4 Steps to Managing Your Cleaning Business's Finances (Without the Overwhelm!)

Strong financial management is the backbone of a profitable cleaning business. Here’s how to keep your finances in check without stress.

Ways to help manage your cleaning business's finances

Step 1: Set Up a Separate Business Bank Account

The first rule of business is to never mix personal and business finances. No matter what business you own, ALWAYS set up a separate bank account for business ONLY.

Some reasons why a separate business bank account is essential:

1. Legal and financial: keeping finances separate protects your personal assets from business liabilities

2. Simpler tax filing: tracking deductible business expenses are easier when every transaction made is for business purposes only

3. Professionalism: when clients and vendors can see payments are going to/coming from a legitimate business account rather than a personal account, you instantly score a point for credibility. Also, lenders often require a dedicated business account when applying for business loans or lines of credit.

4. Easier bookkeeping: you can connect your business account to accounting software (like QuickBooks), making it simpler to track income, expenses, and profit

Do not put your business at risk; set up a separate business bank account.

Step 2: Track Income and Expenses Efficiently

In the last step, it was mentioned that having a business bank account makes tracking your income and expenses easier. Use accounting software like QuickBooks or Wave to monitor cash flow and stay organized.

Not only will it help you as a business owner understand where your money is coming from and what your money is going to, having organized books enable you to prepare for tax season better. In the case of an audit, using accounting software reduces confusion and missed entries as the accounting software can automatically detect what category a specific expense should belong to.

Step 3: Price Services for Profitability

Many new (and established) cleaning businesses struggle with Pricing for Profit. Oftentimes, in order to increase cashflow in times of need, business owners decide to lower their prices, or offer more services at the same price level of basic cleans.

By pricing your cleaning services appropriately, you can avoid the need to take on undesirable jobs or accept jobs at undesirable profits (if any profit is made at all).

In the ebook Pricing for Profit, The Branding Bridge guides you on how to calculate costs, set sustainable prices, and ensure each job is profitable. Undercharging leads to financial struggles. The book even guides you on how to manage requests for discounts and negotiations, as well as offers examples of cleaning service packages pricing.

Step 4: Plan for Taxes

Two things no one in this world can escape: death and taxes.

When you own a business, it is imperative that you plan for taxes. Whether you plan for quarterly estimated tax payments or set aside for an annual tax return, it is crucial to account for taxes. Here is a guide for how much money to set aside for taxes:

• Sole Proprieter/LLC (with no employees): 25%-30% of net income (income left after deducting expenses)

• LLC with Employees (includes payroll taxes): 30%-35% of net income

• S-Corp: 20%-25% of net income

Always work with an accountant for bookkeeping and tax needs. Working with a professional will save you time, stress, and concern about whether you're doing the right thing financially, and gives you confidence if you are ever audited.

Step 5: Plan for Future Investments

Once you have figured out your true profit (money left over after paying expenses, payroll, and taxes), start planning for ways to reinvest the profit into your business. Some ways to reinvest your cleaning business's profit back into the business include:

• Marketing and client acquisition: Running ads, updating your website, designing and printing flyers/business cards

• Expanding your team: Hire (more) employees or contractors so that you can take on more clients

• Invest in trainings: to make your company more marketable, look for certifications and trainings that leadership and employees can take to help give your business a market advantage so that you stand out against your competitors

• Upgrade equipment: when starting out, you may have been bootstrapping your company, saving costs in every way possible by purchasing cheap equipment to just get the job done. However, reinvesting in equipment can help you complete a job more efficiently and perhaps better than ever. Investing in tools to make your employees' jobs easier is an investment that will always be valuable.

Conclusion

Managing finances doesn’t have to be overwhelming. By using these 5 simple steps, you can be on your way to managing your cleaning business's finances with confidence.

Need help running a profitable cleaning business?

The Branding Bridge's eBook Monitoring Your Money is an invaluable guide that will help you set up systems to track income, expenses, and overall financial health, ensuring you make informed decisions that support business growth.

Start running a profitable cleaning business and start Monitoring Your Money today!

The Branding Bridge's Monitoring Your Money is an easy-to-read guide to help you create systems so that you can make decisions to help your cleaning business grow to 6 figures and beyond!