I wanted to write this post because I have learned that many Maid Service owners lack the knowledge of bookkeeping for their small businesses. With a background in small business accounting, I felt inclined to educated small Cleaning Business owners on Bookkeeping! Bookkeeping is one of the most crucial tasks you can do for your Cleaning business.
I often hear, I clean by myself with no employees, I do not need to record my transactions. Or I have heard, but my accountant does my taxes for me, I do not need to do my bookkeeping. Isn’t that what the accountant is for? No! You are in business to make money, but if you do not track your financials you will never know how much money your Cleaning Business is making.
Whether you clean by yourself and have no employees or you have several employees cleaning daily for you, having organized books and knowing where your money is going is crucial to your profitability. And it doesn’t take an accountant to record the transactions.
Haven’t started your Maid Service yet? Read my Complete Guide on Starting and Running a Maid Service.
Do I need to do Bookkeeping for my Maid Service?
YES!!!! Let me ask you a few questions…
- How much money do you make per cleaning service?
- What are you spending on cleaning supplies?
- What is your income after cost of goods sold?
- How much does it cost to clean 1 house?
- How much does it cost to get 1 new regularly occurring client?
The answer to these questions help you scale your business so that you are always making a profit. When I ask maid services, How much income does your cleaning business earn? Most answer this question telling me the total they collect cleaning houses. But did you know there is so much more to Income than the Revenue you collect from your clients.
What is Bookkeeping?
What is bookkeeping anyway? Bookkeeping is the recording of the financial transactions in your business. When you buy cleaning supplies you record the expense. And when you collect money from a client, you record the revenue. See, NOT SCARY at ALL!
A business owner does not need to know how to prepare Income Tax reports, how to file quarterly taxes, or how to create financial reports. These tasks can be done by your Certified Accountant.
How to get your Maid Service started with Bookkeeping
Separate Personal Finances from Business Finances
To keep your cleaning business financials organized, it is important to separate your business accounts from your personal accounts. It becomes VERY difficult to separate out expenses and track income when you are depositing payments into your personal account and buying supplies from your personal accounts.
Open a Business Checking Account
I recommend at the minimum to open a business checking account. Most banks offer free business checking accounts. Start with your bank you already use. Look online or make an appointment to see what they offer for business checking accounts. If they do not offer a free account look elsewhere. There are plenty of banks offering free business checking, therefore you should not be paying for a checking account.
Open a Business Credit Card
You can also open a business credit card as well. If you decide to open a business credit card you will want to ensure you are paying it off each month. Look for credit cards that offer money back. One credit card I utilized was Amazon Prime card. Because I ordered some of my supplies from Amazon, I was able to receive 5% back on my purchases. Other credit cards, similar to Amazon Prime, will also offer money back on gas and other purchases.
Follow these rules when utilizing Credit Cards and avoid unnecessary expenses. You never want to be caught carrying debt and paying high interest expense
- Payoff the balance each month, interest can be as high as 20% these can add up quickly.
- Look for credit cards that have cash back offers and take advantage of them.
- Only use your business account for business related expenses.
Basic bookkeeping tasks for your Maid Service
The essential tools needed for Maid Service Bookkeeping
- Excel (or other spreadsheet program like Google Sheets).
- Copies of your bank and credit card statements
- Copies of your deposit slips
- Cleaning Logs
- Mileage Logs
Fancy Tools you can get as your Maid Service Grows
- Quickbooks Online. plans starting at $7.00/month
- Wave Apps. Plans starting at Free for a basic accounting package, charges for payroll and credit card processing.
- ZOHO. Plans starting at $9.00/month for basic accounting package
Steps to getting started with Bookkeeping for your Cleaning Business
Record your revenue
You should know how much money you are bringing in each day, week, month, and year. By knowing what your maid service’s revenue is, you will be able to set realistic goals to help you to grow your company.
Create a Cleaning Log
The first step in tracking your revenue for your maid service is to create a cleaning log. Keeping a detailed cleaning log serves two purposes. For one, you will know how much revenue you or your employees are bringing in each day. Second, it will tell you how long it takes you to clean a home.
Labor costs are your #1 expense as a Maid Service owner. Therefore it is SUPER important to know your cleaning times. And make sure they are not running over budget.
Your Cleaning log should include
- Clients name
- The start time and end time
- How much the cleaning fee was.
Keep a written log in the vehicle with you our your cleaners. Update the cleaning log after you have cleaned each clients homes. This will ensure the accuracy of your data. If you keep a client schedule for the year, then you should already have all of this information in one spot.
Note: It will be important to follow up promptly with your clients who did not pay on cleaning day. It is costly to perform cleaning services; therefore, don’t get caught carrying balances for your clients. A cleaning business should not wait for payments.
Want to find out how to bring in more Revenue? Read these helpful articles:
- Provide Quotes for House Cleaning Services
- How to get your Cleaning Service listed on Google
- How to sell your Cleaning Services on GROUPON
All revenue should be tracked by client and by month. You can do this using an Excel spreadsheet or an accounting software. This can be done weekly in batches. Use your cleaning log sheets to help you record your revenue for the week.
Create a Revenue Tracking Form
Record all payments you have received from clients each week. If you are using an Excel Spreadsheet it should include the following:
- Rows for each day of the month
- Columns for each client serviced
- Totals by Client
- Totals by Month
Revenue tracking sheets tell you how much revenue each client is bringing in. It is also a great goal setting tool! By tracking how many cleanings you are doing a week, you can set goals each month of how many cleanings you have. If you know you cleaned 10 homes a week, set a goal to clean 15 the next. Each month you can watch the number of clients increase and your revenue! It is quite fun 🙂
Having trouble knowing what to charge for house cleaning fee’s read this blog post: What to Charge for House Cleaning Service. The article goes in depth on setting your cleaning fee’s also includes a free pricing worksheet for you to use.
Review Cleaning Times
Because payroll costs will be your #1 expense, you will want to control how long it takes you to clean a home. When you first start your cleaning business, you should have established your pricing matrix. In establishing your pricing matrix, you should have defined your cleaning times.
Using your pricing sheet, compare the expected cleaning times of each home you cleaned to the actual time it took to clean. If you are going over in area’s you need to figure out why. Make sure you are following a consistent cleaning regime and not wasting time.
When you first meet and provided a price to your client, you should have estimated total cleaning time and cost of the cleaning. This is where having a consistent pricing formula and consistent cleaning system is so important. There should not be a large deviation in cleaning times of homes of similar size.
Record your Expenses
Record bank account and/or credit card transactions
If you are using Excel, you can create an Expense worksheet to record your monthly expenses. Your worksheet should include separate your expenses into categories you can track easily.
For example you should track how much you spend on:
Your worksheet should include the Date of the transaction, the description of where you made the purchase (Amazon, Walmart …), what was purchased (cleaning supplies, towels, advertising …). To tie it up, your Spreadsheet should add add up each category and total out for each month and each year.
If you are using an online accounting program, it should have the capability to link with your bank account so that you can quickly download the transactions. Once transactions are downloaded into the program, you will then label each transaction based on what was purchased.
Example: You purchased your all-purpose cleaner from Amazon, this transaction would be recorded as Cleaning Supplies.
Equipment like vacuums and steam mops should be recorded as Equipment and is considered Capital. This equipment can be depreciated over the expected life of the item. Depreciation is an expense and will decrease your tax liability. You do not have to worry about recording depreciation, your tax accountant should be doing this when completing your year end tax and financial statements.
Tracking Cost of Goods Sold
If you are using an Excel Spreadsheet, you will want to separate out Cost of Goods Sold from all other business expenses. Cost of Goods Sold is the direct costs for you to clean a home. These expenses include cleaning supplies, driving expense from each client’s home, and labor cost (whether you or an employee is cleaning).
Cost of Goods Sold are important because you want to know how much it costs to clean a home. This will be instrumental in setting your prices. It will provide you the information you need to know of how much money you will have left over to pay overhead costs and to pay yourself profits.
If your Cost of Goods Sold are too high you have 3 choices:
- Charge more for cleaning services
- Buy less supplies
- Reduce payroll
Reconcile your transactions
At the end of the month your bank and/or credit card company will send you a statement. At this time, you will want to reconcile all of the transactions into your your accounting program.
Reconciling is: Comparing your bank records to your receipts. That’s it! I remember I use to be so scared of the word. But it is so simple to do if you have recorded your transactions through out the month in either an Excel Worksheet or accounting program.
To reconcile, you will take your back statement or credit card statement. Going down the list of transaction, and comparing it to your expense and revenue worksheets, you will check off each transaction. Make note of any transactions that do not match or you did not make. You will want to call your bank to research it.
Track your mileage and transportation
There are 2 ways to record the expense of your vehicle and transportation. You can claim actual expense or you can claim standard mileage.
- When claiming actual expense is where you track all expenses related to your vehicle. This includes gas, repairs, maintenance, any lease payments or depreciation.
- When claiming standard mileage you track your mileage from when you drive to and from a customers home.
Either method you choose, if you are using your own vehicle, or are reimbursing your cleaners mileage, it is important to keep precise records of mileage used. Mileage and vehicle expense can be one of your largest tax write off’s for your maid service, therefore you will want to keep records of all of your travel so that you can save on your taxes.
Standard Mileage Deduction
In my maid service I did not invest in company vehicles, instead, my employees used their own vehicle and the business reimbursed them the mileage. We reimbursed the employees using the IRS’s mileage rate.
Currently, the IRS allows 56 cents per mile. When you claim this deduction, it does not mean you get 56 cents back from the IRS. What it does is reduces your tax liability. Subsequently, if are not recording and writing off mileage you will be paying more income tax than you should.
Key rules when recording mileage
The IRS has strict guidelines if you will be claiming mileage. If you are claiming Mileage as an expense your mileage log should include the following:
- Your beginning and ending mileage for the year.
- Record travel daily.
- Include the following on your mileage log the date, where you traveled, the number of miles, and the purpose of the travel.
- Tools and Parking costs
For more information on mileage expense and what the IRS requires visit: https://www.irs.gov/taxtopics/tc510.
Record your mileage on paper
If you are recording your mileage on paper, it is best to keep a log in your vehicle. This way you can record each destination you travel to. When you get back to the office you can look up on Google Maps to see how many miles you traveled.
You can then use the paper sheets and record the mileage on a worksheet by month. Then have a cover page which totals the year out for you. When you provide information to your tax accountant you can send them your mileage log for easy recording. This can be time consuming. (trust me I did this!)
Record your mileage with a Mileage App
This is something I wish I knew about when I had my cleaning business! I use to record all of my mileage on sheets of paper. It was time consuming and wasted paper and printer ink.
Now a days there is a mileage tracking app out there called MileIQ that is GPS enabled and will track mileage for you and provide reports for you to record or provide to your accountant at income tax season.
MileIQ is a free app that you download on your Smart Phone. The app is GPS enabled and records your trips throughout the day. At the end of the day you will be provided a list of your trips where you can swipe right if it was a business trip and left if it was personal.
The program allows for you to print summaries at the end of a month or year. After you print your mileage summary can then give it to your accountant during tax season so that it can be used to process your tax write off. Supper simple!
Tips for Success in Bookkeeping for your Maid Service
- Keep your Personal finances separate from your business finances
- Track your revenue by each client.
- Keep track of your expenses, separating out cost of goods sold.
- Record transaction timely, this way you have the most accurate data.
- Reconcile your bank statements monthly to look for inaccurate transactions
- Don’t forget to track your mileage. (It’s a HUGE tax write off at the end of the year)
Common Questions/FAQ About Bookkeeping
Doesn’t my Accountant do my Bookkeeping?
No. Accountants, or CPA (Certified Public Accountant’s) will complete your end of year financial statements and tax reports which get submitted to the IRS. Your accountant uses your recorded transactions to complete these reports and statements. The more organized your books are, the less prep work your accountant will have to do, and the less money it will cost you.
I do not have any employees, do I need to do bookkeeping?
Whether you are a Solopreneur or have 20 employees you need to keep up with your bookkeeping. Bookkeeping helps organize your financials for year end tax reporting. More importantly it allows you to be more informed about how much revenue your cleaning business is bringing in and how much your spending on expenses.
Do I need an accounting degree to do my own bookkeeping?
No, you do not. Bookkeeping is organizing your transactions. Know what your expenses are and know what your revenue is.
Do I need to hire an Accountant to do my bookkeeping?
Not necessary, lots of small business owners complete their own bookkeeping tasks. This helps them keep abreast of how well their company is doing financially . As your business grows, you may want to outsource the clerical tasks of bookkeeping which will give you more time to focus on other tasks to grow your cleaning business.
The Last Thing You Need to Know about Maid Service Bookkeeping
Be consistent and timely in recording your transactions. This will help you to make better business decisions. May you all be more informed and better business owners.
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