Who Needs a Cleaning Business License?
Most states don�t require cleaning businesses to be licensed at the state level, though some municipalities may have their own license or permit requirements for janitorial services and other cleaning businesses. Be sure to check with local authorities in the areas where you will be doing business to see what requirements you might need to meet to operate legally within that jurisdiction.
What Are the Licensing Requirements?
Among the states that do require cleaning businesses to be licensed, the specific licensing requirements and procedures vary. Typically, these will involve:
-������ Registering the business with state and local tax authorities
-������ Completing a license/permit application, often online
-������ Providing proof of worker�s compensation and any other required insurance
In some jurisdictions, a license/permit surety bond may be required.
Why is a Surety Bond Required?
When a surety bond is required, the purpose is to secure the business owner�s guarantee that the business will operate in complete compliance with applicable regulations. Additionally, the bond ensures that funds are available to compensate any party suffering a financial loss as a result of the company�s unlawful or unethical business conduct.
Many people who own cleaning businesses also voluntarily purchase a janitorial service bond. This type of surety bond guarantees reimbursement of clients in the event of theft committed by an employee of the cleaning business. Liability insurance does not cover employee theft claims.
While janitorial service bonds are never required by a state or local government, some clients, especially commercial clients like banks and retailers, won�t hire a cleaning business that has not purchased one.
A janitorial service bond also gives a cleaning business a competitive advantage and effective marketing tool. Even clients who don�t require a bond are more likely to hire a cleaning service that has purchased one voluntarily. The bond is evidence of a cleaning company�s strong commitment to client satisfaction.
How Does It Work?
In most cases, a client can only file a claim against a janitorial services bond after the employee accused of stealing from the client has been convicted of the crime. When a claim is filed, the surety bond company typically will go ahead and pay a claim, even though the cleaning company�s owner is legally responsible for paying all claims and must subsequently reimburse the surety company.
In essence, the surety bond functions like a line of credit for the business owner who purchased it. The surety�s advance payment gives the business owner some time to gather the necessary funds while ensuring timely payment of the claim.
Licensing and Bonding Process for Cleaning Businesses
Surety bonds are sold for an annual premium, which is a small percentage of the total bond amount. The business owner decides how much that will be at the time a janitorial services bond is purchased voluntarily. However, if the bond is being purchased because a large client requires it, the client will establish what the amount of the bond must be.
The premium rate is determined by the surety bond company based largely on the personal credit score of the cleaning company�s owner. The higher the owner�s credit score, the lower the premium rate�potentially as low as 1% for someone with excellent credit.
Get Bonded Today
Give us a call today to discuss your bonding needs for your cleaning service, or request a quote online.