The cleaning industry has been booming in recent years, and even more in recent months because of the COVID-19 pandemic. This makes it a very tempting industry for many entrepreneurs to get into.
Cleaning is avoided at all costs by a lot of homeowners and businesses, which means there will always be a demand for cleaning services. That said, even if you love cleaning, there are some licenses and permits you will need to start your cleaning business. You may also need to purchase certain surety bonds, like janitorial bonds.
In this article, we will go over what these licenses, permits, and bonds are, while also explaining why they are necessary and how to acquire them.
What are Business Licenses, Permits, and Bonds?
If you're new to the business world, you may not be familiar with those 3 terms (especially business bonds).
We're here to help clear up these terms.
- License: It is a generic license granted by government agencies that allow business owners to operate their business in a specific geographic area.
- Permit: This one, on the other hand, is more specific in saying that you have met certain government regulations (restaurants often need these to serve food, for example).
- Bond: It exists as a last resort to be able to pay out customers who are wronged by your business (and are often required by state law). There are a lot of different business bonds out there, and we will discuss ones necessary for a cleaning business a little later.
Why Does My Business Need These Things?
You may be wondering why your business needs licenses, permits, or bonds. The most obvious answer is because the government requires you to get them to operate your business.
Business licenses exist to identify the business so that customers know who to sue if the need arises, and also allow the government to better keep track of the business' finances for tax purposes.
If you do not get the proper licenses, permits, and bonds, there are stiff penalties you will face. Your business location could be padlocked, and you could face financial penalties and liens with substantial interest. Your business will also have no legal protections if you do not have the necessary permits and licenses.
Service Contractor License or Cleaning Business License?
Depending on your state laws, you will likely need either a service contractor's license, a cleaning business license, or both:
Service Contractor's License
A contractor is simply someone hired to perform certain services or provide certain materials. Even if you clean a client's house every week, you are still a contractor as they are not employing you directly (they are merely hiring you to perform a service).
Many states require you to get a contracting license before you start your cleaning business. You can call your state's small business administration to get more info on how to file for and get your contractor's license.
Cleaning Business License
A cleaning business license is specific to those wanting to operate in the cleaning industry.
If your state requires you to get one of these, you can once again contact the small business administration to find out about any paperwork or applications you need to submit (this information may also be available on their website).
In some cases, you may not be able to get a cleaning business license until you buy a janitorial surety bond.
Read about: Business licenses vs. DBA
Cleaning Business Bonds
Janitorial bonds for a cleaning business act as a way to protect customers from any damage done to their property while you are cleaning it.
You can think of it as insurance that will pay customers whose property your employees or business damaged in one way or another. Many states require you to buy a janitorial bond before starting your cleaning business.
It is important to note that these surety bonds are NOT commercial insurance. Commercial insurance protects your company from the financial effects of things like worker's compensation, general liability, and professional liability.
A janitorial bond is all about protecting the consumer from any harm your business could potentially do. Insurance protects you and your business.
You apply for a surety bond in a similar way to how you would apply for insurance. You simply need to research and find the best surety bond company for you. Most of these companies will give you a quote on how much your bond will be after you have applied online.
How much the bond actually costs will depend on your coverage amount, the number of employees, and controls in place for your business operations.
Unless the janitorial bond is for a very large amount, your personal credit will usually not be considered when applying for the janitorial bond.
Other Permits and Licenses You May Need
Most definitely, the permits and licenses that we review are essential, but it is possible that you may need something more. And while we'd love to give you a nice little rundown of every license or permit you can possibly need, the reality is that requirements for a cleaning business are very different from state to state.
Thankfully, the government provides a lot of helpful guidance to these different regulations and requirements and even advises on starting small businesses in the right way. If you want to figure out what you need to start your cleaning business in your state, head over to USA.gov to find a list of state by state requirements.
Hopefully, this article gave you a better grasp of what you might need to start your very own cleaning business.
Even if you decide not to get into the cleaning industry, a strong grasp of licensing and bonds is necessary for almost any type of business.
If you want more helpful tips and tricks to running a small business, be sure to join our Camino Financial Newsletter. We always strive to fulfill our motto: "No Business Left Behind," and a big part of that is sharing with you the information you need.
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