This article provides three key state business startup requirements for self-employed sole proprietors and general partners who run residential house cleaning businesses. Information from the Secretary of State, the Delaware Division of Revenue and selected city and county government sources were used to research this article.
Be aware that sole proprietor and general partner startup requirements in this state are always changing. Some requirements even vary from county to county. It is important that you call or visit your local county or city government to find out local requirements for residential house cleaning businesses and home-based businesses. This article is not intended to be exhaustive or a substitute for qualified legal or tax advice.
Business Name Registration
Sole proprietors and general partners who want a business name that does not include the owner(s) full names (for example, Janice Smith’s Cleaning Service or Martha Harris and Tom Graham’s Maid Service) need to find out whether the name they want to use is available in the county where the business will operate. Start with a search of existing Trade Business and Fictitious Names to avoid legal problems and customer confusion:
Sole Proprietors who choose to operate with a trade name must file for a Trade, Business or Fictitious Name (DBA) Registration Certificate with the Office of the Prothonotary of each county in which they will do business. All Registration Certificates must show the date when the business was organized and must be notarized. (A Notary is available in the Prothonotary’s Office.) Find a Prothonotary in Delaware.
The Office of the Prothonotary of each county will keep the original Registration Certificate, so be sure to request two certified copies (one for the bank and one for your business records).
General Partners must file with the Delaware Division of Corporations to register a trade name.
In the state of Delaware, filing a fictitious or trade name does not guarantee a business sole rights to the use of that name. Other businesses in the state may also register the same fictitious name. Registered businesses are expected to legally defend their trade names.
Business License Registration
Note: Delaware.gov has a very detailed, step by step guide to starting a new business in the state.
Residential cleaning services are licensed by the State of Delaware. Cleaning services are considered general services in Delaware (Business Group Code 099). Sole proprietors and general partners can file for a general business license with using the Delaware Business One Stop Online system. The Combined Registration Application (CRA ) form can be filled out online. The Combined Registration Application (CRA) form registers a business for a general business license and business tax registration.
Most general partnerships in Delaware are treated the same as corporations and limited liability companies. In Delaware, general partnerships are required to file documents with the Secretary of State, including a fictitious name or DBA. A written partnership agreement drawn up by a lawyer is important for both or all partners. Partnership agreements have to be filed with the state.
Sole proprietors and general partners may apply for an Employer Identification Number (EIN) from the IRS even if they do not plan to hire employees. Getting an EIN may make it easier to open a bank account and reduce your risk of identity theft. You can apply for an EIN online. In addition, some business registration forms will require a a NAICS business classification number for the house cleaning industry.
Business Tax Registration
Register for business taxes in Delaware online through the One Stop Business Registration and Licensing System portal.
Residential housecleaning services are not taxable in Delaware. Cleaning services do not have to collect and send sales taxes to the Division of Revenue. Delaware requires all service providers in the state to pay business taxes on the gross receipts of all business activity.
Business income from sole proprietors is considered personal income and is filed and taxed at personal rates to the State of Delaware. Sole proprietors and general partners are responsible for paying estimated self-employment income taxes in Delaware (on Form 200ES) similar to the way self employment taxes are paid to the federal government. Get more information about estimated tax requirements by calling the Division of Revenue at (302) 577-8200 or (302) 577-8205.
General partnerships are required to pay a flat annual tax of $250 to the state. Business income from general partners is divided and taxed at personal tax rates in the State of Delaware. Delaware general partnerships that file a Federal partnership information Form 1065, may need to file state income tax Form 300 Get more information from a CPA or qualified tax preparer to find out if your partnership must file those returns.
Selected Delaware City Licenses
Wilmington Business License (County Seat of New Castle County): Cleaning services must be licensed by the city of Wilmington. Application form (with list of fees):