Tennessee
Tennessee splits cleaning by what gets cleaned. Cleaning a home or building (real property) isn't taxable under Revenue Ruling 07-04, a 2007 ruling that is advisory, while cleaning rugs, upholstery, or furniture is taxable. There's no state income tax on wages to withhold, and the federal $7.25 minimum wage applies.
In Tennessee the question that matters for sales tax is whether you're cleaning the building or something in it, and that holds for homes and offices alike. Payroll has one less account to open, since the state doesn't tax earned income, and the minimum wage is the federal rate. Below I go through sales tax, the employee test, payroll registration, the minimum wage, and what all of it means for your books.
Residential and commercial cleaning get the same treatment in Tennessee, and it turns on the object. Cleaning the dwelling or the building itself is real property cleaning, which Revenue Ruling 07-04 (2007) treats as not taxable; the ruling states that revenue rulings are advisory and not binding on the Department of Revenue. Cleaning tangible personal property, such as rugs, upholstery, or furniture, is taxable under SUT-115 and Tenn. Code Ann. 67-6-205. The conditions, including cleaning done as part of a repair, are on my page on Tennessee sales tax for cleaning services.
Source: Tennessee Department of Revenue, Revenue Ruling 07-04 (February 13, 2007)
Source: Tennessee Department of Revenue, SUT-115, Services Subject to Sales and Use Tax (March 27, 2025)
For unemployment insurance, the Tennessee Department of Labor and Workforce Development applies the IRS 20-factor test from Revenue Ruling 87-41 to services performed on or after January 1, 2020. Services before that date fell under the ABC test. How each kind of worker shows up in the books is in 1099 subcontractors vs. W-2 employees. Whether a particular cleaner is an employee is a legal question, and it belongs with your CPA or an employment attorney.
Source: Tennessee Department of Labor and Workforce Development, Employee or Contractor
Tennessee has no state income tax on earned income, so there's no state withholding account and no withholding registration, per the Department of Revenue's GEN-34 on income tax withholding. Unemployment insurance runs through the Tennessee Department of Labor and Workforce Development and its Employer e-Services site. That link is the e-Services landing page; a TDLWD help article says new employers use the Register my business link on the e-Services homepage.
Source: Tennessee Department of Revenue, GEN-34, Income Tax Withholding (updated August 13, 2024)
Source: Tennessee Department of Labor and Workforce Development, Employer Registration (February 26, 2026)
Tennessee uses the federal minimum wage of $7.25 an hour, in effect since July 24, 2009. The U.S. Department of Labor's state table, updated July 1, 2026, shows no state minimum wage law and no change, and no change is announced as of October 20, 2026.
Source: U.S. Department of Labor, Wage and Hour Division, State Minimum Wage Laws (updated July 1, 2026)
Source: U.S. Department of Labor, Wage and Hour Division, Minimum Wage
The building-or-object line is the one your chart of accounts has to carry. House and office cleaning goes to one income account, and rug, upholstery, and furniture cleaning goes to another, since that's the taxable work. Then I try to break the split on purpose: I pull a month of invoices and check that every carpet or sofa job landed on the taxable line, because a mislabeled job is easy to miss and a pain to find a year later. Sales tax you collect on that work sits in a liability account, separate from income. Wages go in at the rate you actually pay, and the job profitability estimator shows what that rate does to a single job.
I'm a bookkeeper, not a CPA or an Enrolled Agent. I keep taxable and non-taxable work apart in the books; whether a given job is taxable, and how the tax is reported, 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 Tennessee 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
Tennessee's line between cleaning a building and cleaning the things in it means two income accounts in your books, one for house and office work and one for rugs, upholstery, and furniture. Collected sales tax sits in a liability account, apart from income, and payroll goes in at the wage actually paid. Book a short call below and we'll check how your split looks 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
If your Tennessee invoices put house cleaning and rug work on one line, send me a note and we'll sort out the split together. The first conversation doesn't cost anything.
