One of the most important things to decide upon in starting a business is the legal structure of your cleaning business. Your business legal structure is very significant because it will determine how much taxes you will pay and the responsibility that you will have legally. In addition to this, the requirements that you need to complete and pass will be determined by the legal structure of your business. The issues concerning the amount of your earnings or how much money you can borrow for your business will also be determined.
Here are the various types if business legal structures.
• Individual Proprietor
It is the most common legal structure for small businesses because the owner himself has total control over all the transactions, decisions and business deals. This makes this structure easy to establish. The disadvantage of this type is that you as you are the one who has total control you will also be the only one who will deal with all the problems that your business faces. You are responsible of all the financial obligations of your business and you will be liable if anything untoward or wrong occurs. You are accountable for paying the required FICA taxes. Since you are the sole owner of the business, then you are required to pay the total FICA tax which is approximately 15%.
• Partnership
When the business is owned by two or more people, the legal structure is called Partnership. The responsibilities and of course, the profit is shared by the different owners. Every individual owner should be able to approve all the profits of the business which will then be reported and should agree with their respective tax returns. Similar to the individual proprietor, the owners are fully responsible for the financial obligations of the establishment.
• C Corporation
This legal structure is the third kind and the largest among the three. When they pay out the dividends, the paid income tax of these corporations is doubled. There are a lot of requirements for starting and operating this kind of company they are quite tedious. The company is obligated to file a return. In addition to this, a C corporation is also required to pay their income tolls before giving the dividends to the various shareholders. The shareholders will be taxed twice since they are receiving dividends as their profit.
In sole proprietorship and partnership the owners are the ones who are responsible for all the problems that the company faces. This denotes that the income and individual assets of the owners can be acquired from them if the company is litigated.
With regards to the taxes paid, sole proprietorships and partnerships have a smaller amount of tax as compared to the C Corporations. This is because C Corporations are doubly taxed. Aside from the company profit, the profit of their respective shareholders is also being taxed. Generally, the sole ownership is the easiest legal structure of business to operate. However, if you are aiming for a large scale business, a C Corporation is fit for you.
Acquiring the Appropriate Insurance for Your Cleaning Business
Sometimes, acquiring insurance is overlooked in some businesses. The insurance policy usually covers instances in the future involving loss of items, damaged or stolen equipments and others. Other policies also include auto insurance for those businesses involving the use of vehicles and a worker’s compensation insurance. These are usually put together into one policy therefore one must clarify the actual scope of this policies with his insurance agent first. An appropriate insurance coverage would be able to minimize all future possible risk.
On the other hand, in some industries, there are certain risks that are not covered in the policy package. Hence, for a more proficient cleaning business and a better service, here are some of the things that should be included in the insurance policy of a cleaning business.
• For keys
It is very necessary to include keys in the insurance policy because it will deal with the activities that took place after the working hours. Having this in your insurance would prevent your employees from replacing or paying for any key in case they lost it.
• For properties handed over to a cleaner’s care
This includes the protection of the properties that are entrusted to one’s supervision. It involves the protection of the rented or leased equipments such as vacuum cleaners or floor polishers and others.
• For thievery
This kind shouldn’t be confounded with the insurance against thievery involving a cleaner’s employee. Instead, it is when a cleaner’s employee is negligent enough for theft instances to occur. An example of this is when an area is illegally entered by thieves because an employee has left the door unlocked.
• Anti-pollution
This is an important thing to be included in the policy because chemicals or the solvents used for cleaning may be spilled.
• For losses or recession in business
This would allow the insurance of a company from any abrupt loss in business or unexpected recession. An example is the abrupt closing of a company or if the company’s big clients suffer from recession or bankruptcy which will greatly affect the cleaning company as well. If your cleaning company has this covered in your insurance, it will be secured financially until the company starts to earn back its normal income.
• For non-cleaning and other materials
Insurance that includes this policy would allow the protection of the equipments in the cleaner’s office. This is applicable to cleaning companies that are operating outside of one’s home.
As it can be seen, a cleaning establishment is related to some dangers that are not usually covered in a basic insurance policy. Therefore, it is very important that cleaning business owners acquiring insurance should talk to insurance experts or insurance agents first before finalizing the insurance in order to fully understand the coverage of such. This will lessen the risks that would probably take place in the future.
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