How to Start a Cleaning Business in Georgia : Cleaning companies provide a variety of services such as disinfection, vacuuming, dusting, cleaning up, floor mopping, and waxing. Recently, cleaning companies have specialized in CDC-recommended COVID-19 virus-killing treatments. This tutorial discusses low-cost ways for getting your cleaning service up and going on a budget. In seven steps, we will show you how to establish your own cleaning service.
How to Start a Cleaning Business in Georgia
The first step is to decide whether you want to start a residential or commercial cleaning business. Your selection here will have an impact on everything else you do, from funding to equipment to promotion.
Most cleaning businesses do not serve both residential and commercial clients. The specialization is due to the fact that each delivers distinct services and necessitates specialized equipment. You must also determine whether you want to create your own cleaning business from scratch or buy a cleaning franchise.
But let’s first talk about the specific cleaning business start up conditions applicable to Georgia. The next couple of sections will bring some clarity about the business registration, start up laws and tax registration applicable in Georgia.
Cleaning Business: Business Registration, Start-up Laws and Tax Registration applicable in Georgia
Georgia Cleaning Business Regulations
Here we discusses three important state company establishment requirements for self-employed sole proprietors and general partners that own and operate residential house cleaning enterprises. This article was researched using data from the Secretary of State, the Georgia Department of Revenue, and selected city and county government sources.
Be advised that the beginning criteria for sole proprietors and general partners in this state are constantly changing. Some regulations even differ from one county to the next. It is critical that you contact or visit your local county or city government to learn about the criteria for residential house cleaning firms and home-based businesses in your area. This material is not intended to be exhaustive or to serve as a substitute for professional legal or tax advice.
Registration of a Business Name
Sole proprietors and general partners who want to use a business name that does not include the owner(s) full names (for example, Janice Smith’s Cleaning Service or Martha Harris and Tom Graham’s Maid Service) must first determine whether the name is available in the county where the business is located. It is advisable to conduct a search for names that other firms in the state and county are using. Begin by conducting a statewide corporate name search.
Then, conduct an online search for names that are similar to the one you intend to use. For example, if you wish to use the term Crystal Clean Maid Service, simply Google “Crystal Clean Maid Service+Georgia” as well as “Crystal Clean Maid Service+your county” and “Crystal Clean Maid Service+your town or city.” Look past the first page of results. Go at least five pages down into the search results to discover if the name you want, or names similar to it, are already in use.
Sole proprietors and general partners must register their businesses’ Trade Names or DBA (“doing business as” names) with the registrar of the supreme court in the county where the business is located. The application for a Trade Name must be notarized. The original trade name document will be kept by the superior court clerk, so make sure to request two certified copies, one for the bank and one for your business records. Once registered, the trade name must be published in the newspaper that publishes the county sheriff’s advertisements for two weeks. In Georgia, look for a Superior Court Clerk.
In the state of Georgia, filing a Trade Name does not grant a company exclusive rights to use such name. The same Trade Name may be registered by other businesses in the state. Registered firms are expected to defend their trade names in court.
Registration of a Business License
The state of Georgia does not require sole proprietors or general partners to get a company license. Residential house cleaning services must apply for a business license at their city or county clerk’s office.
A general partnership is formed in Georgia when two or more owners enter into an oral or written agreement to start a business together. General partners are exempt from filing any documentation with the Secretary of State. General partners should file a Trade Name or DBA in the county where the business is located. It is critical for both or all partners to have a documented partnership agreement drawn up by a lawyer. Partnership agreements are not required to be registered with the state.
Even if they do not intend to hire staff, sole proprietors and general partners can register for an Employer Identification Number (EIN) from the IRS. Obtaining an EIN may make opening a bank account easier and lower your risk of identity theft. An EIN can be obtained online. Furthermore, for the house cleaning industry, certain business registration papers will require an NAICS business categorization number.
Registration for Business Taxes
Sole proprietors and general partners can use the Georgia Department of Revenue’s online portal, the Georgia Tax Center, to register their firms.
In Georgia, residential house cleaning services are not taxed. House cleaning services are exempt from collecting and remitting sales taxes to the state Department of Revenue.
Sole proprietors and general partners pay business income taxes to the state of Georgia on their personal state tax returns. In Georgia, sole proprietors and general partners must pay estimated self-employment income taxes (on Form 500 ES), identical to how self-employment taxes are paid to the federal government. Call the Georgia Department of Revenue at (877) 423-6711 for further information on anticipated tax requirements.
In Georgia, general partnerships must file an annual state tax return known as the Georgia Income Tax Return Form 700 if:
• The partnership must submit Form 1065, Federal Income Tax Return.
• The partnership owns property or conducts business in Georgia; • The partnership earns money in Georgia; and • The partnership has members who live in Georgia.
The Form 700 is a return of information. The report gives information to the state, but no taxes are expected to be paid. Find out if your partnership needs to file those returns by speaking with a CPA or a licensed tax preparer.
In Georgia, sole proprietors and general partners are exempt from the state’s net worth tax.
Georgia City Licenses
Alpharetta Business License: https://www.alpharetta.ga.us/business/licenses
Athens-Clarke County Business License: https://www.accgov.com/138/Business-Occupation-Tax
Atlanta Business License: https://www.atlantaga.gov/government/departments/finance/revenue/applying-for-a-business-license
Augusta- Richmond County Business License: https://www.augustaga.gov/203/Business-Tax-Certificate
Columbus Business License: https://www.columbusga.gov/finance/Revenue.htm#BusinessLicenses
Johns Creek Business License: https://www.johnscreekga.gov/businesses/businesslicenses
Macon-Bibb County Business License: http://www.maconbibb.us/businesslicense/
Marietta Business License: http://www.mariettaga.gov/318/Apply-for-a-Business-License
Roswell Business License: https://www.roswellgov.com/government/departments/community-development/business-registration
Sandy Springs Business License: http://www.sandyspringsga.gov/business/business-regulations-and-licensing/opening-a-new-business
Savannah Business License: http://www.savannahga.gov/785/Business-Tax
Warner Robins Business License: http://www.wrga.gov/index.aspx?NID=267
Cleaning Services for Homes vs. Cleaning Services for Businesses
A residential cleaning service specializes in homes, whereas a commercial cleaning service concentrates in businesses. However, things become more complicated. Residential cleaning businesses are often less expensive to start; but, commercial cleaning businesses can be very profitable due to add-on services such as floor waxing, window washing, and deep disinfecting.
You should also keep in mind that residential work is done during the day, whereas commercial work is done at night. Also, because the homeowner is more likely to scrutinize your work and be specific about how you execute certain jobs, such as arranging pillows and blankets, domestic cleaning is more detail focused. Commercial requires more square feet, so you’ll have to work faster and with fewer details than residential.
From a corporate standpoint, the residential market has less rivalry because there are more clients available. Overall, the decision between residential and commercial is influenced by your budget for equipment and lifestyle.
Should You Invest in a Cleaning Franchise?
Cleaning franchises are popular, with over 15 brands to select from. Cleaning franchises are appealing since they are often low-cost to start. Many also allow you to work from home or on a part-time basis. The Stratus Building Solutions franchise is available for as little as $3,500.
It is crucial to know that not all cleaning franchises are inexpensive. Some may necessitate a $200,000 investment. Vehicles, a location, and advanced equipment are frequently required for these types of franchises.
Many first-time business owners prefer to invest in a franchise because it provides business and industry training. The Maids, for example, provides seven weeks of business training, as well as two days of culture training at headquarters, six days of admin training, and four days of on-site training at your location. It’s a cleaning company boot camp!
Top cleaning franchises to research:
$4,000 – $73,000
$4,000 – $54,700
$6,000 – $37,000
$11,000 – $68,000
$58,000 – $222,000
$63,000 – $141,000
$90,000 – $125,000
$112,000 – $156,000
The next stage in launching a cleaning company is to write a one-page business plan. You should get your thoughts off your chest and onto paper. You should also investigate initial costs and anticipate how much money the cleaning company will generate and spend over the next two years (called financial projections).
A standard business plan is required if you are seeking big amounts of capital from a bank or investor. The majority of people will use business plan software to help them prepare their financial estimates. If you are unsure what an income statement, balance sheet, or break-even point is, you will most likely require software.
Make a 1-Page Business Plan
You should be able to finish the one-page business plan in within 15 minutes. It’s easy: Fill in the blanks with one to two sentences for each of the following questions:
Create a Budget
You must estimate the financials of your cleaning firm in addition to the business plan. You must calculate three figures: beginning costs (how much it will cost to get started), projected monthly expenses, and estimated monthly income.
The following are typical costs for a low-cost cleaning service:
Licenses and permits: To register as a limited liability company, you must pay between $100 and $500.
Insurance costs between $500 and $3,500 per year, depending on the number of employees. You should budget for a few hundred dollars per month.
Cleaning supplies and equipment range in price from $300 to $600, depending on the type of tool. High-quality vacuums can cost $200 to $300, as can numerous big all-purpose cleaning solutions for $10, a broom for $10, a mop for $20, and dusting supplies for $20.
Print and web advertising costs between $100 and $200.
Labor costs about $12 per hour each employee.
Once you’ve evaluated your expenses, you’ll need to figure out your rates and how much money you’ll make each month.
Determine Your Cleaning Fees
Your actual pricing will be determined by factors such as your location, competition, clientele, and interior condition. You can also make extra money by performing improvements like window cleanings, appliance cleanings, or wall washings.
Consider the following choices while deciding on your rates:
Hourly Rate: $30-$90 per hour The most prevalent billing method is the hourly rate. Establish an estimate for your hourly pricing by phoning competitors and asking how much service they would provide.
For a single-family home, the flat rate is $120 to $150. Estimate how long it will take to clean a certain house to arrive at this rate. Customers may choose this rate because they know exactly how much they will pay each month.
Rate per square foot: It is common practice in the commercial cleaning industry to charge by square foot. Expect to pay between $.05 and $.20 per square foot for an office facility.
Add your income and expenses together.
Now that you’ve determined your startup costs, monthly expenses, and potential income, the next step is to calculate your net income (income after expenses) and the time it will take to recover back your initial investment, commonly known as breakeven.
Assume your startup costs $4,000, for example. In terms of monthly spending, you decide to spend $1,000 every month, including your quarterly tax withdrawal (about 20 percent of income).
If you clean 20 homes per month at $120 a home, your monthly income is $2,400. After deducting the $1,000 in monthly expenses, you’ll have $1,400 in net income per month.
In this case, it will take you at least four months to break even and recoup your initial $4,000 investment. Keep in mind that you are unlikely to sell 20 homes in your first month of operation. It may take longer than four months to establish this clientele and recoup your investment.
You completed one of the most difficult tasks. You’ve calculated the statistics and determined how much money you’ll need to start and sustain your cleaning business for at least six months. You must now come up with the funds. But how do you do it?
To begin the business, you should ideally employ personal assets. You are determined to avoid debt at any costs. If you are beginning a cleaning service with trucks or a physical site, this may not be possible. Whatever form of business you start, keep in mind that you will still have to repay the debt if the firm fails.
Consider the following financial sources to start your cleaning business:
Own funds: Before you use any of your personal cash to start the firm, deposit the funds into a business bank account (discussed below).
Crowdfunding is a funding tool that many startup cleaning companies ignore. Before starting, use crowdfunding to raise funds from potential clients such as family and friends. Spend the money on equipment and then perform the prepaid services.
Credit cards: Keep in mind that we do not recommend going into significant debt to start your first business. A credit card, on the other hand, is an option if you choose to incur debt. If you have strong credit, you may be eligible for a 0% introductory APR for 12 to 18 months.
Personal loan: In general, we advise against taking out a personal loan to start a cleaning business. Because the loan is not secured by collateral, the interest rate is relatively high (over 12%).
Home equity loan: If you have equity in your home, you can use it to establish a business. Because this loan is secured by your home, the interest rate will be low.
ROBS (rollover for business startups): Only look into this if you intend to open a franchise. A ROBS is when you use your 401(k) funds to start a business.
Do not apply for a standard bank loan or SBA loan until you have at least a three-year history of income and spending, or until you have paid off equipment such as vehicles. Banks typically do not lend to startups.
If you are considering franchising, a bank loan or franchise financing may be a possibility. The franchise may have a partnership with a bank and can help you arrange financing. If the total failure rate is low, a bank may be willing to finance a franchise.
When you have enough money to start your cleaning firm, it’s time to get your legal documents in order. You’ll need to obtain an EIN, register the business as a legal entity, and open a business bank account.
Register the Legal Entity
Every proprietor of a cleaning business must register their company as a legal entity. Registering as a legal entity protects personal assets in the event of a lawsuit being filed against the firm. The cost of registering a business varies by jurisdiction and ranges from $40 to $500.
Tip: Do not attempt to save money by omitting this step! A cleaning business is risky since you use chemicals in your customers’ houses. If you, for example, damaged or shattered something in a customer’s home, they may sue you for compensation. Your personal assets are at risk of being used to cover damages if you do not have a legal business.
If you do not register your business as a legal entity, the default business structure is sole proprietorship. A sole proprietorship has no legal safeguards.
LLC (Limited Liability Company): The most likely legal entity for your cleaning firm will be an LLC. It is simple to put up and requires little care each year.
C corporation: The other legal entity is the C-corp. It is more difficult to set up than an LLC. Often, business owners engage an attorney to help them set up their company. The C-corp is often used by larger companies with several investors.
S corporation: Technically, an S-corp (small business corporation) is a tax categorization rather than a legal organization. The S-corp was founded by Congress to provide small businesses with the same tax benefits as corporations. You can use a bespoke calculator to see if converting your LLC to an S-corp will save you money on taxes.
Visit your state’s official business registration website to register your company. If you find the site difficult to browse, consider hiring an online legal firm to handle it for you. IncFile will register your company for free (plus any state fees).
Open a Business Bank Account
Get a business bank account before incurring any expenses or taking on any new clients. As a business owner, you must guarantee that your personal and corporate finances are kept separate.
Separate bank accounts aid in the tracking of business income and expenses for tax purposes. Furthermore, separating your finances makes the process go more easily if the IRS ever audits you.
If you already have a banking relationship, you can go to that bank and open a business checking account. Consider Novo if you’re looking for a bank. They are a small business-oriented internet bank. Novo has no minimum balance requirement for their checking account (larger banks frequently require $1,500).
A cleaning company is likely to require a license in the city where it operates. In terms of insurance, all cleaning businesses will require at the very least general liability insurance to cover any damages in a customer’s home. If you plan to hire people, you’ll also require workers’ compensation insurance.
A cleaning business license is unlikely to be required in your state. To find out if a license is required, go to your state’s business regulation website.
In your city, a General Business License is most certainly required. Most cities merely want to keep track of which firms are open. To obtain the General Business License, go to the official government website of your city.
For example, Atlanta requires all businesses, including at-home and online operations, to get a General Business License. The license costs $75 to get. A $500 punishment is levied for failure to get a license.
Insurance for General Liability
You should at the very least have general liability (GL) insurance. This policy will cover both personal injury and property damage. A modest cleaning company’s general liability insurance will cost roughly $300 per year.
Customers may request proof of general liability insurance before engaging your cleaning service. They want to know if they can sue you if your cleaning causes harm to their home or business.
Bond for Janitorial Services
You will endeavor to hire the best personnel for your cleaning company, but you cannot promise they will not steal on the job. In the event of a theft, a janitorial bond (surety bond) protects the homeowner’s possessions.
This is how it works: If an employee steals something from a customer’s home, the bond firm will pay to replace it. The bond company puts your firm on a payment plan so that you can repay them over time. This is preferable to filing a lawsuit or making a hefty payment to the customer.
A bond is required for new cleaning companies to ensure that a major expense from theft does not bankrupt the company. A janitorial bond will cost you approximately $200 each year.
Workers’ compensation insurance is required if you have employees. This insurance pays for medical expenditures, rehabilitation fees, and missed wages for employees who are injured on the job. Workers’ compensation will cost approximately $450 per employee per year.
You’re almost ready to take on your first client! However, you must first obtain the necessary equipment to complete the task. We’ve developed a list of low-cost goods to help you get your cleaning business off to a good start.
Here are some basic materials you’ll need:
Cleaning apron or uniform
Cloths made of microfiber
Gloves made of latex
Brush for the toilet
Brush for grout
a multipurpose cleaner
Cleaner for wood
Cleaner for tile and grout
Duster with an extendable handle
Vacuum \sBucket \sMop
If you’re starting off on a tight budget, don’t be overwhelmed by the variety of cleaning supplies—and brands. When you’re initially starting out, buy products that will get the job done. Spend no more money or incur more debt than is absolutely necessary.
Make a list of the housekeeping goods on your wish list. You may desire that high-end vacuum right now, but resist the urge to buy it.
In your company strategy, provide a list of your wish list items. Indicate the net income level at which you will make each purchase. You’ll have business milestones to look forward to!
Let’s speak about low-cost and no-cost ways to get your cleaning company noticed. Google My Business, social networking, and internet directories are all free forms of online marketing. Physical marketing materials will cost money, but you may use them imaginatively to leave a lasting impression on clients.
Physical marketing items such as business cards, flyers, and postcards are available. Because we’re talking about marketing on a budget, I’ll simply go through one low-cost marketing method that a cleaning company can apply.
Leave a card with a handwritten letter after each cleaning of a new home. Thank the homeowner for their business and urge them to forward your card on to anyone who is interested in having their home cleaned.
When advertising your business with marketing materials, give a modest present such as chocolates or something useful for the homeowner, such as a small hand sanitizer. This is a persuasion technique known as reciprocity. This customized marketing creates an emotional connection with the homeowner, increasing their likelihood of reciprocating a customer.
Consider the following free online marketing tactics to help you get your cleaning company noticed online:
Google My Business (GMB): Google My Business is a free listing service that Google offers to all businesses looking for local customers. When a potential consumer looks for what you sell (residential cleaning service), they will first read your GMB before visiting your website.
Website for Google My Business: Google delivers a free one-page website once you build your free GMB listing. This isn’t a “permanent” website, but it’s a great alternative for a low-budget cleaning company.
Profiles on social media: A wonderful piece of advice for social media success is to focus on one platform and master it. Choose your favorite social platform (for cleaning, either Facebook or Instagram) and build your following there.
Directories of local businesses: You should be listed on at least Yelp and Yellow Pages if you own a cleaning service. To find out what other directories you should be on, conduct a Google search for the precise service you offer and check what directories come up in the results.
Make Connections in Your Community
In-person networking is an effective and memorable technique to get your company in front of potential clients. Experiment with joining a few local small business organizations, such as the Chamber of Commerce or the Rotary Club. Volunteer for a leadership role to have a long-term impact on an organization.
Factual sentences referenced across top search results:
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- Keep in mind, it’s likely you won’t have 20 homes in your first month in business.
- If you have good credit, you can get a 0% introductory APR for 12 to 18 months.
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- 70% of all new businesses choose the Limited Liability Structure (LLC) to form a company entity.
- The forecasted industry growth would be between 3.5% and 4.5%, , which is below April 2021 levels in Cobb County . , which actually are expected to be about 3% to 4% in for the .5 millions Services cleaning Marietta (businessnameusa.com)
- Apply for an Employer Identification Number (EIN) Online | Internal Revenue Service
- Starting a Business | Internal Revenue Service