classified as an independent contractor, and individuals obtaining cleaning jobs through your cleaning business may, at the very least, fall into a grey area. One specific document worth reviewing is IRS Form SS-8 (Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding), which lays out the many potential criteria used by the IRS to determine worker status; it is available at irs.gov.
A good resource for general employment issues is The Employer’s Legal Handbook, by Fred Steingold (Nolo). Also, many key employment laws are administered through the Department of Labor, and there are a variety of informative webpages within the Department of Labor website.