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Carpet cleaning businesses provides professional carpet cleaning
services, such as steam cleaning, dry cleaning and rug cleaning to households
and businesses. If you are looking to open your own carpet cleaning business, choosing the right business structure might seem like a daunting task to any aspiring business owner. There are different advantages and disadvantages for each structure, making some better for certain industries. Gaining an understanding of the different structures available will help you to make this decision and ultimately allow you to reap the benefits of your chosen structure.

Setting up a Carpet Cleaning Company

A company business structure is a popular option because it creates a separate legal entity – the liabilities of your business remain those of the business instead of yours as an individual.

Advantages of Incorporation

Any debts accrued in the course of business become those of the company and not the individual. For example, should your carpet cleaning business enter insolvency, it won’t clean out your bank account; your assets and shareholders are protected. However, shareholders may lose their original investment. If you have dreams of running a carpet cleaning empire, this structure is for you.

Disadvantages of Incorporation

While creating a separate legal entity can be enticing, it does come with some responsibilities and burdens. The incorporation process is rigorously governed and can be a lengthy process. Couple this with reporting requirements, annual meetings, the requirement of having certain officers and a 30% company tax rate. By the end, you may be referring to your company as your child.

Carpet Cleaning Sole Trader Structure

If you prefer to operate a carpet cleaning business as a sole trader, you will have full control of your business. A sole trader’s business does not take on separate entity status, rather, it is the individual (you) trading on their own.

Advantages of being a Sole Trader

Unlike the company structure where the business is separate from the business owner, the sole trader takes on all the responsibility of the business. Revenue is treated as personal income meaning you keep the profits. Should you wish to sell your business, you can also keep the after-tax gains. Lastly, this business structure is easy to set up.

Disadvantages of being a Sole Trader

As a sole trader, you can also be held responsible as an individual should things take a turn. For example, if you accidentally ruin your client’s antique Persian rug, you can be held personally responsible for the damage. 

Key Takeaways

Whether you dream of being a carpet cleaning mogul or running a small-scale operation, the business structure you choose will impact you in both the short and long term.Our business structuring lawyers can assist you with setting up your carpet cleaning business.

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