What Licenses are Needed To Start A Cleaning Business | 2 Major Licenses

Starting a cleaning business can be a lucrative venture, allowing individuals to provide valuable services to residential and commercial clients.

However, like any business, it’s essential to understand the legal requirements and obtain the necessary licenses before embarking on this entrepreneurial journey. This article will explore the question, “What licenses are needed to start a cleaning business?”

Research says a mid-size laundrette typically costs between ₦200,000 and ₦500,000 to open, and that’s without all the extras like pay-by-card machines, wash/dry/fold/press services, vending machines, and TV areas to keep your clients entertained.

Whether you’re thinking about starting your own cleaning business or are simply curious about the regulatory framework surrounding this industry, this comprehensive guide will provide valuable insights into the licenses and permits needed to ensure compliance and successfully operate your cleaning business.

Key Takeaways

• Each state and city has different regulations when it comes to cleaning businesses, so it’s crucial to research what licenses you need to operate. Start by checking with your local government’s small business department to determine the licenses required in your location.
• To ensure your cleaning business is protected, getting liability insurance is essential. This insurance will cover your business if something goes wrong during a cleaning job, such as damage to the client’s property. Most clients will require proof of liability insurance before working with your business.
• To be a legitimate business, you must have a tax ID number. This will enable you to pay taxes on your income and keep your business separate from your finances.
• Registering your business is necessary for paying taxes and conducting transactions legally.
• Licensing regulations for cleaning businesses can change frequently, so staying informed and updated on any changes is essential. Doing so will ensure you remain in compliance and avoid any legal problems.

What Is a Cleaning Business License?

A cleaning business license is a legal authorization required to operate a cleaning or janitorial service as a business entity. It is a formal document or permit issued by the relevant government authority or licensing agency that grants permission to provide cleaning services within a specific jurisdiction.

Obtaining a cleaning business license involves fulfilling specific local or state government requirements. These requirements may vary depending on the location, but they often include:

1. Business Registration

With the appropriate government agency, you are registering your cleaning business as a legal entity, such as a sole proprietorship, partnership, or limited liability company (LLC).

2. Application and Fees

You are required to submit an application form and the required fees to the licensing authority. The costs may vary based on the type of license and the jurisdiction.

3. Background Checks

Some jurisdictions may require background checks for the business owner or key personnel involved in the cleaning business, ensuring they have no criminal record or history of fraudulent activities.

4. Insurance and Bonding

Providing proof of liability insurance coverage and, in some cases, a surety bond to protect clients during accidents, damages, or theft while providing cleaning services.

5. Compliance with Regulations

Here the individual demonstrates compliance with health and safety regulations, including proper handling and disposal of cleaning chemicals, adherence to environmental regulations, and compliance with local zoning or building code requirements.

6. Occupational Licenses

In addition to a general business license, specific occupational licenses may be necessary for cleaning services, such as carpet cleaning, window washing, or hazardous material cleanup.

Read also: Top 10 Most Profitable Business to Start With 10k in Nigeria | Tips

Why You Need a License to Start a Cleaning Business

A license is often required to start a cleaning business for several reasons. These reasons vary depending on the specific jurisdiction and local regulations, but here are some common explanations:

1. Legal Compliance

Operating a business without the necessary licenses and permits can result in legal consequences. Governments require licenses to ensure that companies adhere to specific laws and regulations. You demonstrate your commitment to operating within the legal framework by obtaining a license.

2. Consumer Protection

Licensing helps protect consumers by ensuring that businesses meet specific standards of quality and professionalism. It helps establish trust and credibility in the marketplace. Licensing requirements may involve background checks, insurance, or certifications, which can enhance customer confidence in your cleaning services.

3. Health and Safety

Cleaning businesses often handle chemicals, equipment, and potentially hazardous materials. Licensing authorities may enforce specific guidelines and regulations to ensure that companies follow proper health and safety practices.

By obtaining a license, you demonstrate your knowledge of these requirements and commitment to maintaining a safe working environment.

4. Environmental Compliance

Cleaning businesses work with various cleaning products, some of which may have environmental impacts. Licensing can involve adherence to regulations regarding waste disposal, recycling, and eco-friendly cleaning practices. This helps protect the environment and ensures responsible business operations.

5. Fair Competition

Licensing can help level the playing field and promote fair competition among cleaning businesses. It sets a baseline standard that all companies must meet, preventing unqualified or unscrupulous operators from undercutting legitimate businesses.

Licensing requirements may include proof of qualifications, experience, or financial stability, ensuring that only qualified and reputable businesses enter the market.

Licenses Needed To Start A Cleaning Business

When you establish a cleaning business, you may require a vendor’s license and a doing business as (DBA) license. On a high level, business licenses allow your organization to conduct business in your state lawfully.

Here’s what you should know about each type of license:

1. DBA License 

A DBA cleaning business license refers to a permit obtained by a business operating under a “Doing Business As” (DBA) name in the cleaning industry. A DBA, also known as a fictitious name or assumed name, is used when a business operates under a name different from its legal name. A DBA cleaning business license is essential for legal compliance and professional credibility.

Acquiring a DBA cleaning business license may vary depending on the jurisdiction and local regulations. Generally, it involves the following steps:

Step 1: Research and Name Selection 

Before obtaining a DBA license, it is essential to research the availability of the desired business name. Check with the local government agencies or the Secretary of State’s office to ensure the chosen name is not already used.

Step 2: Registration

Once a suitable name is selected, the next step is registering a DBA with the appropriate local government authority. Depending on the jurisdiction, this may involve filing a fictitious name statement or an assumed name certificate. Typically, you will need to provide information such as the business name, address, and the owner’s legal name.

Step 3: Business Licenses and Permits

In addition to the DBA registration, cleaning businesses may be required to obtain specific licenses and permits to operate legally. These requirements can vary widely depending on the location.

Standard licenses and permits for cleaning businesses may include a general business license, a professional license (if applicable), and a home occupation permit if the company operates from a residential address.

Step 4: Compliance with Regulations

Cleaning businesses must comply with various regulations, such as safety and environmental standards. This may involve obtaining liability insurance, workers’ compensation insurance (if hiring employees), and adhering to health and safety guidelines. Researching and understanding the specific regulations that apply to cleaning businesses in your area is essential.

Step 5: Renewal and Compliance Maintenance

DBA licenses typically have an expiration date and require periodic renewal. It is essential to stay updated with the renewal process and comply with any ongoing requirements or changes in local regulations.

2. Vendor’s License 

A vendor’s license is often equivalent to a regular business license. It enables you to collect sales tax on purchased cleaning goods, which some states require. If you charge clients for cleaning goods in addition to the service, you will almost certainly be obligated to collect sales tax.

To obtain a vendor’s license for a cleaning business, you would generally need to follow these steps:

Step 1: Research Local Requirements

Start by researching the specific requirements for obtaining a vendor’s license in your local area. This information can typically be found on the website of your city or county government or by contacting the appropriate licensing authority.

Step 2: Business Registration

Before applying for a vendor’s license, you may need to register your cleaning business with the appropriate government agencies. This often involves choosing a business name and structure, obtaining an employer identification number (EIN) from the Internal Revenue Service (IRS), and registering with the appropriate state or local agencies.

Step 3: Application Process

Once you complete the business registration, you can apply for a vendor’s license. The application forms and requirements will vary depending on your location. Still, you will need to provide information about your business, such as its name, address, ownership structure, and the services you offer.

Step 4: Fees and Documentation

Along with your application, you may need to pay specific fees, such as an application fee or an annual licensing fee. Additionally, you might be required to submit supporting documentation, such as proof of insurance, background checks, or any necessary certifications or permits related to the cleaning industry.

Step 5: Review and Approval

Once you have submitted your application, it will be reviewed by the licensing authority. The authority will assess your application, verify the information provided, and ensure you meet all the requirements. You will typically receive your vendor’s license if your application is approved.

What Does It Mean To Be Bonded And Insured?

Bonded and insured refers to the the protection and coverage provided to individuals or businesses in specific industries. Here’s what each term typically means:

1. Bonded

Being bonded means that a person or business has obtained a surety bond. A surety bond is a legally binding agreement between three parties: the principal (the person or business getting the bond), the obligee (the party requiring the bond), and the surety (the company providing the bond).

A surety bond guarantees that the principal will fulfill their obligations or compensate for any losses incurred by the obligee due to the principal’s actions.

For example, you hire a contractor to renovate your home. By being bonded, the contractor has obtained a surety bond that protects you, the homeowner, in case the contractor fails to complete the work or causes damage to your property. If such a situation arises, you can file a claim against the bond, and the surety company will compensate you up to the bond’s coverage amount.

Bonded provides financial security and reassurance to clients, customers, or employers, as it demonstrates that a third-party guarantee backs the bonded individual or business.

2. Insured

Insured means a person or business has purchased an insurance policy to safeguard against potential risks and liabilities. Insurance protects in case of accidents, damages, losses, or other unfortunate events.

For example, an individual or business can have various types of insurance, such as liability insurance, property insurance, professional liability insurance, or vehicle insurance. Each policy covers specific risks and compensates or assists if certain events occur.

The policyholder pays regular premiums to the insurance company, and in return, the insurance company agrees to cover the costs outlined in the policy up to the policy’s limits.

Insurance helps mitigate financial risks and potential liabilities associated with accidents, injuries, property damage, lawsuits, or other unforeseen circumstances. It provides peace of mind and can protect the insured party from substantial financial burdens.

Bonds You Need For Your Cleaning Business

As you embark on this entrepreneurial journey, you must familiarize yourself with business operations’ various legal requirements and protections. One crucial aspect is obtaining the right bonds for your cleaning business. Bonds offer peace of mind to your customers and demonstrate your commitment to professionalism and accountability.

Here are some bonds you should consider for your cleaning business:

1. License and Permit Bonds

Before launching your cleaning business, you’ll need to obtain the necessary licenses and permits from your local government. Many municipalities require license and permit bonds to ensure companies comply with local laws and regulations.

These bonds guarantee that you will adhere to your industry’s rules and regulations. They also protect your clients by providing a financial remedy if you fail to meet your obligations.

2. Janitorial Services Bonds

Janitorial services bonds, fidelity bonds, or employee dishonesty bonds protect your clients from your employees’ theft or damage to their property. These bonds offer coverage in the event of theft, vandalism, or other dishonest acts committed by your staff while working on a client’s premises.

Having this bond in place shows your clients that you take their security seriously and are willing to take responsibility for any misconduct that may occur.

3. Business Services Bonds

Business services bonds, sometimes called dishonesty bonds or fidelity bonds, protect your clients from financial losses resulting from fraudulent acts committed by you or your employees.

This bond can cover theft, forgery, fraud, or other intentional wrongdoing. By obtaining a business services bond, you demonstrate your commitment to ethical business practices and reassure your clients that they are protected in the event of any financial wrongdoing.

Type Of Insurance You Require For Your Cleaning Business

Obtaining the proper insurance coverage is a critical component of protecting your cleaning business. Insurance provides financial security and peace of mind, ensuring you can focus on growing your business without worrying about unforeseen circumstances.

Here, we will discuss the types of insurance you need for your cleaning business.

4. General Liability Insurance

General liability insurance is the foundation of any business insurance plan. It protects your cleaning business against third-party claims for bodily injury or property damage. For instance, if a client slips and falls while you’re cleaning their premises and sustains injuries, general liability insurance can cover the medical expenses and any legal costs if they decide to sue your business.

General liability insurance also covers damage to the client’s property caused by your operations. Public liability insurance is a fundamental policy that provides broad coverage for various potential risks.

5. Property Insurance

Property insurance is crucial if you own or lease a physical location for your cleaning business. It protects your business property, such as your office, equipment, tools, supplies, and inventory, against damage or loss due to fire, theft, vandalism, or natural disasters.

Property insurance ensures that you can recover financially and quickly resume your cleaning operations in the event of an unexpected incident.

6. Workers’ Compensation Insurance

If you have employees working for your cleaning business, workers’ compensation insurance is typically required by law in most states. It covers medical expenses, disability benefits, and lost wages if an employee is injured or ill while performing work-related duties.

Workers’ compensation insurance is essential for protecting your employees and business from the financial burdens associated with workplace injuries.

7. Commercial Auto Insurance

You’ll need commercial auto insurance if your cleaning business uses vehicles to transport employees, equipment, or supplies. This policy covers any vehicles owned or operated by your company for accidents, property damage, bodily injury, and medical expenses.

Whether you have a single company car or a fleet of vehicles, commercial auto insurance ensures that you’re protected on the road.

8. Umbrella Insurance

Umbrella insurance provides additional liability coverage beyond the limits of your primary general liability or commercial auto insurance policies. It offers an extra layer of protection if you face a significant lawsuit that exceeds the limits of your prior policies.

Umbrella insurance benefits cleaning businesses that may face higher liability risks or work on larger commercial projects.

9. Business Interruption Insurance

Business interruption insurance is designed to protect your cleaning business in case of a significant disruption that causes a temporary closure. It covers lost income, ongoing expenses, and relocation costs while your business cannot operate due to a covered event, such as a fire or natural disaster.

Business interruption insurance helps you recover financially and keep your business running during challenging times.

How Much It Costs To Get a Cleaning Business License

The cost of obtaining a cleaning business license can vary depending on various factors, such as your location, the type of license required, and any additional permits or certifications needed. Additionally, licensing fees can change over time, so checking with the appropriate local government agencies or licensing authorities for the most up-to-date information is essential.

Typically, you need to contact your city or county clerk’s office, local business licensing department, or the appropriate regulatory agency in your area to inquire about the specific costs involved. They can provide detailed information regarding the application process, necessary fees, and any other requirements for your location.

Remember that apart from the license fee, you may also need to consider other expenses associated with starting a cleaning business, such as insurance coverage, equipment, supplies, marketing, and potentially hiring employees.

Conclusion 

In conclusion, starting a cleaning business requires obtaining the necessary licenses and permits to ensure legal compliance and establish credibility in the industry. These licenses vary depending on your location and the specific services you offer. Standard permits may include a business license, a trade license, and liability insurance.

By obtaining the appropriate licenses, you comply with legal requirements and establish a strong foundation for your cleaning business. Clients will have confidence in your professionalism and trust your ability to deliver quality services. Moreover, having the necessary licenses and permits sets you apart from competitors who may operate without legal authorization.

Frequently Asked Questions 

References

• What License is Needed to Start a Cleaning Business
• What license do I need to start a cleaning business?
• Laundromat startup costs – everything you need to know