In Australia, professional carpet cleaning services, such as steam cleaning, dry cleaning and rug cleaning to households and businesses, continues to grow. At 2% growth over the next five years, more carpet cleaning businesses are appearing, given the
common occurrence of carpets in commercial office space areas. If you are looking to start a carpet cleaning business, the business structure you choose for your carpet cleaning business will be paramount to any long term plans you have for the prosperity and growth of your business. Also, choosing the wrong business structure for you could affect your ambitions in an increasingly competitive market. On the other hand, by implementing the correct business structure for your needs, you may gain a crucial advantage over your competition. This article explores two types of business structures: franchise and company.

Should I Franchise My Carpet Cleaning Business?

There are two ways to look at a franchise business structure, as you can either join an existing franchise or create a new franchise for your carpet cleaning business. Participating in a franchise network will ease the process of entering into the market by taking on the goodwill of an existing business. Meanwhile, creating a franchise will provide the potential to expand your business into new areas with a proven business model.

By joining an existing carpet cleaning franchise, you will gain customers as a result of its current reputation or goodwill. As a result, this will ease the woes many businesses have of building up a client base from scratch and gaining their trust over time. Furthermore, franchises buy their materials in bulk and strike deals with manufacturers and suppliers of products that they need, which will lower the cost of running your carpet cleaning business. In setting up a new franchise network, this will require some capital to establish, however, if your long-term goal is building a reputation and expanding your business then this could well be the right choice for you.

Setting up a Carpet Cleaning Company

Alternatively, you may wish to choose a company business structure for your carpet cleaning business. This structure will provide you with the benefit of limited financial liability which will allow you to grow and expand more aggressively than some other business structures such as a sole trader.

The advantage of a company business structure is that it is viewed as an individual legal entity within Australian law. This means any debt accrued by the agents of a company during business will only be payable by the company. Therefore, you can protect your personal finances by incorporating your carpet cleaning business and earning a salary as a director. Also, you will then be able to take risks or take on debt that you may have shied away from as an individual, which can assist you in expanding your business.

Note that strict company law governs exactly how a company is to be structured and how it is to report earnings. Furthermore, companies within Australia will be subject to very significant obligations when it comes to reporting and payment of tax. Finally, should directors engage in fraud while running a company, they could be subject to civil and criminal liability.

Key Takeaways

Due to the low barriers to entry, the carpet cleaning industry is largely made up of small independent owners and operators. If you are looking to start your own carpet cleaner business or expand your already existing carpet cleaner business, it would be prudent to begin to consider which business structure will best suit your needs. If you have the starting capital, you may wish to choose a company structure as this will grant you the limited financial liability. You may also want to consider joining a franchise to ease you way into a competitive market, or create you own franchise network.

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.
Adi Snir

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