Commercial cleaning and janitorial insurance in Virginia

Virginia's setup for a cleaning company: SCC, Virginia Tax and a local BPOL license

A Virginia cleaning company forms its entity with the State Corporation Commission, registers with Virginia Tax for withholding once it has employees, and gets a local business license (BPOL) from the commissioner of the revenue in each city or county where it has a place of business. There's no state license for commercial cleaning. DPOR's contractor licensing covers construction trades, not cleaning.

No sales tax on cleaning services

Virginia's retail sales tax rules say charges for services are generally exempt, and only services tied to a sale of tangible goods (plus listed exceptions) are taxable. Janitorial services aren't among the taxable ones, so pure cleaning contracts don't need sales tax registration. If you sell supplies to a client as a separate item, ask Virginia Tax or your CPA whether that sale is taxable.

BPOL: the local tax on your gross receipts

The Business, Professional and Occupational License tax is where Virginia collects from a cleaning company. Under Va. Code §58.1-3706, localities can tax gross receipts from "repair, personal and business services" at up to 36 cents per $100, unless a locality kept a higher rate it already had on January 1, 1978. Receipts under $100,000 are exempt in localities over 50,000 people, and under $50,000 in localities of 25,000 to 50,000.

Rates vary by locality, and a company with buildings in several jurisdictions files a license return in each one. The city notes below show how different the numbers can be. Read the statute at Va. Code §58.1-3706 and confirm your rate with each commissioner of the revenue.

State rules that touch cleaning crews

We found no Virginia law written specifically for janitorial employers. Two general rules matter most. Va. Code §40.1-28.7:7 lets a misclassified worker sue within three years if the employer knew of the misclassification, and in that suit a person you pay to work is presumed to be your employee unless IRS guidelines show otherwise.

For schools, Va. Code §22.1-296.1(E) requires a school board, before awarding a contract for services involving direct contact with students on school property during school hours or school-sponsored activities, to have the contractor certify whether anyone providing the services has been convicted of specified offenses. Under subsection F, certain convictions bar the award.

Virginia comp: the three-employee threshold and who it really reaches

Virginia's comp law applies to employers with three or more employees regularly in service in the same business (Va. Code §65.2-101). A two-person crew sits below that line. Clients often ask for a comp certificate anyway, and the statutory-employer rule explains why.

Under §65.2-302, when an owner or contractor hands off part of its own line of work, it answers for the comp benefits of the subcontractor's injured workers, just as it would for its own staff. A facility-services prime that hands you a building is effectively insuring your crew if you're not, so primes push comp requirements down to cleaning subs regardless of headcount.

Owners have options. A sole proprietor, a sole shareholder, a single-member LLC member or all the partners of a business aren't counted as employees unless they elect coverage by telling the insurer, while corporate executive officers are employees by definition and may reject coverage under §65.2-300.

An employer that should carry comp and doesn't faces civil penalties of up to $250 a day, capped at $50,000. It's also liable to the injured worker without the usual defenses, and after a Commission finding and 15 days' certified notice it can be ordered to stop operating (§65.2-805).

Virginia is an NCCI state, so contract janitorial payroll generally goes under class 9014, "Janitorial Services by Contractors – No Window Cleaning Above Ground Level & Drivers," as assigned by your carrier. Filings and coverage checks run through the Virginia Workers' Compensation Commission.

How a Virginia county writes insurance into service contracts

Henrico County publishes a standard insurance exhibit for goods and services bought by the county and Henrico County Public Schools. The October 2018 version, which can vary by procurement, asks for:

• workers' comp at Virginia statutory limits, with employer's liability of $100,000 each accident, $100,000 each employee for disease and $500,000 disease policy limit
• general liability of $1,000,000 each occurrence including contractual liability, $2,000,000 general aggregate, $2,000,000 products-completed operations and $1,000,000 personal and advertising injury
• business auto of $1,000,000 combined single limit covering owned, hired and non-owned vehicles, and a $2,000,000 umbrella
• the County and the school division as additional insureds, carriers licensed in Virginia and rated A- VII or better, and 30 days' notice of cancellation

Two add-ons apply when the scope calls for them: $1,000,000 of abuse and molestation coverage where services involve one-on-one contact with children, and $1,000,000 of pollution liability where substances can be released into the environment.

The exhibit doesn't ask for a janitorial bond, but property managers who hand over master keys often do. Our guide to reading a cleaning contract's insurance requirements covers each of these lines.

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Virginia exposures cleaning companies run into

1099 crews under the employee presumption

In a misclassification suit, Virginia presumes paid workers are employees unless IRS guidelines show they're independent, and workers can sue within three years if the employer knew. A company running cleaners on 1099s faces wage claims and can see those workers added to its comp payroll at audit. Ask an employment attorney before choosing that model.

The prime contractor's comp problem becomes yours

Because §65.2-302 makes primes liable for their subs' workers, a facility-services company may refuse to start you without a comp certificate, even at two employees. Not having one can cost the account before it begins.

Abuse and molestation on school-adjacent work

Henrico's exhibit adds $1 million of abuse and molestation coverage where a scope involves one-on-one contact with children, and school boards collect conviction certifications from contractors whose staff have direct student contact. Many GL policies exclude or sublimit abuse claims, so check yours before bidding.

Virginia localities and their license math

What sets the price of cleaning insurance in Virginia

We don't publish Virginia prices, but the state's rules shape them.

BPOL is a tax, not a premium, but it's figured on gross receipts, and your annual sales also feed into liability pricing, so report the same numbers in both places. Comp starts at three employees by law and earlier by contract, and every part-time cleaner adds payroll. County exhibits that ask for a $2 million umbrella, abuse and molestation coverage or pollution liability add policies or limits a small office-only contractor might not carry.

Your price depends on the payroll in each class code, your annual sales, the kinds of buildings you clean, how much specialty and chemical work you do, the vehicles your crews drive, your claims history and the limits your contracts require. Our guide to cleaning insurance costs breaks the numbers down.

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Licensed for Virginia cleaning contractors

Commercial Cleaning Insurance Group is a brand of The Allen Thomas Group, licensed in Virginia (License #617462, NPN 7642818).

Virginia contractors can start a quote here. Our licensed team checks your headcount, locality list and contract exhibits and talks with you before quoting.