Operating a cleaning business can be both challenging and rewarding—there’s plenty to navigate and juggling lots of things at once is overwhelming, to say the least. You’re not just thinking about new clients, cleaning supplies, marketing strategies, and a social media presence but also business insurance and whatnot!
With so much going on, you may find it overwhelming to use an already limited budget in your business plan for legal issues that don’t seem immediately urgent. And while it’s easy to overlook or hold off on considering the complex legal aspects of your business if you don’t have the legal know-how, failing to pay attention to these issues can land you in hot water.
Let’s go through 6 tips to give your cleaning business the legal protections it deserves and needs.
1. Set up the basics
Whether you’re going into residential cleaning or commercial cleaning, the first crucial step in starting up a cleaning business is to decide what business entity/structure is right for you. This is important when trying to understand the legal requirements of starting a cleaning business. How you choose to form your cleaning business determines the start-up costs and prices, tax payments, liability and other aspects of running your business.
Here are the basic legal structures you can choose from:
- Sole Trader/Sole Proprietorship
- Partnership
- Corporation
- Limited liability company (LLC)
- Franchising
Each business structure has its own benefits and drawbacks and the type you choose can impact your business.
Sole Traders
Generally, cleaning businesses in the cleaning industry typically operate as sole traders as it is relatively easier and cheaper to establish and manage. You will have complete control over any decision-making but also total responsibility for the business’ finances.
Partnership
If you choose to establish your cleaning business as a partnership, this means two or more people manage the business. Profits, losses and financial obligations of the business become the shared responsibility of you and your partners. However, it is important for you to have a partnership agreement to outline the roles and responsibilities of each person involved.
Company
Perhaps becoming a corporation or LLC is a suitable business structure for you. Under this model, you will need to register your company to ensure you are legally protected. This means your business will become a separate legal entity, which can be taxed and held legally responsible for any liabilities. This may be suitable for your cleaning business if you don’t want to be personally liable for any injuries your employees sustain while cleaning other people’s homes or offices.
Franchise
Another option is franchising. A huge advantage of franchising is that you can start operating with the existing brand reputation and resources of a business. This may be helpful if you’re just starting out in the business world and want to have some cleaning jobs already lined up. However, a downside is that you have to make regular payments to the franchisor.
2. Safeguard your identity and intellectual property
You may think intellectual property is an issue for giant companies. But your branding and trademarks can be one of the most valuable assets of your cleaning business. Even if you’re a local business with a small but loyal customer base. It’s what sets you apart from the rest.
In order to protect your intellectual property, you could register a trademark. Your trademarks include your cleaning business name, logos, slogan/phrase, labels and even sounds/smells. Essentially, they indicate that a particular good/service originates from you.
As an entrepreneur, you’ve worked hard to establish your business, get your name out there, and have existing and potential clients associate you with high-quality cleaning. There are specific steps you may need to take to protect your intellectual property and an IP Agreement can ensure your business is legally protected.
Otherwise, another business may get away with taking advantage of your trademark to benefit themselves. That’s not fair. With a registered trademark, you will be allowed to take legal action and prevent third parties from using your brand.
Even for small businesses providing house cleaning, carpet cleaning or window cleaning, defending your intellectual property rights is important in legally protecting your own cleaning business overall.
3. Search for the right employees
Now that your cleaning company is finally up and running, the next step is to hire the right type of employees.
It is important to understand that your legal responsibilities to an employee will differ based on whether they are full-time, part-time or casual employees. For example, full-time and part-time employees have entitlements to paid annual leave and notice of termination, while casuals do not. Instead, casuals have indefinite work hours and are paid a higher hourly rate.
As a small business owner of a cleaning company, you will also need to have a written employment contract when engaging any employee.
Employment Agreements
An employment agreement should be written, compliant with Australian law (including the Fair Work Act 2009, National Entitlement Standards (NES), and the Cleaning Services Award) and clearly outline the employee’s specific rights, responsibilities and entitlements that are appropriate to their employment status.
Other terms in an employment contract include:
- Employee details;
- The employer’s name and office address;
- Employee’s role;
- An outline of their duties;
- Remuneration and superannuation contributions;
- Confidentiality clause;
- Length of the probation period;
- Performance and salary reviews;
- Grounds for termination such as poor performance or misconduct;
- Restraint of trade clause (if applicable).
If you incorrectly classify your workers or have improperly drafted employment contracts, you could leave your business exposed to a lot of risks and liabilities. For example, you may be subject to disputes and monetary claims from employees.
By precisely clarifying the expectations and obligations of your employees, you’ll also be protecting your cleaning business if things don’t work out.
4. Seek out specific business documents
It’s necessary to have the right documents in place to make ensure you can deliver your cleaning services effectively. It is also important that you are remunerated for those services accordingly.
As a cleaning business, you may want to consider specific business documents including a:
- Cleaning Services Agreement (to cover how and when your services are provided and details regarding payment and pricing);
- Cleaner Contract (to govern your relationship with your clients); and
- Workplace Hygiene Policy (to protect employees from hazards at work that may result in injury and illness).
Here’s a brief breakdown of what each of these specific business documents contains:
Cleaning Services Agreement
A Cleaning Services Agreement is a written contract that sets out the terms and conditions of your cleaning services and covers many aspects of your services including:
- Type of cleaning;
- Provision of services;
- Materials;
- Timing;
- Pricing;
- Payment and invoicing;
- Warranty, alterations and rejection of services;
- Confidentiality;
- Copyright and intellectual property;
- Non-solicitation of personnel and clients;
- Liability insurance
- Waivers;
- Mediation; and
- Termination for provider and recipient.
Cleaner Contract
A Cleaner Contract governs the relationship between you and your client. It will allow both parties to outline the terms, rights and expectations of each other under the contract.
It is helpful in ensuring that everyone is aware of their obligations and therefore preventing misunderstandings and potential disputes. It covers:
- Names of the contracted cleaner and client;
- Description of how and when cleaning services are provided;
- Duration of contract;
- How payment is calculated;
- How payment is paid; and
- Additional details on subcontracting, liability, waiving and jurisdiction.
Workplace Hygiene Policy
A Workplace Hygiene Policy can effectively protect employees from safety hazards at work that may result in injury and illness. This document covers:
- Expectations of employees’ adherence to standards of hygiene;
- Processes they need to follow when cleaning, disinfecting and maintaining both workplace and personal spaces; and
- Protocol to keep the workplace as free as possible from infectious diseases.
For documents specific to your cleaning business, check out Lawpath’s range of cleaning agreements and templates.
5. Sort out your business insurance
Running a small cleaning business can involve a lot of risks. Some risks you can mitigate yourself while for others you may need insurance to provide protection.
Another thing to keep in mind is that if you operate as a sole trader you are legally and financially responsible for situations that may arise. Essentially, this means your personal assets could be at risk if things can wrong.
Here are the two critical insurance products for Australian cleaning businesses:
Public Liability insurance*
From forgetting to put out a wet floor sign and a client falling over to you spilling some harsh chemicals on a benchtop, there are many risks cleaners contend with in their day-to-day business activities.
Thankfully Public Liability insurance is there to protect you and your cleaning business in the event a third party is injured or sustains property damage as a result of your negligent business activities.
Business Insurance*
As you may know, cleaning equipment is expensive. What would you do if your cleaning tools were lost or stolen? The good news is you can protect your equipment under the Portable Equipment section of a Business Insurance Package.
A Business Insurance Pack is a range of business insurance products that can provide financial cover for your cleaning business. It is designed to cover your business premises and contents against loss, damage or theft as well as cover against any resulting financial loss from an insured interruption to the business.
Lawpath’s partner, BizCover, is an online service that provides tailor-made insurance products for Australian cleaning businesses. Jump online, compare quotes and get covered today.
6. Speak to a lawyer
Speaking to a lawyer can help you protect your cleaning business in many ways. It can strengthen your contracts and service agreements, provide security in the event of a dispute with a client or employee, and help you avoid simple but costly errors.
Referral for legal advice is especially imperative for small business owners when things start going south and you need to minimise the risks and liabilities to your business.
If you’re still looking for reassurance about what specific legal protections your cleaning business needs, speak to a Lawpath lawyer for advice.
Conclusion
Your cleaning services are precious.
Therefore, it is essential that you have adequate legal protections for it. After all, you’ve worked hard to get your cleaning company to where it is today.
As a small business owner, you can give your business a legal protective coat by considering these 6 tips: selecting the right business entity, safeguarding your intellectual property, seeking out specific business documents/contracts, and speaking to a lawyer.
Hopefully, these 5 tips will help you get started on the right foot to become a successful cleaning business.
Author Bio
This post is contributed by Chris Tsiknas who leads Partnerships at Lawpath and is an admitted lawyer, from UTS Law School.
