Starting a cleaning business in California can be simplified into several different steps. First, California requires most companies within the state to obtain a license or permit to operate. Therefore, in California for an entrepreneur seeking to begin a new cleaning business, a business license would be required.
Forming an Official Business Entity
California has simplified obtaining a business license by allowing new entrepreneurs to form a business online through the California Secretary of State online portal. For any individual or group seeking to do business in California, using the state’s online portal to register a business is the simplest way to get started quickly.
The first step in registering a business in California is determining the business structure. As a new business, many options are available, but each option provides its own risks and benefits. These risks and benefits sometimes apply to the individual or the company.
When deciding between business structures, the possibilities detailed by the California Secretary of State are:
- Sole Proprietorship
- Limited Liability Company/Partnership
- Limited/General Partnership
Although these may seem daunting, each provides easy-to-understand risks and benefits. As a new cleaning business, you may want to look into the benefits of each. Still, a new cleaning business will generally be established as a sole proprietorship or limited liability company.
Establishing a Sole Proprietorship Cleaning Business in California
According to the California Secretary of State, a sole proprietorship is one way an individual may elect to establish a business structure. When a business is designated as a sole proprietorship, the state website indicates that this type of set-up is meant to allow one individual to own and operate a business. For example, suppose you plan to be a residential cleaner. In that case, you will likely set your business up initially as a sole proprietorship.
There are many pros and cons to establishing a new cleaning business in California as a sole proprietorship. First and foremost, California does not require that formation documents be filed if a company acts as a sole proprietorship. For example, suppose an individual has exclusive and total control and receives all the profits. In that case, the state does not require articles of formation as required with a limited liability company.
Establishing a Limited Liability Cleaning Company in California
In addition to establishing the cleaning company as a sole proprietorship, an entrepreneur has several other options to consider when starting their new cleaning business. A limited liability company (LLC) is another option. An LLC can be formed and managed by one or more members.
What makes an LLC most lucrative to many new entrepreneurs is that it provides similar protection to what a corporation would receive. What this means is that the business and the individual are considered two separate entities. It may seem counterintuitive to separate a business and the owner. Still, by keeping the two different, an individual can protect their own personal assets from being liquidated in the event liability from the business arises.
Articles of Organization are filed to register the business when choosing an LLC. This process can be completed entirely online by visiting bizfileOnline.sos.ca.gov. Once on the site, visitors will be prompted with four rectangular boxes. The option “Register a Business” will be clickable in the first rectangular box.
If desiring simply to establish an LLC, any user can click on “Articles of Organization – CA LLC” to begin registering their cleaning business as an LLC. Upon clicking the link, the option “FILE ONLINE” will appear. Following this prompt will allow the user to sign up for an account and begin the online process.
Before beginning the online process, users will need to agree to the terms & conditions of the California Secretary of State’s website. Although California does not require anything other than a Doing Business As (DBA) (statement when the business name does not contain the owner’s surname), the business must have a DBA statement to know the company’s owner.
For example, a cleaning business may be known as John Smith Residential Cleaning Services. In an instant such as that, a DBA statement would be unnecessary. This is because the owner’s surname (AKA last name) is within the business name. However, a DBA statement would be required if the business were called Jeff’s Jiffy Cleaning Services.
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Strengthening a New Cleaning Business with Insurance
Although California has minimal requirements for a business to lawfully operate, there are many ways in which companies can set themselves apart from others. Simple steps can help customers be aware that the company is a legitimately operated business and that it values its client’s money, time, and intangible resources.
To set itself apart, a cleaning business in California can get Licensed and Bonded. Since no specific license is required to run a licensed cleaning business, becoming bonded adds an extra layer of security clients will greatly appreciate. This is because cleaning services require the individual, whether the owner or an independent contractor, to go into homes and provide residential or commercial cleaning services to retail and office spaces.
Becoming bonded means that the cleaning service owners are protected against liability claims that may arise if an employee engages in criminal or negligent acts while on a client’s property. On average, a bond in California can range from $135 to $700. Although that may seem like a steep cost, keep in mind that that provides the client with a range of coverage from $9,500 to $95,000.
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Overall, establishing a new cleaning business in California can be a relatively simple process. If the owner includes their surname in the business title, then it’s likely that a DBA may not even be required. Entrepreneurs may have the opportunity to clearly state their surname and business name, and that be sufficient to be considered a business. Additionally, a business can strengthen its reputation by becoming bonded and adding an extra layer of protection for the client.
To help you get started in the cleaning industry, check out these helpful blog posts:
- How to start a cleaning business
- How profitable is a cleaning business
- Cleaning business marketing ideas
- Best cleaning business names
- Cleaning business insurance
- Cleaning business license
- Finding employees for cleaning business
- How much should I pay my cleaning employees
- How much should i charge for cleaning a house
- Cleaning business software