LLC or sole proprietor for a Georgia cleaning business
Should my cleaning business be an LLC or a sole proprietorship in Georgia?
The short answer for most cleaning businesses
A solo house cleaner can start as a sole proprietor. Most owners form an LLC once they sign commercial contracts, hire staff or work in clients' buildings with keys.
The reason is who carries the risk. Commercial accounts come with indemnity clauses, insurance terms and staff working unsupervised. An LLC puts those obligations on a separate legal person.
It is not a shield against everything. Insurance still does most of the work when something goes wrong. But an LLC is also what many commercial buyers expect to see on the contract and the certificate. The steps to form one are in the business setup guide.
Georgia describes an LLC as a business structure that offers limited personal liability on the part of the owner. — Georgia.gov, retrieved 2026-09-27
Sole proprietorship, the default with no filing
If you start cleaning for pay and file nothing, you are a sole proprietor. There is no state formation filing and no annual state registration.
Your business income goes on Schedule C with your personal return. You pay self-employment tax on the profit through Schedule SE. The rate is 15.3 percent, covering Social Security and Medicare, once net earnings reach $400.
The trade-off is exposure. Contracts, debts and claims against the business are claims against you. For a few residential clients with good insurance, many owners accept that. For a commercial janitorial contract, fewer do.
A sole proprietor files Schedule C with Form 1040 for business income and Schedule SE for self-employment tax. — Internal Revenue Service, retrieved 2026-09-27
15.3%Self-employment tax applies at 15.3 percent when net earnings from self-employment are $400 or more. — Internal Revenue Service, retrieved 2026-09-27
The LLC, taxed like you by default
A Georgia LLC costs $100 to form online and files an annual registration by April 1. By default the IRS taxes it the same way it would tax you.
A single-member LLC is disregarded for federal tax. Its profit lands on your Schedule C, just as before. A multi-member LLC is taxed as a partnership by default and files its own partnership return.
Either kind can elect corporate tax treatment with Form 8832. The election cannot take effect more than 75 days before it is filed. Most cleaning owners never file one. The more common change is the S corporation election covered below.
A domestic LLC with at least two members is classified as a partnership for federal income tax unless it files Form 8832. — Internal Revenue Service, retrieved 2026-09-27
75 daysAn LLC's classification election on Form 8832 cannot take effect more than 75 days before the date it is filed. — Internal Revenue Service, retrieved 2026-09-27
$100Georgia charges $100 to register an LLC online. — Georgia.gov, retrieved 2026-09-27
The corporation, and the S election on either entity
A Georgia corporation also costs $100 to file online, but it must report three principal officers within 90 days. It carries more records than most cleaning companies need.
The initial annual registration is $50 for a for-profit corporation. After that, it files each year between January 1 and April 1, like an LLC.
The S corporation election is available to a corporation and to an LLC that elects to be taxed as one. The owner then takes a reasonable salary through payroll and the rest as distributions. It can reduce self-employment tax once profits are steady, at the cost of running payroll for yourself.
$50A Georgia corporation must file an initial annual registration listing three principal officers within 90 days of incorporation, at a fee of $50 for a profit corporation. — Georgia Secretary of State, Corporations Division, retrieved 2026-09-27
S corporation payments to a corporate officer must be treated as wages to the extent they are reasonable compensation for services rendered. — Internal Revenue Service, retrieved 2026-09-27
Georgia's net worth tax depends on how the entity is taxed
Georgia's net worth tax falls on corporations, not on most LLCs. A single-member LLC and an LLC taxed as a partnership are not subject to it.
An LLC that elects to be taxed as a corporation is subject to it. So is a Georgia corporation. That is one more reason the default LLC treatment suits most small cleaning businesses.
Check with the Department of Revenue before electing corporate tax treatment. The yearly filing calendar for each structure is on annual registration and taxes.
The Georgia Department of Revenue states that a single-member LLC is not subject to the Georgia net worth tax, and there is no net worth tax on partnerships. — Georgia Department of Revenue, retrieved 2026-09-27
Under the Department of Revenue's FAQ, an LLC that files as a corporation is subject to the Georgia net worth tax. — Georgia Department of Revenue, retrieved 2026-09-27
Structure changes your workers' comp head count
In Georgia, LLC members and corporate officers count toward the three-employee threshold for workers' compensation. Sole proprietors and partners do not.
Two partners and one cleaner is a count of one. The same three people as a two-member LLC is a count of three, which triggers the requirement. Owners forming an LLC with a partner should price workers' comp into the decision.
Members and officers can waive their own coverage on form WC-10, but the waiver does not lower the count. See workers' compensation in Georgia for the rest of the rule.
| Item | Sole proprietor | LLC (default tax) | Corporation |
|---|---|---|---|
| State formation fee online | None | $100 | $100 |
| Annual state registration | None | By April 1 | $50, by April 1 |
| Federal tax return | Schedule C | Schedule C or partnership return | Corporate return |
| Georgia net worth tax | No | No | Yes |
| Owners counted for workers' comp | No | Yes | Yes |
For Georgia workers' compensation, LLC members and corporate officers are included in the employee count, while sole proprietors and partners are considered employers. — Georgia State Board of Workers' Compensation, retrieved 2026-09-27
Make the choice before the first commercial contract
Pick the structure before you sign a commercial contract or buy commercial insurance. Changing it later means re-papering both of them.
A contract signed in your own name stays with you when you form an LLC. A policy issued to you personally has to be changed to name the LLC. Local certificates and bank accounts need the same update.
If you decide on an LLC, you can file it yourself or have a service do it. The services and their published prices are on the formation-services comparison. The state fee is the same either way.
7 business daysGeorgia's online LLC filing takes about 7 business days as standard, with two-day processing available for an extra $100. — Georgia.gov, retrieved 2026-09-27
Questions
Can I switch from sole proprietor to LLC later?
Yes. You form the LLC and move the business into it. Expect to update your EIN, bank account, insurance, local certificate and client contracts, since the LLC is a new legal person.
Does an LLC protect me if a cleaner damages a client's property?
The LLC separates business debts from yours, but the claim is usually paid by your general liability policy. The entity and the insurance work together; neither replaces the other.
Is an S corporation worth it for a new cleaning business?
Usually not in the first year. The saving depends on steady profit above a reasonable salary, and running owner payroll has its own cost. Revisit it with an accountant once you have a year of numbers.
Does a two-member LLC file a different federal return?
Yes. By default it is taxed as a partnership and files a partnership return, and each member reports their share. A single-member LLC reports on the owner's Schedule C instead.