Tax Tips for House Cleaners, Maids & Janitors
Best Tax Tips for House Cleaners & Maids – Your Answers
- Keep all your W2’s and 1099 forms in one place. As they trickle in over the month of January have one set spot for them. It makes bookkeeping for your cleaning service a breeze.
- Keep your house cleaning purchases and receipts separate from your personal household purchases and receipts.
- Report your cash earnings and tips. Don’t screw around with the IRS. It’s not worth the jail time if you’re caught.
- Hire an accountant to oversee your cleaning business
#WorkSmartNotHard Quiz of Next Week & Next Weeks Newsletter Topic:
Ask a House Cleaner – Best Tax Tips for House Cleaners & Maids
It’s tax time. Yay!
In our house cleaner training as Savvy Cleaner, we encourage all housekeepers and maids to think of taxes as a puzzle. The big picture comes together when you have all the pieces in place. The pieces arrive during January and come in the form of 1099 and W2’s. Because house cleaners have many clients – you may receive many tax forms.
Tax Tips for House Cleaners (Employees)
As a cleaning employee if you earn more than $2,000 per year from a single source (a family, or the cleaning company that hired you) you will receive a W2. That source is legally required to pay employer taxes for you. This means they’ve contributed to social security and Medicare benefits you may later need. Receiving a W2 also creates a verifiable work history that comes in handy when you apply for a car or house loan.
If you earn less than $2,000 from a single source in a year, they may send you a 1099 which pays you as an independent contractor. They didn’t take any taxes out or contribute to any benefits for you. One time house cleanings pay you as a “once and done”. You won’t receive any tax forms from them at all. You claim your 1099’s, bonuses, tips, and random cleanings as “other income.”
Tax Tips for House Cleaners (Cleaning Service Owners)
You own the business. You pay for advertising. Lots of clients cycle through your business. You provide the cleaning supplies. And you decide the cleaning hours. You are responsible for all the taxes. You are the one who sends out the W2’s and 1099s to your housekeepers, maids, and independent contractors. The law states that you send these out by January 31.
As the owner of the company, you pay self-employment taxes. You pay these taxes in equal installments four times a year to both the state and the federal government. If you don’t pay quarterly taxes and you owe more than $1,000 in taxes when you file your annual return, there will be penalties.
One of the Secrets to Putting a Puzzle Together Is to Look for Straight Edges.
This helps you form the outline of the puzzle. Tax codes are the straight edges that tie your tax puzzle together. Next, group like colors and common objects together. These are your cleaning business receipts that you’ve collected all year. You use these to confirm cleaning related deductions.
But the biggest secret of putting a puzzle together is to look at the big picture. This gives you an idea of what the completed puzzle will look like and keeps you on track. An accountant who understands tax law for residential cleaning holds the big picture.
Meet with your accountant through the year to ensure you get the most deductions your cleaning company deserves.
Be sure to keep good records of your business income and expenses. You wouldn’t think of putting a puzzle together knowing it’s missing pieces. Keep all your pieces together.
Social Media & Tax Tips for House Cleaners
Join a Tax for small business Facebook Group. There is lots of free advice out there and lots of people who can offer great solutions to your common problems.
Time-Saving Hack of the Week = Accounting Software to Streamline Bookkeeping
I’ve used Quicken for years for my house cleaning company. I have it connected online to my credit cards and bank accounts. Once a week I open the online software and it updates all the bank vault entries automatically. My weekly accounting takes me ten minutes. Fifteen tops.
Cleaning Business Deposits
For small deposits, I use mobile banking. Using the bank app, I photograph checks I receive and like magic, the bank deposits the money to my account. For larger or recurring accounts I have direct deposit set up through the client.
For cash accounts, I save up until I have $600 or more and then I drive through a bank teller window and make a cash deposit.
Every week I verify all deposits automatically added to my Quicken ledger are accurate.
Purchases for my Cleaning Business
Then I verify all purchases I made to operate my cleaning service. I match the receipts I’ve saved. And I note right in the software which ones are house cleaning related and which ones are personal. Then I file my paper receipts in a filing system that I keep for ten years in the event of an audit. Keeping good records is among the best tax tips for house cleaners.
Pay Bills on A Schedule
The weekly accounting routine is a good time to pay bills and taxes on a schedule. I see the bills due now, and the ones due next week and next month. This way I can budget money if necessary. It also prevents me from late payments, overdraft fees or tax penalties.
You don’t have to be super smart to run the financial end of your cleaning business. But it is a smart idea to use software that does the bulk of the work for you and keeps you on task.
What’s going on with Angela?
Well, it is the end of the year at Savvy Cleaner and probably the end of the year in your cleaning business as well. We’re really big in our office on new years resolutions. We have a contest that continues all year with awards and prizes for every posted new years resolution that we meet. In 2016 we had 43 posted resolutions and we met 36 of them. How do I know there were 36? Because we celebrate at my favorite restaurant which is a Hibachi Grill that also serves sushi (I pick up the tab for the team). At the end of the celebration the waiter brings us all fortune cookies. I keep my fortunes in a small tray on my desk. I just counted and there are 36 of them. No surprise most of my fortunes have come true as well. Woohoo!
So we are setting new years resolution for the coming year and I hope you are too. Tax tips for house cleaners – celebrate your wins. It’s great comradery and keeps everybody focused and on task. And since it’s a business celebration it’s tax deductible. And yes, you should keep the receipts. 🙂