Crews, vans, supplies, and the constant W-2 vs 1099 question. We get the equipment expensed, the workers correctly classified, and your QBI deduction protected so the IRS doesn't reclassify a year of profit into back-payroll.
Worker classification is the #1 audit risk in cleaning. State DOL audits trigger federal reclassification. We document, structure, and stand behind the call.
Crews you schedule, supply, and supervise are almost always W-2 under common law (Rev. Rul. 87-41 / §3121(d)(2)). Misclassification penalties: 1.5% of wages + 20% of FICA + late deposit penalties. We structure crew agreements that hold up to a DOL or IRS audit.
IRC §3121(d)(2); Rev. Rul. 87-41 (20-factor test)Commercial vacuums (ProTeam, Sandia), floor scrubbers, carpet extractors (Mytee), pressure washers, ladders, ULPA HEPA. Up to $1,160,000 §179 expensing 2024 plus 60% bonus depreciation. We time purchases so the deduction hits your highest-income year.
IRC §179; §168(k)Cargo vans, Sprinters, F-250 trucks for janitorial routes. Standard mileage 67¢ (2024) or actual + depreciation. Heavy vehicle >6,000 lb GVWR qualifies for §179 (cap $30,500 for SUVs / no cap for true cargo vans) plus bonus. We pick whichever yields the bigger Year-1 deduction.
IRC §179(b)(5); §168(k); Rev. Proc. 2024-13EPA-list-N disinfectants, microfiber, mop heads, can liners, PPE, gloves, paper. Tracked as supplies or COGS depending on inventory level. Small-taxpayer §263A exemption keeps the accounting simple if revenue is under $30M.
IRC §162(a); §263A(b)(2)(B); §471(c)National commercial accounts (medical offices, retail chains) can put you in 3-5 states by year 3. Each one wants registration, payroll withholding, and a return. We coordinate state filings so a Texas job doesn't become a Texas back-tax notice.
IRC §901; state nexus + reciprocity rulesCleaning shops netting $80K+ benefit from S-Corp election. We benchmark reasonable comp from BLS first-line cleaning supervisor data. Add a SEP-IRA or Solo 401(k) ($69K combined limit 2024) and shelter more of the profit before tax.
IRC §1402(a); §408(k); §401(k)Residential cleaning company, 4 employees, $300K net 2024, FL + GA commercial side accounts. We S-Corp elected, fixed W-2 misclassification on 2 crews, §179'd a replacement van + scrubbers, set up a SEP, and registered properly in GA.
$19,000 savedFederal + FICA savings on S-Corp split + SEP shelter + accelerated equipment expense + avoided GA back-tax exposure. State savings on top.