Starting a house cleaning business might seem like a relatively low-risk venture. However, the minute you accept payments for services, step over the threshold of a client’s home, send other people in to work on your behalf, establish business credit lines, and so forth, you take on a surprising amount of personal liability and risk. Here are just a few key risk-related things to consider when starting a house cleaning business.
Legal structure. How you structure your business legally determines what happens if, for example, you get sued by a client or employee, make an innocent tax-filing error, fail to pay your bills, or many other unforeseeable catastrophes. It also determines your responsibilities for things such as registering your business with state and federal authorities, paying taxes, carrying insurance, and so forth. While a sole proprietorship might be the easiest and most common way to get started in a house cleaning business, it also carries the greatest amount of personal risk and liability and won’t be the best choice if you ever intend to employ others.
Taxes. Properly structuring and registering your house cleaning business puts you on the radar of local, state, and federal tax authorities. Which means you need meticulous accounting and record keeping practices both to calculate what you owe and in case you are ever audited. Some states – but not all – will require you to pay sales taxes on house cleaning services. You will also need to accurately calculate and pay income and withholding taxes both for yourself and your employees plus any self-employment taxes you might owe, which make up for monies you don’t otherwise pay into Social Security, Medicare/Medicaid systems, and so forth. Depending on what state you are in, you might also be hit up for payments into state unemployment insurance programs, especially if/when you lay off employees and they file for benefits.
Insurance, bonding, and criminal background checks. What happens when you are merrily dusting or sweeping and accidentally break a client’s precious family heirloom? Or using the wrong cleaning solution or tool causes irreparable damage to a priceless antique? What happens when a cleaning employee you find falls off a stepping stool and ruptures a disc or stands accused of stealing a client’s property? And what happens if you get sick or injured and can’t work for an extended period of time? These are all rare, but real situations that arise when you run a house cleaning business. Proper types and levels of insurance – liability, workman’s compensation, disability – as well as bonding and criminal background checks for employees can protect you. Once again, however, the steps you take in these areas need to be carefully matched with the legal structure you adopt for your house cleaning business.
Home security. When you clean people’s houses for a living, you’ll often be doing it when they aren’t at house, which means they are trusting you, plus anyone you hire, with keys or security codes for access. You need best-practices and processes to ensure those keys and access codes are kept secure at all time plus insurance protection should your security measures fail. Having well-documented best practices in place for protecting client’s home security can make those liability insurance payments much more affordable.
Financial fraud. If accepting anything other than cash from clients for services rendered, you become a custodian of sensitive personal financial data such as account numbers on checks, credit card numbers and their security codes. Get ready for a dizzying array of information, advice, and fees for certifying that your house cleaning business is PCI compliant. And, understand that, even when you are PCI compliant, should client data be stolen from you and used fraudulently, you can still be held liable. You are exactly the type of business that cyber-thieves target and, as cybercrime continues to spread, credit-card companies are becoming less willing to assume all the risk themselves.
All small-business ownership involves some risk and liability; the risk is perfectly manageable as long as you’re well informed and stay up to date on changing rules and regulations. Cleaning franchise companies take a huge portion of this knowledge-management burden off your shoulders. So, get in touch with MaidPro today to learn how our unique system of personalized business coaching will help you to easily navigate the complex maze of personal risk and liability associated with starting a house cleaning business.