California
California doesn't tax residential or commercial cleaning under its general service rule, Regulation 1501, though the cleaner owes tax on the supplies it buys as their consumer. Unemployment insurance classification uses the ABC test, and the $16.90 minimum wage rises to $17.40 on January 1, 2027. Local minimum wages also exist.
For a California cleaning business, the tax question sits on the buying side. The service isn't taxed under the general rule, but the supplies are, because the cleaner is their consumer. Add a classification test that reaches wage law as well as unemployment insurance, and a wage change on January 1. Below: sales tax, the employee test, payroll registration with EDD, the minimum wage, and what it all means for your books.
Residential and commercial cleaning aren't taxable in California under the general service-enterprise rule in Regulation 1501. That conclusion comes from the general rule; no California Department of Tax and Fee Administration source naming house cleaning or janitorial service was found. The same rule has the cleaner owing tax on the supplies it buys as their consumer. The conditions, including separately stated sales of goods, are on my page on California sales tax and cleaning.
Source: California Department of Tax and Fee Administration, Regulation 1501, Service Enterprises Generally
California uses the ABC test for unemployment insurance. EDD's guide DE 231K (Rev. 12-24) places it at Cal. Unemp. Ins. Code 621(b), with the exceptions at Labor Code 2776 to 2784; this page relies on that guide rather than the statute text. The Department of Industrial Relations says the ABC test (Labor Code 2775 to 2787) applies under the Labor Code and the IWC wage orders as well as the Unemployment Insurance Code, and EDD notes that some relationships use the Borello multifactor test instead.
How employees and subcontractors each appear in the books is in 1099 subcontractors vs. W-2 employees. Which test applies to a given cleaner, and how that cleaner comes out under it, is a legal question for your CPA or an employment attorney.
Source: California Employment Development Department, Employee or Independent Contractor (AB 5)
California taxes wages. The Employment Development Department administers California Personal Income Tax (PIT) withholding and is also the unemployment insurance agency, and registration for a payroll tax account goes through EDD's Register for a Payroll Tax Account page.
Source: California Employment Development Department, New Employer Resources
Source: California Employment Development Department, Step 3: Register for a Payroll Tax Account
The California minimum wage is $16.90 an hour, effective January 1, 2026. The Department of Industrial Relations announced on August 13, 2026 that it rises to $17.40 an hour on January 1, 2027. California also has local minimum wages; this page covers the state rate only, and Los Angeles, San Francisco, and San Diego each have their own page.
Source: California Department of Industrial Relations, Labor Commissioner, Minimum Wage FAQ
Source: California Department of Industrial Relations, News Release 2026-66 (August 13, 2026)
Source: U.S. Department of Labor, Wage and Hour Division, State Minimum Wage Laws (updated July 1, 2026)
With the service untaxed under the general rule, the bookkeeping attention moves to what you spend. Bookkeeping for a California crew isn't just logging invoices. It's recording supplies at what they actually cost you, tax included, it's carrying labor at the wage you actually pay as it moves to $17.40, and it's keeping withholding and unemployment insurance as separate liabilities even though EDD handles both. The payroll page goes through how wages and payroll liabilities land in the books.
I'm a bookkeeper, not a CPA or an Enrolled Agent. I keep the supplies, wages, and payroll liabilities straight; whether a particular sale is taxable, and what goes on a return, is a question for your CPA.
Rules checked against the sources above as of October 20, 2026. Rates and rules change; confirm current figures with the agency or your CPA.
About Figure Eight Financial
Figure Eight Financial is Dave Gordon’s bookkeeping practice for residential and commercial cleaning companies. I work with owners in California and across the country, and I’m a Certified QuickBooks Online ProAdvisor.
Before bookkeeping I studied computer science at Penn State and spent a career at IBM as an engineer, so I build the books as a system: data comes in once, lands in the right place, and ties back to a statement. I’m a bookkeeper, not a CPA or Enrolled Agent. I keep the books your CPA works from, and the tax decisions stay with your CPA.
Credentials and memberships reported by Figure Eight Financial.
More about DaveHow I Help
Since the service itself isn't taxed under California's general rule, the bookkeeping focus goes to supplies recorded at their full cost, tax included, and payroll recorded at the wage actually paid. Withholding and unemployment insurance each get their own liability account, even though EDD handles both. Book a short call below and we'll walk through your California books before January.
The core service. Transactions recorded and categorized, every account reconciled so the books and the bank agree, and monthly reports that arrive explained, split by residential and commercial and sliceable per contract.
The full picture of how this works for a cleaning companyFor the months where nothing got entered at all. I fill in the missing periods from the ground up, pulling bank feeds, statements, and receipts until every month has a complete set of records.
How catch-up bookkeeping worksFor books that exist but can’t be trusted. I audit what’s there, fix the unreconciled accounts, duplicate transactions, and wrong categories, and tie every balance back to a statement.
How cleanup bookkeeping worksYour crews paid on time, every pay period, with each payroll run recorded in the books so labor shows up against the jobs it belongs to.
How payroll worksRecurring invoices that match your contracts, an aging report you can trust, and follow-up on slow payers handled by a process instead of your evenings. Built for net-60 commercial accounts.
How invoicing and receivables workA file built right for a cleaning company from day one, or rebuilt after the DIY version drifts, and then I teach you to run it. I’m a Certified QuickBooks Online ProAdvisor, and this is honestly my favorite part of the job.
How a proper setup worksWe start with a short call about your business and where the books stand. The first conversation doesn’t cost anything.
I take a look at what you’ve got, your QuickBooks file, your spreadsheet, whatever exists.
You get a written proposal with the price, so the decision is yours with the number in hand.
Let's Connect
If you clean in California and want your books ready for $17.40 in January, send me a note. We'll sort it out together, and the first conversation doesn't cost anything.
