Should your cleaning business be an LLC? Costs, taxes and setup

Should my cleaning business be an LLC?

Form an LLC when you have something to protect and the yearly cost is small next to your income: you hire cleaners, take commercial or property-manager contracts, or have savings or a home you want kept apart from the business. If you are a solo cleaner testing the idea, a sole proprietorship with good insurance is a fine start, and you can convert later.

An LLC (limited liability company) is a business you register with your state. It becomes a separate legal person that signs contracts, holds a bank account and owes its own debts. A sole proprietorship is just you doing business, with no state filing unless you use a trade name. The cleaning work is the same either way. What changes is paperwork, yearly fees, and what is at stake if something goes wrong.

Good reasons to form one now

• You are hiring your first employee or bringing on subcontractors.
• You are signing contracts with offices, property managers or builders, who may ask for one.
• You own a home or have savings you want separated from business debts.
• You have a business partner. An LLC with an operating agreement settles who owns what.

Good reasons to wait

• You are still testing whether people will pay your prices.
• Your state charges a lot every year (California’s $800 annual tax is the big one).
• You have not bought liability insurance yet. Insurance comes first: it is what actually pays a client’s claim.

This guide is general information, not legal or tax advice. Rules and fees change, so confirm with your state and an accountant before you file. For the wider registration picture (DBAs, local licenses, sales tax), see what licenses a cleaning business needs.

Sole proprietorship vs LLC vs S corp: what actually changes?

Sole proprietorship versus LLC is mostly a question of liability and paperwork, because the IRS taxes a one-owner LLC the same way by default. The S corp is not a separate kind of company you form; it is a tax election an LLC (or corporation) can make, which changes how you pay yourself and adds payroll.

A partnership is the fourth option: two people cleaning together without forming anything are usually a general partnership, with both owners personally exposed. If you start with a partner, an LLC is usually the better container.

What does an LLC protect, and what doesn’t it?

An LLC protects your personal assets from the business’s own debts and from claims against the business. It does not protect you from your own negligence, from debts you personally guarantee, or from a claim bigger than what the business owns. That is why cleaners still need insurance.

What it usually covers

• A supplier or landlord the business owes money to generally can’t come after your house or personal savings.
• If an employee damages a client’s floor and the client sues, the claim is against the LLC, not you personally, in most cases.

What it does not cover

• Your own mistakes. If you personally break a client’s heirloom or leave a bucket on a stair, you can be sued personally as well as the LLC.
• Personal guarantees. Banks, van leases and credit cards often ask the owner to guarantee the debt, which puts you back on the hook.
• Mixing money. Paying groceries from the business account or client payments into your personal account can let a court treat the LLC and you as the same, which undoes the protection.
• The size of the claim. An LLC with $2,000 in the bank can’t pay a $40,000 water-damage claim. Only insurance can.

So the order is insurance first, LLC second. Our guide to insurance for cleaning businesses covers general liability, bonds, commercial auto and workers’ comp. Many property managers and commercial clients ask for a certificate of insurance before your first visit, and having an LLC does not change that.

How is a cleaning LLC taxed?

By default, a one-owner LLC pays no tax of its own. The IRS treats it as a disregarded entity: you report the profit on Schedule C and pay self-employment tax on it, exactly like a sole proprietor. An LLC with two or more members is taxed as a partnership by default. Either can elect to be taxed as a corporation, and then as an S corp.

Default tax: the same as a sole proprietor

The IRS page on LLC tax classification says a single-member LLC is disregarded unless it files Form 8832 to be treated as a corporation, and a domestic LLC with at least two members is a partnership unless it elects otherwise. The self-employment tax rate is 15.3% (12.4% Social Security plus 2.9% Medicare), and you file Schedule SE once net earnings from self-employment reach $400. That 15.3% is on top of income tax, which is why cleaners are often surprised at their first tax bill.

The S corp election

An LLC can ask to be taxed as an S corporation with Form 2553. The IRS describes an S corporation as passing income, losses, deductions and credits through to its owners, who pay tax at their individual rates. To qualify it must be domestic, have no more than 100 shareholders and one class of stock, and have only eligible owners such as individuals.

Per the Form 2553 instructions, an eligible LLC filing Form 2553 doesn’t also need to file Form 8832, and the election must be filed no more than 2 months and 15 days after the start of the tax year it is to take effect, or at any time during the year before.

The possible saving: as an S corp you pay yourself a salary through payroll, and profit above that salary is not subject to self-employment tax. The catch, per the IRS page on S corporation compensation: the salary must be reasonable pay for the work you do, and the IRS can reclassify distributions as wages. You also take on payroll, a separate business tax return and more accounting. For a cleaner earning modest profit, those costs can wipe out the saving.

Ask a CPA or enrolled agent to run your numbers before electing. When you keep the books, the guide to accounting software for cleaning businesses helps you pick a tool that separates salary, distributions and expenses cleanly.

What does an LLC cost in the 10 biggest states?

To form an LLC in the 10 most populous states costs between $50 (Michigan) and $300 (Texas), and most add a yearly or every-other-year fee. California is the expensive one: $70 to file but $800 a year in tax, from the first year. New York adds a requirement to publish a notice in two newspapers.

Fees below were checked on each state’s official site on October 5, 2026. The states are the 10 largest by the Census Bureau’s July 2025 population estimates. They are state fees only: no registered agent service, no lawyer, no local license.

Three costs that surprise people

• California’s $800. It is owed every year the LLC exists, including the first, even with no profit. Our California guide explains the timing.
• New York’s publication. The newspaper cost is on top of the $50 filing and varies by county. New York’s Department of State says an LLC that doesn’t complete it can be suspended.
• Florida’s late fee. Miss the May 1 annual report and the $138.75 becomes $538.75. See the Florida guide.

More state detail, including DBAs, sales tax on cleaning and hiring rules, is in our guides for Texas, Ohio, Georgia and North Carolina.

How to form an LLC for a cleaning business, step by step

Check the name, choose a registered agent, file articles of organization with your state, sign an operating agreement, get a free EIN, and open a business bank account. Most owners can file online in an afternoon. Processing time depends on the state: Illinois, for example, quotes 10 business days for a standard online filing.

1. Check the name. Search your Secretary of State’s business database for your name, and check that the web domain and social handles are free. The name usually has to include “LLC” or “Limited Liability Company”. Need ideas? Try the cleaning business name generator.
2. Pick a registered agent. Every LLC names a person or company with an address in the state to receive legal papers. You can usually be your own if you have a street address there and don’t mind it being public. A paid agent keeps your home address off the record.
3. File the articles of organization (Texas calls it a certificate of formation, Pennsylvania a certificate of organization) and pay the state fee from the table above.
4. Write an operating agreement. Most states don’t ask you to file it, but write one anyway, even as the only owner. It shows the LLC is run as a separate business, and with a partner it settles ownership, pay and what happens if one of you leaves.
5. Get an EIN from the IRS, free. The IRS EIN page says you never have to pay a fee for an EIN and warns about websites that charge for one. Apply online and, if approved, you get the number right away. A single-member LLC must use its own EIN for employment taxes once it pays wages.
6. Open a business bank account. Bring the filed articles and the EIN letter. Run every client payment and business expense through it, never personal spending.
7. Update everything else. Put the LLC’s name on your insurance policy, contracts, invoices, website, Google Business Profile and payment processor. Ask your city or county whether your local business license needs to be reissued in the LLC’s name.
8. Put the deadlines in your calendar. Annual reports, California’s tax, New York’s publication: missing them costs late fees or the LLC itself.

If you are earlier than this and still setting up the business itself, start with our 10-step start-up guide.

Does a new cleaning LLC still file a BOI report?

No. A cleaning LLC formed in the United States does not file a beneficial ownership information (BOI) report with FinCEN. FinCEN’s BOI page states that U.S. companies are exempt and are no longer required to file BOI reports.

Here is how the rule changed:

• The Corporate Transparency Act originally required most small LLCs to report their owners to FinCEN.
• In March 2025, an interim final rule exempted all entities created in the United States, including those previously called “domestic reporting companies”, and their owners.
• On August 11, 2026, FinCEN announced a final rule that permanently removes the requirement for U.S. companies and U.S. persons, effective on its publication in the Federal Register.

Only foreign companies registered to do business in a US state still report, and they don’t have to report US owners. If a letter or website asks you to pay to file a BOI report for your US cleaning LLC, you don’t need to.

What is the business code for a cleaning service?

The business code for a house cleaning or maid service is 561720. It is both the NAICS code (Janitorial Services) and the principal business code the IRS lists on Schedule C. Use it on bank, insurance, loan and tax forms that ask for your industry.

NAICS 561720: Janitorial Services

The Census Bureau’s 2022 NAICS definition covers businesses mainly cleaning building interiors, the interiors of vehicles such as aircraft, and windows. Its examples include housekeeping services and maid services, and its index lists “cleaning homes”, “residential cleaning services”, “office cleaning services” and “window cleaning services” under 561720. So a residential cleaning business, a maid service and an Airbnb turnover business all fit here.

Nearby codes that are not yours

The Schedule C business code

The IRS Schedule C instructions (2025 tax year) tell you to enter a six-digit code on line B from the chart at the end. That chart lists 561720 for janitorial services, 561740 for carpet and upholstery cleaning, and 561790 for other services to buildings and dwellings. The same instructions say the sole member of a domestic LLC files Schedule C unless the LLC elected to be treated as a corporation.

If you do both house cleaning and carpet cleaning, use the code for whatever brings in most of your revenue.

When is the right time to form one, and what comes next?

The right time is before the risk arrives: before your first hire, before a big commercial contract, or once you have savings worth protecting. Forming mid-year is fine. Afterward, keep business money separate and set up systems that make the business look and act like a company.

A simple timeline many cleaners follow

1. Months 1 to 3: sole proprietor, liability insurance, a DBA if you use a trade name, a separate bank account.
2. When you have steady clients or hire: form the LLC, get its EIN, move the bank account and insurance over.
3. When profit is well above a reasonable salary for your work: ask an accountant whether an S corp election pays.

Running the business once the paperwork is done

We make BroomBook, a scheduling, online booking and crew app for residential cleaning businesses, so weigh this as our view. It doesn’t form LLCs or do your taxes. It helps with the day-to-day: clients book online with an instant price, cards are charged after each job through Stripe (with payouts to the bank account you connect to Stripe, so use the business one), and crew hours from clock-ins export to CSV for your payroll service. It costs $29/mo for up to 2 cleaners or $59/mo for unlimited cleaners, with a 14-day free trial and no credit card. See pricing or try the demo.

Pick something else if you want jobs and payments to sync into QuickBooks or other accounting software, need invoices with net terms for commercial accounts, or want a native app from an app store. BroomBook does none of those.