Most house cleaners bring their own equipment and supplies to the job and are usually given due credit for that expense when a customer weighs the rate they will agree to pay… whether by the hour or by the job.
But there are many other (and greater) expenses that customers, and often house cleaners themselves, might not take into account when setting the price for cleaning service.
(Warning: I am not a legal, financial or tax expert!)
As with all self-employed individuals, an independent house cleaner (a.k.a. sole proprietor) is required to pay both the employee’s portion of Social Security and Medicare taxes as well as the employer’s portion; essentially doubling that tax to a bit over 15% of total income after expenses… in addition to any federal, state and local income taxes. (A customer can submit the employer taxes if they choose, but generally it is agreed/assumed that the self-employed individual will handle those payments)
www.IRS.gov has informative articles; just use the search bar in the top right-hand corner of the home page.
Be sure to fully investigate all taxes and fees due, not only on the federal level, but also to your state and local tax departments. Laws vary from area to area and you certainly don’t want to be blindsided by a tax or fee you didn’t realize you should have been paying all along.
No Employee Benefits
There are no ’employee benefits’ other than those the self-employed provide (and pay for) themselves:
- No Paid Time Off (unless your customers are super duper generous)… no Vacation Pay, no Holiday Pay, no Sick Pay~ usually regardless of who cancels a visit
- No Medical Insurance
- No Worker’s Compensation Insurance
- No Disability Insurance
- No Unemployment Insurance
- No Liability or Bond Insurance
- No Life Insurance
- No Retirement Fund
The insurances that an employer might provide, such as disability insurance, can be quite costly to provide for yourself. One strategy is to build a personal emergency fund to offset unpaid time off; whether from predictable cancellations or a sizable setback like injury or illness.
Taking advantage of a savings plan such as an IRA (Individual Retirement Account) can be a realistic start toward addressing future needs.
These options, of course, depend upon a net income sufficient enough to allow for payments into these future-oriented accounts.
House cleaning is a very physical task and for most cleaners 40 ‘billable hours’ per week is over the limit of what is do-able. Taking into consideration the number of hours it is physically possible to work needs to be part of the equation in determining the rate that makes for a ‘Living Wage’.
Like all businesses, there are ‘non-billable’ hours in every house cleaner’s work week; most revolve around keeping supplies stocked and keeping the caddy cleaned and filled with the specific supplies needed for the next outing… not to mention hauling to and fro. There is always time spent in communication with customers about scheduling issues, etc., and a surprising amount of free time devoted to research looking for solutions to specific cleaning challenges.
The Bottom Line
As they say: The bottom line is… the bottom line. If house cleaning is your livelihood, it ultimately needs to cover important financial necessities beyond your immediate monthly bills. You and I may not end up with more money than we need, but working to responsibly cover life’s real expenses is a worthy and realistic goal.
If you clean, clean well; only then can you work toward the higher end of what housecleaning services go for. There are customers willing to pay for excellence, and you will find each other.
BTW: it does not hurt to briefly and respectfully outline the expenses mentioned above for a prospective customer when you are bidding a job, to give them a better understanding of what you take into account when setting your rate. (Heck, forward this article to them) Unless they are self-employed, they probably have never needed to think about the difference between an employee’s hourly wage, and a self-employed person’s hourly rate. Big difference!
Please Chime In!
Did I miss any expenses? Do you have suggestions for dealing with any of the expenses listed above?