This excerpt is part of Entrepreneur.com's Second-Quarter Startup Kit which explores the fundamentals of starting up in a wide range of industries.
In Start Your Own Cleaning Service, the staff at Entrepreneur Press and writer Jacquelyn Lynn explain how you can launch a profitable cleaning service, whether you want to offer maid services, janitorial services, carpet and upholstery cleaning, and more. In this edited excerpt, the authors explain what you should consider when choosing where to base your business.
Homebased businesses are common these days, and cleaning services are excellent candidates for this type of setup. After all, your customers will likely never come to your facility since all your work is done on their premises. But that’s not the only issue influencing your decision to operate from a homebased office or a commercial location.
Many municipalities have ordinances that limit the nature and volume of commercial activities that can occur in residential areas. Some outright prohibit the establishment of homebased businesses. Others may allow such enterprises but place restrictions regarding issues such as signage, traffic, employees, commercially marked vehicles and noise.
Before you apply for your business license, find out what ordinances govern homebased businesses; you may need to adjust your plan so you comply. If you live in a neighborhood with a homeowners association, you may be subject to additional restrictions; find out what those are before you get too far along in your planning.
Beyond the specific regulations, it’s reasonable and fair to operate your business in a manner that won’t negatively affect the neighborhood. Be a good citizen, and don’t give your neighbors any reason to complain.
Where in your house should your office be? Of course, it’s your house--and your decision. When choosing where to set up, first do an analysis of your expected needs and your available space; then try to blend the two. Most cleaning services will need space for two primary functions: administration and storage for equipment and supplies.
It’s ideal to locate your business separate from your living area (a spare bedroom is perfect). If that’s not possible, you may need to apply some creativity to arranging work areas so they're effective and, at the same time, don’t overtake your personal space. Take the same basic approach to furnishing and equipping your office: Figure out what you need and what you can afford, then begin shopping and setting up.
The Homebased Tax Advantage
Because expenses related to running your business are generally tax-deductible and the IRS has relaxed the rules on what is an allowable home-office deduction, the tax advantage of being homebased is more attractive than ever. The IRS says a home office “will be considered a principal place of business if you perform administrative or management activities there and there is no other fixed location of that trade or business where you conduct substantial administrative or management activities of that trade or business.” In other words, even though your actual work will be performed outside your home, your home office will be deductible.
What can you deduct? You can deduct directly related expenses, which are costs that benefit only the business part of your home, as well as a portion of indirect expenses, which are the costs involved in keeping up and running your entire home. For example, your office furniture and equipment are fully deductible and directly related expenses. In the area of indirect expenses, you may deduct a portion of your household utilities and services (electric, gas, water, sewage, trash collection, etc.) based on the percentage of space you use for business purposes. Other examples of indirect expenses include real estate taxes, deductible mortgage interest, casualty losses, rent, insurance, repairs, security systems and depreciation.
The Commercial Option
Many industry veterans believe that to achieve authentic business growth, you must get out of the home and into a commercial facility. Certainly, doing so will help you create a successful and professional image, but before you begin shopping for an office, think carefully about what you’ll need.
Your office should be large enough to have a small reception area, work space for yourself and your administrative staff, and a storage area for equipment and supplies. You may also want to have space for a laundry and possibly even a small work area where you can handle minor equipment repairs. Depending on the size of your staff, consider allowing for a small break area, perhaps with lockers for members of your cleaning crews, so they have a place to sit and store personal items when they’re in the office at the beginning and end of their shifts.
Regardless of the type of cleaning business you have, remember that chances are slim that your customers will ever come to your office. So look for a facility that meets your operational needs and is in a reasonably safe location, but don’t pay for a prestigious address--it’s just not worth it.