Just like in any other business, when you are starting a cleaning business you have to decide on what kind of legal structure you will have. The legal structure of your business is very important because it affects the amount of taxes you will pay and the legal responsibility you have. Aside from that, the requirements for papers and additional paperwork can be determined through the kind of legal program you will have. It can also be an issue when it comes to the amount of money you are making and the amount you can borrow for your business.

There are different types of legal programs which you can choose from:

The first type is the Individual Proprietor. It is one of the easiest kinds of legal programs which make it very common for small scale business. In this kind, the owner has the control over his industry. He is the only one that is responsible for the business. This may be good because you can have the control and you can decide for your business. The drawback in this kind of legal program is that since you are the sole owner, any problems regarding the company such as finance problems you will only be the sole liable. If anything happens wrong, it is your liability and responsibility. Aside from that, the total FICA taxes that should be paid is accountable to you. In other cases, the owner can just match with how much the workers are paying but if you are the only owner then you have no choice but to pay the whole 15%.

The second kind is the Partnership. In this type of company, there are two or more owners of the company. The owners share the responsibilities as well as the income of the company. All profits must be approved by each individual. It is then reported to agree with their tax returns. Just like in the individual proprietor, the owners are also the ones responsible for any monetary obligation of the company.

The last kind is the C Corporation. This kind of business is usually large and is open to other businessmen. The income tax that C Corporations pay is doubled whenever they pay out dividends. There are many requirements in this kind of company. It is necessary for the corporation to file a return as well as pay tolls for their income before the dividends are distributed to its shareholders. Once the shareholders receive their dividends, they must maintain it as their profit which will be taxed again.

When it comes to the legal liability of your company, sole ownership or partnership type of companies are the once responsible for any kind of problem. This means that if the company is sued, the individual assets and income of the owner can be taken.

In terms of the tax that will be paid, sole ownerships and partnerships have less tax compared to C Corporations which are double taxed. In C Corporations, aside from the industry profit, the individual profits of the shareholders are also taxed. In general sole proprietor is the easiest kind of company as it requires less but if you are after a large scale business, C Corporations are best suited for you.

For more: How to start a cleaning business by StartCleaningService.com