Lexington
Lexington-Fayette Urban County Government charges an occupational license fee of 2.25% on wages and other compensation for work in Fayette County, and employers withhold it from pay. They file Form 220-221 quarterly, or monthly if withholdings in any quarter exceed $300, plus an annual Form 222 reconciliation. Kentucky taxes residential and commercial cleaning, so state sales tax runs on your invoices too.
Lexington's local rule for a cleaning company is a payroll one, and a business subject to it obtains an occupational license account before starting business. This page covers the occupational license fee, the license account, Kentucky sales tax on cleaning, the state wage, and what it means for your books. State payroll registration is on my Kentucky page.
LFUCG's occupational license fee is 2.25% of each individual's gross wages, salaries, commissions, and other compensation for work in Fayette County, and 2.25% of business net profits from activities in Fayette County. Employers must withhold it from employee pay and file Form 220-221 quarterly, moving to monthly if withholdings in any quarter exceed $300, with an annual Form 222 reconciliation. The LFUCG Division of Revenue administers it (the division is named on a 2013 LFUCG form).
Neither LFUCG page behind this section shows a date, and the rate carries no stated effective date. This page doesn't cover the Fayette County school board's separate tax.
Source: Lexington-Fayette Urban County Government, Occupational license fee
Source: Lexington-Fayette Urban County Government, Occupational license returns
Per LFUCG, a business subject to the occupational license ordinance must obtain an occupational license, set up as an account with the Division of Revenue, before starting business.
Source: Lexington-Fayette Urban County Government, Occupational license returns
Both sides of a cleaning business are taxable in Kentucky. KRS 139.200(2)(h), in the version effective August 1, 2026, covers janitorial services including residential and commercial cleaning, plus carpet, upholstery, and window cleaning. The Department of Revenue's janitorial FAQ says cleaning within restoration work is taxable, and that a contractor buying taxable janitorial services for a construction project can't claim a resale exemption on them. The rest of the conditions are on my Kentucky sales tax page.
Source: KRS 139.200 Imposition of sales tax (Kentucky General Assembly)
Source: Kentucky Department of Revenue, Janitorial Services FAQs
This page doesn't cover any Lexington wage rule. Kentucky's minimum wage has been $7.25 an hour since July 1, 2009, and KRS 337.275 and the U.S. Department of Labor's state table showed no announced change as of October 20, 2026.
Source: KRS 337.275 Minimum wage (Kentucky General Assembly)
Source: U.S. Department of Labor, Wage and Hour Division, State Minimum Wage Laws (2026-07-01)
The occupational license fee gets a withholding liability account of its own, apart from Kentucky withholding and from collected sales tax. A single catch-all account for state and city payroll taxes. Terrible setup. Come quarter end, the 220-221 needs the Fayette County figure by itself, and a blended account means digging it back out line by line. Payroll is recorded at the wage actually paid, which my payroll page walks through, and sales tax collected never counts as revenue.
I'm a bookkeeper, not a CPA or an Enrolled Agent. I keep the occupational license fee and the sales tax in their own accounts; whether you file monthly or quarterly, what the net profits piece means for your company, and how each return gets filed are questions 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 Lexington 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
Lexington's fee comes out of pay for work in Fayette County, so it gets a liability account that holds nothing else. Kentucky sales tax collected on cleaning sits in a separate account, out of income, and labor is booked at the wage actually paid. Book a short call below and show me how your quarterly numbers come together today.
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
Cleaning in Lexington and want the Fayette County fee pulled out of your general payroll line? Tell me how your accounts are set up. The first conversation doesn't cost anything.
