Cleaning homes, apartments, offices and other buildings can indeed be a chore, but one that can be incredibly rewarding, especially when you are paid well to do it.
The tips in this article apply to all cleaning companies and professionals, whether you provide janitorial services, commercial or residential cleaning, window cleaners, pressure/power washers, auto detailing, or any related business. These tips are just as important (if not more so) to a one or two-person operation as they are to a company with dozens of employees.
If you ever worked for someone else and received a W-2, you and your employer each shared a responsibility for your taxes. The employer withheld a portion from your paycheck, added an employer portion, and submitted them quarterly.
Most cleaning professionals are self-employed. That means you are responsible to report and pay both the employee and employer portions of your taxes on a regular basis. However, since you are in business, you can deduct the employer portion as a business expense.
Whether you use your personal vehicle for business use or have a separate vehicle just for business, you can deduct expenses related to your vehicle. If you use your own vehicle for both personal use and for business use, you will need to track the business expenses separately.
Parking and Tolls
You can deduct fees and tolls related to your cleaning business. If you have to pay for parking to clean an office or a home, it is a deductible expense.
Bus / Train / Other Public Transportation
If you have to travel by bus, train, taxi, or Uber/Lyft to go from job site to job site, you can deduct the cost of this transportation. Keep all receipts.
While vehicle and transportation expenses will be a significant portion of your expenses, they aren’t the only ones you can deduct:
Newspaper ads, flyers, Facebook ads, postcards, imprinted pens, direct mail letters, and other related ways to market your business. Even the costs of setting up a tent/booth at a local home show are deductible if you are advertising your business. The cost of having a logo designed for your company – that’s deductible also.
Most cleaners need to have general liability insurance, which is a valid business expense. Don’t claim vehicle insurance – that was already covered by the vehicle expenses.
If you have a separate phone line installed for your business, it is a valid expense. Most people today use their cell phones for business. If it is your personal phone, you will have to separate out the business use from personal use.
I have one client who uses her cell phone for business, and her customers communicate with her by text message. Each month, she prints out her cell phone record and highlights the texts from her customers. This is a great way to document actual business usage of her phone, and good records are needed to substantiate any type of deduction claimed on your tax returns.
You are in business, and you need health insurance. Your premiums may be deductible if your business makes a profit and you can’t enroll in an employer’s health plan (if you can be claimed on your spouse’s health plan, you can’t claim the deduction.)
Employer Portion of Social Security and Medicare
As noted earlier, you are responsible for both the employer and employee portions of employment taxes. The good news is you can deduct the employer portion as a business expense.
Ordinary and Necessary Expenses
Any cleaning company has a lot of ordinary and necessary expenses to keep the operation going. You can claim expenses for:
- Wages you pay to employees or helpers
- Solvents, rags, gloves, and other supplies
- Training and certifications you acquired
Keeping clear records is critical because it’s easy to forget small deductions over time, such as the fuel used to power your pressure washer. Keep receipts for all business-related costs to show the IRS in case you are audited.
You can deduct larger items, like a floor buffer or pressure washer, over time because it is considered a “capital purchase”. You can spread the deduction of a “capital purchase” over the number of years you expect the item to last. For example, if a floor buffer costing $1300 is expected to last five years:
- $1300 x 20% = $260. $260 is the deduction you can claim each year for five years.
These are just a few of the many business items a new cleaning business must keep in mind. If you need help in setting up your new business or want to discuss how you can improve your operations, please contact our office.