Setting up the legal structure
for your cleaning business

Setting up the legal structure for your cleaning business

When you start your cleaning business you will need to select the business or legal form under which to operate. Determining the form most suitable for your business and your situation is complex. We recommend that you consult a lawyer and a tax adviser before doing any kind of business, including acquiring equipment, hiring employees, leasing office space, borrowing money or acquiring a license.

The six different business forms:

1. Sole Proprietorship

2. General Partnership

3. Limited Partnership

4. Limited Liability Partnership

5. Corporation

6. Limited Liability Company

Which form you choose depends solely on your intent for the business. How to figure out what your intent is? Create a business plan. By default you are a Sole Proprietorship. The second you take in money you are this legal classification by default. Let's start with the very basic.

Doing Business As, or "DBA"

A fictitious business name, assumed name, or DBA, and referred to as "trading as" in the UK, allows you to do business legally under a particular name at reasonable cost, without having to create an entirely new business entity. You can accept payments, advertise, and otherwise present yourself under that name. In fact, if you present your business under a name other than your proper legal name without proper notification, it may be considered fraud. Fortunately, filing for an assumed name is so easy and inexpensive, there's really not much excuse for not filing one.

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Why file an assumed name? What does it let you do?

It allows you as a sole proprietor to use a business name rather than your personal name. In some places you can use either your full name or part of your name plus a description of your product or service without filing an assumed name, for example, Cathy's Custom Clean or C Black. The exact rules vary from country to country and within the U.S., so again, check with your local business regulatory authority regarding your region. If there's any implication that there are more people involved (C and J's Custom Clean), or if you're just using your first name (Kathy's Custom Clean, etc.), you must file a DBA.

An assumed name also allows you to use a typical business name without creating a formal legal entity. You can open a business checking account and apply for a business phone listing under your assumed name. For sole proprietors, this is the least expensive way to legally do business and use a business name other than your own.

It allows a single legal entity (corporation, LLC, etc.) to operate multiple businesses without creating a new legal entity for each business. Since filing and maintaining a corporation is expensive, filing an assumed name keeps your costs down while still allowing you to expand your business.

How do you go about getting an assumed name?

In most states in the US, you would register at the county level. Each county has its different forms and fees for registering an assumed name. You must first make sure the name is not already in use, then submit a simple form, along with the correct filing fee.

Some states also require that you publish a notice in your local newspaper and submit an affidavit to show that you have fulfilled their requirements. Call your own county clerk's office for information about the local procedures and fees in your area.

Laws vary significantly from country to country. In the UK, there is no governmental filing process for the use of assumed names, but DBAs are heavily regulated by the Business Names Act of 1985. Again, you'll have to check with your local regulatory board.

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