The cleaning industry is one of the ATO's most scrutinised sectors. With a mix of cash payments, subcontractor arrangements, and high labour costs, cleaning businesses face unique compliance risks. Whether you run a residential cleaning service or a commercial contract cleaning company, getting your bookkeeping right is essential.
1. Revenue Tracking
Separate your income streams for better profitability analysis:
- Recurring contracts (offices, strata, schools) — predictable monthly income.
- One-off cleans (end-of-lease, deep cleans, builders' cleans) — higher margin but irregular.
- Residential regular cleans — recurring but lower per-job value.
Track each revenue type separately in Xero to understand which services generate the best return.
2. Contractor Compliance — The #1 Risk
The ATO and Fair Work specifically target cleaning businesses for sham contracting. If your "contractors" only work for you, use your equipment, and follow your schedule — they're likely employees. Consequences of misclassification:
- Back-payment of super, PAYG withholding, and leave entitlements.
- Fair Work penalties up to $93,900 per contravention.
- Payroll tax reassessment by your state revenue office.
If you genuinely use subcontractors, ensure they have their own ABN, insurance, and the ability to work for other clients. Lodge your TPAR by 28 August each year.
3. Cleaning Services Award
If you employ cleaners, the Cleaning Services Award 2020 applies. Key points:
- Base rate (Level 1): Check the current Fair Work rate — it updates annually on 1 July.
- Penalty rates: Saturdays (150%), Sundays (200%), public holidays (250%).
- Early morning/late night: Shifts starting before 6am or finishing after 6pm may attract allowances.
- Casual loading: 25% on top of the base rate for casual cleaners.
4. Key Tax Deductions
- Cleaning supplies and chemicals — consumables are fully deductible.
- Equipment: Vacuum cleaners, steam cleaners, pressure washers, and floor polishers — instant write-off under $20k.
- Vehicle costs: Fuel, rego, insurance, and servicing for your work van. Keep a logbook for the business-use percentage.
- Uniforms: Branded uniforms and their laundering costs.
- Insurance: Public liability (essential for entering client premises) and workers compensation.
- Marketing: Website, Google Ads, Hipages listings, vehicle signage.
5. Cash Flow Management for Contract Cleaners
- Invoice immediately after each clean or at the start of each month for contracts.
- Set payment terms to 7 days for commercial clients — 14 or 30 days creates cash gaps when you need to pay staff weekly.
- Automate invoicing for recurring contracts using Xero's repeating invoices feature.
- Set aside GST and tax weekly — don't wait until BAS time to discover you've spent it.
Key Takeaways
- Cleaning is a high-scrutiny industry for ATO and Fair Work — compliance is critical.
- Ensure subcontractors are genuinely independent and lodge your TPAR annually.
- Pay employees under the Cleaning Services Award including all penalty rates.
- Claim supplies, equipment, vehicles, uniforms, insurance, and marketing costs.
- Use repeating invoices in Xero for recurring contracts and set 7-day payment terms.