Michigan’s strong economy and diverse population make it an ideal location for cleaning businesses to thrive. With its bustling cities, suburban areas, and rural communities, there is a wide range of potential customers in need of professional cleaning services.
However, there are unique opportunities and challenges that cleaning businesses need to navigate. Here’s what you need to know about the licensing and insurance requirements for cleaning businesses in the Great Lakes State.
In Michigan, registering your business with the state varies based on your business structure. If you’re operating as a limited liability company (LLC), limited partnership (LP), or corporation, you need to register with the Michigan Department of Treasury or the Michigan Secretary of State.
You can complete registration online through the Michigan Department of Treasury’s Online New Business Registration process1 or the Corporations Online Filing System (COFS) at the Michigan Secretary of State.
However, if you’re a sole proprietor, there’s no need for state registration.
Suppose you plan to start your cleaning business and operate under a name other than your legal name (e.g., “John Smith’s Cleaning Services”). In that case, you may need to file a “Doing Business As” (DBA) or fictitious business statement with the appropriate county or city government.
An Employer Identification Number (EIN), or Federal Tax Identification Number, is typically required if your cleaning business has employees or if you operate as a corporation or partnership.
You can obtain an EIN from the IRS. The process is straightforward and can be done online through the IRS website — you will find a few questions to answer and information to provide, pay a small fee, and you will receive the EIN paperwork within a few days.
To determine if your area requires a business license and to access the application process, contact your local city or county government. Specialized cleaning services, such as upholstery and post-construction, may need special licenses, and you might need to meet certain safety and environmental regulations.
The type of license needed also depends on the business structure (sole proprietor, corporation, LLC, etc.). Business owners should visit the Michigan Secretary of State’s website for specifics to get started.
In Michigan, businesses that sell tangible personal property in addition to providing labor or services are required to obtain a sales tax license. However, residential cleaning services in Michigan are generally not subject to sales tax. Therefore, you may not need to register for sales tax if you operate a cleaning business that solely provides residential cleaning services.
It’s important to note that sales tax requirements can vary, and it’s always best to consult with a tax professional or the Michigan Department of Treasury to ensure compliance with the specific regulations in your area.
Starting a cleaning business in a large municipality will have different requirements or restrictions than in a smaller rural county. A larger market has to consider the protection of a much larger population within a more compact area; thus, controls will be tighter.
For instance, the disposal of dry cleaning fluids in a bigger city will be different than in a more rural area. The result must be the same—safe disposal—but the methods will differ because of the location. Checking with the local governing bodies is a must before beginning a new business.
Here’s how local regulations may influence cleaning businesses in Detroit and Grand Rapids:
To open a business in Detroit, a Certificate of Occupancy is required from the Zoning Division before operating a business out of a building. After the building is approved for use, a Business License is required from the Business License Center.
The city of Grand Rapids may have specific licensing requirements for cleaning businesses, which could vary based on the type of services offered.
Insurance is a critical part of any business plan and budget. Not only does cleaning insurance provide essential financial protection and peace of mind, covering potential liabilities, property damage, and injuries, but It also ensures your business can continue to operate without being weighed down by unexpected expenses.
Here is a list of highly suggested insurance coverages:
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