What does a profit and loss statement show for a cleaning business?
A profit and loss statement (P&L, or income statement) shows what you earned, what it cost, and what was left, over one period, usually a month or a year. For a cleaning business it answers three questions: are the prices right (gross margin), is the overhead under control (overhead ratio), and is the business paying you (net profit after your own pay).
It is one of three statements. The SBA’s guide to managing your finances describes the balance sheet as a snapshot of what you own and owe, and notes that businesses usually keep their books on either the accrual method, which records a sale when it is made, or the cash method, which records it when the money arrives. The P&L is the one you will read most, because it changes every month and it is what Schedule C is built from.
A cleaning company P&L has a simple shape:
- Revenue: what clients paid for cleaning, by service type if you can.
- Direct costs (cost of services): cleaner wages, payroll taxes and workers’ compensation on those wages, contract labor, and supplies. These rise and fall with the number of cleans.
- Gross profit: revenue minus direct costs. As a percentage, your gross margin.
- Overhead (operating expenses): everything that does not change with one more clean: vehicles, insurance, software, marketing, office, your own pay for running the business.
- Net profit: what is left before income tax.
What stays out of a P&L matters as much: money you take out as an owner’s draw (that is profit leaving, not an expense), the principal part of a loan payment, and the purchase of equipment that lasts more than a year (that is depreciated over time, as explained later). Put those in and your profit disappears on paper while the business is actually fine, or the other way around.
Which accounts should a cleaning company P&L use?
Use account names that match the expense lines on Schedule C (Form 1040), the form sole proprietors use to report business profit, so your monthly P&L and your tax return use the same buckets. If your business is an LLC taxed as a partnership or S corporation, the forms differ but the categories are the same; ask your tax preparer.
The table below is a chart of accounts for a residential or small commercial cleaning company, with the matching line from the Schedule C instructions. Direct costs are shown first so your P&L can show a gross margin.
| Account | What goes in it | Schedule C line |
|---|---|---|
| Revenue: standard cleans, deep cleans, move-outs, add-ons, commercial contracts | Everything clients paid for cleaning, before card fees | Line 1, gross receipts |
| Cleaner wages | Hourly pay, overtime, commissions, bonuses to employees | Line 26, wages |
| Payroll taxes | Employer share of Social Security and Medicare, federal and state unemployment | Line 23, taxes and licenses |
| Workers’ compensation | The premium, usually a percentage of payroll | Line 15, insurance (other than health) |
| Contract labor | Payments to cleaners who are genuinely independent contractors | Line 11, contract labor |
| Cleaning supplies | Chemicals, cloths, mop heads, vacuum bags, gloves, consumables used on jobs | Line 22, supplies |
| Vehicle | Standard mileage rate, or actual fuel, repairs and insurance for business use | Line 9, car and truck expenses |
| Liability insurance and bond | General liability, janitorial bond, commercial auto | Line 15, insurance |
| Software and subscriptions | Scheduling, accounting, phone plans, website hosting | Line 18 (office expense) or line 27a (other), per your preparer |
| Advertising | Ads, lead fees, flyers, signs, website design | Line 8, advertising |
| Card processing fees | What Stripe or your processor keeps from each payment | Line 10, commissions and fees |
| Legal and professional | Accountant, bookkeeper, attorney | Line 17, legal and professional services |
| Rent or storage | Office, storage unit, equipment rental | Lines 20a and 20b, rent or lease |
| Repairs and maintenance | Vacuum and equipment repairs that do not extend the item’s life | Line 21, repairs and maintenance |
| Utilities and phone | Business share of phone and internet | Line 25, utilities |
| Licenses and permits | Business license, state registrations | Line 23, taxes and licenses |
| Depreciation | The yearly share of equipment and vehicles you bought outright | Line 13, depreciation and section 179 |
| Uniforms, training, bank fees, other | Anything small that does not fit above | Line 27a, other expenses |
Fifteen to twenty accounts is enough. More than that and you spend your Sunday deciding whether paper towels are supplies or office expense. The Schedule C page links the current form, and the instructions explain each line; for example, line 17 covers fees charged by accountants and attorneys that are ordinary and necessary expenses of running the business, and line 22 covers materials and supplies to the extent you actually used them during the year.
A sample monthly P&L for a three-cleaner cleaning company
Here is a full hypothetical month for a residential company with three full-time cleaners and an owner who runs the office. Revenue is $19,350, gross profit $6,772 (35%), overhead $4,450 (23%) and net profit $2,322 (12%). Every number is an example built on $150 cleans that take 3.5 cleaner-hours at $20 an hour, the assumptions in our house cleaning pricing guide.
| Brightside Cleaning Co. (example), month ending October 31 | Amount | % of revenue |
|---|---|---|
| Revenue | ||
| Standard recurring cleans (109 at $150) | $16,350 | 84.5% |
| Deep cleans and first visits (8 at $255) | $2,040 | 10.5% |
| Move-out cleans (2 at $300) | $600 | 3.1% |
| Add-ons (ovens, fridges, windows) | $360 | 1.9% |
| Total revenue | $19,350 | 100.0% |
| Direct costs | ||
| Cleaner wages (451.5 hours at $20) | $9,030 | 46.7% |
| Payroll taxes (employer share) | $880 | 4.5% |
| Workers’ compensation | $650 | 3.4% |
| Paid drive time between jobs (29 hours at $20, plus payroll costs) | $728 | 3.8% |
| Cleaning supplies | $1,290 | 6.7% |
| Total direct costs | $12,578 | 65.0% |
| Gross profit | $6,772 | 35.0% |
| Overhead | ||
| Owner’s pay for office work | $2,000 | 10.3% |
| Vehicle (about 850 business miles at 76 cents, plus parking) | $650 | 3.4% |
| Liability insurance, bond and commercial auto | $350 | 1.8% |
| Software, phone and website | $250 | 1.3% |
| Advertising and lead fees | $450 | 2.3% |
| Card processing fees | $580 | 3.0% |
| Accounting, licenses, uniforms, equipment replacement | $170 | 0.9% |
| Total overhead | $4,450 | 23.0% |
| Net profit before income tax | $2,322 | 12.0% |
Notes on the lines. The revenue mix is 129 visits: the cleaner-hours and supplies are modeled on 129 standard cleans for simplicity, so a real month with eight deep cleans would show a few more hours. Payroll taxes, workers’ compensation and drive time together are about 25% of wages, the loading our pricing model assumes; your workers’ compensation rate depends on your state and insurer. The vehicle line uses the IRS standard mileage rate of 76 cents a mile for driving from July 1, 2026 (IRS) as a stand-in for actual costs. Card fees are about 3% of revenue because most clients pay by card.
A P&L for a solo owner looks the same with two differences: there are no wages (the owner’s labor is the profit), so gross margin looks huge, and the owner’s pay line is replaced by a draw that sits outside the statement. Both make the solo P&L flattering. Add a line for what you would pay someone to do your cleaning hours and the picture gets honest fast.
How do you read a cleaning business P&L?
Read four ratios before anything else: direct labor as a share of revenue, gross margin, overhead as a share of revenue, and net margin. In the sample month they are 58%, 35%, 23% and 12%. A P&L that only shows dollar amounts hides problems; the percentages show them in a glance.
| Ratio | Sample month | Planning range we use (residential) | If it drifts |
|---|---|---|---|
| Direct labor (wages, payroll costs, drive time) ÷ revenue | 58% | 50% to 60% | Above 65%: jobs run long or prices are low. Re-time jobs, re-quote outliers, raise prices. |
| Gross margin | 35% | 35% to 45% | Below 30%: there is no room for overhead. Fix pricing before anything else. |
| Overhead ÷ revenue | 23% | 15% to 25% | Above 30%: marketing or admin is heavy for the revenue; grow revenue into it or cut. |
| Net margin (after owner pay) | 12% | 10% to 20% | Below 5%: one bad month puts you in the red. Price increase and cancellation policy first. |
| Supplies ÷ revenue | 6.7% | 4% to 8% | Above 10%: waste, theft, or buying retail. Switch to concentrates and measured dilution. |
| Card fees ÷ revenue | 3.0% | 2.5% to 3.5% | Mostly fixed; offer bank transfer to commercial clients if it matters. |
Compare each month with the same month last year, not only with last month: residential cleaning dips in December and January and peaks in spring and before the holidays. A revenue line that is 10% below last October is a signal; one that is 10% below September may just be the season. For what drives each ratio and how to move it, see the cleaning business profit calculator, which rebuilds this P&L from your own prices and client count.
These ratios only show up once a month. Our guide to KPIs for a cleaning business adds the weekly numbers behind them, such as revenue per labor hour, close rate and client churn.
How do you build a monthly budget from the P&L?
A cleaning business budget is next year’s P&L written in advance: a revenue target for each month, each cost line set as a percentage of revenue or a fixed amount, and a column for actuals next to it. Build it once a year, update the revenue line each quarter, and compare budget to actual at every monthly close.
A budget template (hypothetical numbers for a three-cleaner company)
| Line | How to set it | Budget | Actual | Difference |
|---|---|---|---|---|
| Revenue | Recurring clients × visits × price, plus a conservative one-time estimate | $19,350 | $18,600 | − $750 |
| Cleaner wages | 46.7% of revenue (hours × rate) | $9,030 | $9,240 | + $210 (jobs ran long) |
| Payroll costs and drive time | 25% of wages | $2,258 | $2,310 | + $52 |
| Supplies | $10 per clean | $1,290 | $1,180 | − $110 |
| Owner’s pay | Fixed | $2,000 | $2,000 | $0 |
| Vehicle | Miles × rate | $650 | $690 | + $40 |
| Insurance | Fixed, from the policy | $350 | $350 | $0 |
| Software, phone, website | Fixed | $250 | $250 | $0 |
| Advertising | Fixed cap, raised only when the calendar has gaps | $450 | $600 | + $150 |
| Card fees | 3% of revenue | $580 | $558 | − $22 |
| Other | Fixed allowance | $170 | $140 | − $30 |
| Net profit | $2,322 | $1,282 | − $1,040 |
The actual column tells a story in a minute: revenue came in $750 short (a few cancellations), wages went over because jobs ran long on the cleans that did happen, and marketing was raised to fill the gaps. Net profit nearly halved. Without the budget column, a $1,282 month looks fine. With it, you know exactly which three conversations to have.
Rules that keep a budget useful:
- Budget revenue from the calendar, not from hope. Count recurring visits already scheduled, then add one-time work at last year’s level.
- Set variable lines as percentages (wages, payroll costs, supplies, card fees) so a slow month does not look like overspending.
- Set fixed lines as amounts and review them twice a year.
- Budget seasonally. Give January 85% of October’s revenue if that is what last year did.
- Add a savings line. Treat the cushion (two months of wages and overhead) as a budget item until it is funded.
If you are writing a plan for a lender, the same budget extended to twelve months is the financial section; the cleaning business plan template has the layout, and the cleaning business plan guide shows a worked example.
How do you handle card payouts, tips, sales tax, loans and equipment?
Record revenue on the date of the clean, not the date Stripe pays out; keep tips and sales tax out of revenue because they are not yours; record loan interest as an expense but not the principal; and spread equipment that lasts more than a year over its life. These five items cause most of the errors in small-company P&Ls.
- Cash or accrual. Most small cleaning businesses use the cash method, which the IRS describes in Publication 334 alongside the accrual method; under cash accounting, income counts when you receive it and expenses when you pay them. If you take cards after each visit, the two methods differ by only a few days. If you invoice commercial clients on 30 day terms, accrual shows the month’s work truthfully and cash shows the month’s collections; pick one and stay consistent, and ask your tax preparer which to use on your return.
- Card payouts. A $150 clean paid by card arrives as a smaller payout a few days later. Book $150 of revenue and the processor’s fee as an expense, not the net amount as revenue, or your revenue and your card fee line will both be wrong.
- Tips. Tips belong to the cleaners and must be passed on. Record them as a liability (money you hold for someone else) and clear it through payroll. If they land in revenue, your margin looks better than it is and your payroll looks worse.
- Sales tax. Where your state taxes cleaning services, the tax you collect is also a liability, not revenue. The Schedule C instructions say that sales taxes imposed on the buyer that you were required to collect and pay over to the state are neither included in gross receipts nor a deductible expense, while sales taxes imposed on you as the seller go on line 23. Check your state’s rules.
- Loans. Interest is an expense (Schedule C lines 16a and 16b). The principal you repay is not; it reduces what you owe on the balance sheet.
- Equipment and vehicles. A $600 commercial vacuum or a $30,000 van lasts years, so its cost is normally spread through depreciation rather than expensed in the month you buy it. The IRS explains in Publication 946 that for tax years beginning in 2025 you can elect to deduct up to $2,500,000 of qualifying equipment at once under section 179, and that a 100% special depreciation allowance applies to certain property acquired and placed in service after January 19, 2025. On your monthly P&L, a steady depreciation line gives a truer picture than a $30,000 hit in March; your tax preparer decides the tax treatment.
- Owner’s draw. Money you take for yourself is not an expense. Either pay yourself a salary that appears in overhead (so profit is measured after your work) or take draws from profit and keep a memo line below net profit so you can see both.
This is general information, not tax or accounting advice; the treatment of several of these items depends on your state and how your business is taxed.
How do you produce the P&L every month?
Reconcile the bank and card accounts, confirm revenue against your scheduling software, post payroll, check that every transaction has a category, and read the four ratios. Done weekly in small pieces, the monthly close takes about an hour; done once a year, it takes a weekend and the numbers are too old to act on.
- Reconcile. Every bank and card account matches its statement. Unmatched items are usually a missed cash payment or a personal purchase on the business card.
- Tie revenue to visits. Total the month’s completed visits in your scheduling software and compare with deposits plus unpaid balances. A gap is an unbilled visit or an uncollected one.
- Post payroll and its costs. Wages, employer taxes and workers’ compensation, from your payroll service, into the direct cost accounts.
- Log mileage for the month, split at July 1 in a year when the IRS rate changes.
- Categorize everything. Nothing left in “uncategorized”.
- Run the P&L with percentages and compare with the budget and with the same month last year.
- Write three lines: what went right, what went wrong, what changes next month.
The tools matter less than the habit. Any mainstream bookkeeping app produces a P&L once the bank feed is categorized; our guide to accounting software for cleaning businesses compares them and the deductions to track. Broombook covers step two: it shows completed visits, what each was charged and which are unpaid, and exports hours, tips and commission per cleaner as a CSV for payroll, but it does not keep your books or sync with accounting software. The features page lists exactly what it does.
What mistakes make a cleaning company P&L misleading?
The usual ones are leaving out the owner’s labor, mixing personal and business spending, counting tips as revenue, forgetting mileage, and treating a loan or a van purchase as a monthly expense. Each one moves the profit line by thousands over a year.
- No owner labor line. A solo owner with $75,000 of revenue and $15,000 of costs does not have an 80% margin; they have a job. Add what you would pay someone to do your hours.
- Personal spending on the business card. Groceries in “supplies” and a family road trip in “vehicle” make the P&L useless and the tax return risky. Separate accounts, always.
- Tips in revenue. Inflates revenue and gross margin; see above.
- No mileage. A three-cleaner company drives hundreds of business miles a month (about 850 in the sample month above). At 76 cents a mile that is a real cost the P&L must show, whether you pay cleaners mileage or run company vehicles.
- Lumpy equipment. A van expensed in one month creates a fake loss, then eleven months of fake profit.
- Revenue by payout date. Stripe payouts arriving in early November for late-October cleans shift revenue across months and make October look slow.
- Ignoring unpaid visits. On the cash method they are invisible until paid. Keep a list outside the P&L and chase it weekly.
Get these right and the P&L becomes the one page that tells you whether to raise prices, hire, or hold. For what to do with the margin once you can see it, our guide to growing a cleaning business covers the numbers at each stage.