I’m starting up a janitorial business in California. Do I need to worry about bonding?
The state of California does not require your business or your employees to be bonded, but some clients may, nor does any county or municipality in California. Any janitorial, cleaning, or maintenance company that is involved in cleaning client premises, whether residential or business, benefits greatly by being “bonded.” That goes for janitorial firms, maid services, carpet cleaners and floor maintenance specialists, window washers, landscapers—in short, any business that sends employees to a client’s premises to perform work when the client may not be present. Janitorial bonds may also be referred to as housekeeper bonds, residential cleaning bonds, janitorial service cleaning bonds, or something similar.
How does my business benefit from being bonded? I’m not sure I want to pay for a bond if it’s not required in California.
The biggest benefit is that janitorial bonds give clients and potential clients peace of mind, which can give your business a competitive advantage over janitorial services that do not purchase bonds. Quite simply, it enhances your company’s image as an ethical, responsible service provider?
Aren’t janitorial bonds simply another kind of insurance?
There are a couple of types of bonds that janitorial, cleaning, and maintenance businesses typically buy in California—one that protects your clients in the event that one of your employees steals something from a client’s premises and one that compensates the client if you fail to provide services that your business has already been paid for. The key point to remember about either of these types of surety bonds is that they are not insurance. They compensate the client, but you must then reimburse the bonding company.
How do janitorial bonds work, exactly?
Let’s look first at what are often called “dishonesty” bonds or “fidelity” bonds. They pay your client if one of your employees steals something from the client’s premises. For example, shortly after your employee leaves the home, a residential client finds that some expensive jewelry is missing. A police investigation results in an arrest and eventual conviction. Or, a business client claims that a couple of laptops were stolen from the office by someone on your night cleaning crew. Again, the police determine that a crime was, in fact, committed by one of your employees, who ends up doing some jail time. In both cases, the client relationship is preserved because you bought a dishonesty bond and the client was compensated for the stolen items. You, of course, must repay the bond issuer, but the client is satisfied.
The other kind of surety bond frequently purchased by janitorial, cleaning, and maintenance companies in California pays the client if, for any reason, you are unable to complete the terms of your contract with the client. Let’s say that you are paid monthly, in advance, for services to be provided throughout the coming month, but a labor shortage makes it impossible for you to deliver all of the services for which you have already received payment. Again, the bond issuer pays the client back for the services you have not been able to provide, and you then reimburse the bonding company.
Are all of my employees in California covered when I buy a dishonesty bond for my janitorial service?
All of the employees for whom you pay employment taxes are included. Employees who work for you as contractors, with their income reported on a 1099 form, are not covered.
Am I going to have to pay a lot to buy a janitorial bond in California?
Fortunately, janitorial bonds are relatively inexpensive and easy to obtain, because your company will reimburse the bond issuer if there is a payment to a client because of something your employees do, or fail to do. No credit check is required when you apply for bonding for your janitorial, cleaning, or maintenance business, unless you are seeking a very large bond. How much you will pay depends on the number of employees you have and the amount of coverage you are seeking.