Starting a cleaning business for offices or homes in the State of California 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.
To learn about other California business opportunities, see Nolo's section on Starting a Business in California.
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.
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.
Various other licenses and permits will also be necessary; these may include:
To find out more about what licenses and permits you may need, you should check out the easy-to-use CalGOLD website, which is maintained by the Governor's Office of Business and Economic Development; it will show you most of the various licenses and permits that may be necessary for any of nearly 150 business types, including Janitorial Cleaning Maintenance Services.
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. If you will have employees, California requires that you prepare an Injury and Illness Prevention Plan; more information is available through the Division of Occupational Health and Safety (DOSH) of California's Department of Industrial Relations.
The federal Occupational Safety & Health Administration (OSHA) also has a variety of regulations relating to, among other things, eye and face protection, hand and foot protection, toxic and hazardous substances, and ventilation. 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, with a new cleaning business you will probably need to do at least some advertising. 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. Prohibitions on false advertising are incorporated into California law as part of the State's Business and Professions Code.
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:
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:
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.
The State of California also has its own rules and guidelines regarding independent contractors; information is available on webpages of the Department of Industrial Relations and the California Tax Service Center.
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.