What expense category is Cleaners?

Maintaining a clean and hygienic workspace is essential for employee productivity, customer impressions, and overall business operations. Costs associated with keeping your business premises clean—whether hiring a professional service or purchasing cleaning supplies—are regular expenditures for most companies.

For accountants and small business owners, understanding how to properly categorize these "cleaner" expenses is crucial for accurate financial tracking and tax reporting.

Cleaners Expense Category

The appropriate expense category for cleaning costs depends on whether you are paying for a service or buying supplies:

1. Hiring a Cleaning Service

Examples include a janitorial company or an independent contractor cleaner.

Category: These costs are operating expenses, typically classified under:

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• Cleaning Expense or Janitorial Expense: Specific accounts for clarity.
• Repairs and Maintenance Expense: Often used as cleaning, contributes to building upkeep.
• Office Expenses or General & Administrative Expenses: Broader categories where these might fit.
• Rent Expense: In certain lease situations, janitorial services paid directly by the tenant may be treated as additional rent, as per IRS guidance (Pub. 535).

2. Purchasing Cleaning Supplies

Examples include disinfectants, paper towels, soap, and mops used by your staff or business.

Category: These costs are typically classified under Supplies Expense or Office Supplies.

Choose the categories that best suit your business structure and apply them consistently.

Some Important Considerations While Classifying Cleaner Expenses

When accounting for cleaning costs, keep these points in mind:

• Ordinary and Necessary: The cost of cleaning your business premises must be an ordinary and necessary expense for maintaining your operations.
• Business Premises vs. Home Office: Cleaning costs are fully deductible for dedicated business locations. If you have a home office, only the portion of cleaning costs (service fees or supplies) allocated to the square footage exclusively and regularly used for business is potentially deductible as part of the home office deduction. Strict allocation rules apply.
• Service vs. Supplies: Clearly distinguish between payments made for cleaning services (categorized as Cleaning, Maintenance, etc.) and purchases of cleaning supplies (categorized as Supplies).
• Worker Classification (Individuals): If you hire an individual cleaner directly (not a company), be sure to correctly classify them as either an employee (requiring payroll withholding and taxes) or an independent contractor (potentially requiring Form 1099-NEC reporting if payments reach $600/year). Hiring an established cleaning company avoids this complexity.
• Recordkeeping: Maintain detailed records. Keep invoices from cleaning service providers specifying dates, services performed, and costs. Retain receipts for all purchases of cleaning supplies. Keep proof of payment for all expenditures.

Examples of Cleaners' Expenses

Common cleaning-related costs for businesses include:

Cleaning Service Fees

• Payments to a commercial janitorial company for regular office cleaning.
• Fees paid to an independent contractor for cleaning services.
• Costs for specialized cleaning, like carpet cleaning, window washing, or post-construction cleanup for the business premises.

Cleaning Supply Purchases

• Cleaning solutions, disinfectants, and glass cleaner.
• Paper towels, toilet paper, tissues.
• Trash bags.
• Hand soap and sanitizer.
• Mops, brooms, buckets, sponges.
• Vacuum cleaners (Note: Higher-cost vacuums might be capitalized and depreciated, while very low-cost ones might be expensed as supplies, possibly under the De Minimis Safe Harbor rule).

Tax Implications of Cleaners' Expenses

• Deductibility: Costs for cleaning services and supplies for your business premises are generally tax-deductible as ordinary and necessary operating expenses.
• Timing of Deduction: Deduct expenses in the year they are paid or incurred, depending on your accounting method (Cash or Accrual). Prepayments for cleaning services covering periods significantly beyond the current tax year should be allocated over the service period.
• Capitalization: Routine cleaning costs are operating expenses. However, cleaning costs incurred as part of a major renovation or construction project might need to be capitalized as part of the overall project cost under Uniform Capitalization Rules (UCR), if applicable.
• Home Office Allocation: Remember, only the business portion of cleaning costs related to a qualifying home office is deductible.

Where to Report (Schedule C): For sole proprietors:

• Cleaning Services: Typically reported on Line 21 ("Repairs and maintenance") or Line 27a ("Other expenses") specifying "Cleaning" or "Janitorial Services." If treated as additional rent, use Line 20b. If paying an independent contractor $600+, potentially Line 11 ("Contract labor").
• Cleaning Supplies: Report on Line 22 ("Supplies").

How Fyle Can Automate Expense Tracking

Managing payments for cleaning services and supplies requires good recordkeeping. Here’s how Fyle can help:

• Capture Payments: Track payments made to cleaning companies or for supply purchases via company credit card using Fyle's real-time feeds. Manage invoices paid via other methods by attaching proof of payment.
• Store Documentation: Keep digital copies of cleaning service contracts, invoices, and receipts for supply purchases attached directly to the expense transaction within Fyle.
• Consistent Categorization: Use Fyle to reliably categorize cleaning costs under the appropriate account (Cleaning Expense, Supplies, Repairs & Maintenance).
• Track Recurring Payments: Monitor recurring payments to cleaning service providers for easier budget management and timely payment verification.
• Seamless Integration: Fyle syncs the categorized expense data to your accounting software (QuickBooks, Xero, NetSuite, Sage Intacct), ensuring accurate financial records and simplifying tax preparation.

Cleaning expenses, whether for services or supplies, are generally deductible operating costs necessary for maintaining a business environment. Proper classification depends on whether you're paying for a service or buying materials, and careful recordkeeping is essential. 

Utilizing expense management tools like Fyle can streamline the tracking and documentation of these recurring business expenditures.