Laundromat and dry-cleaning businesses are always in demand. But just like other businesses, if you operate a laundromat or dry cleaner, you must keep up with business license, permit, and registration requirements for public safety, tax, and other reasons.
Read on to learn what licenses and permits may be required for your laundromat or dry-cleaning business.
These steps establish your business's legal and tax identity and should be completed before applying for any licenses and permits.
Secretary of State registration. Operating your laundromat or dry-cleaning business as an LLC or corporation requires registering your business with the Secretary of State's office in the state where you plan to operate.
EIN. An employer identification number, or EIN, is a federal tax identification number issued by the IRS. It functions much like a Social Security number and is used for tax filing purposes. Corporations and most LLCs must obtain an EIN regardless of whether they have employees.
State tax ID registration. Issued by your state's department of revenue or taxation, a state tax ID number is required whenever a business triggers state tax obligations, such as collecting sales tax, withholding payroll taxes for employees, or paying state-level business taxes.
DBA registration. If you plan to operate under a name other than the legal name of your business, you will likely need to file a DBA, also known as a "doing business as," assumed name, or fictitious business name registration. Depending on your state and entity type, this filing happens at either the state or county level.
If your laundromat or dry-cleaning business has employees, there are several state and federal requirements to be met. These responsibilities begin the moment you make your first hire.
New hire reporting. Most states require employers to report newly hired or rehired employees to a state directory, which typically falls under the department of labor or a similar agency. Reporting usually needs to happen shortly after an employee's start date, within 20 days or less, depending on the state.
Payroll tax requirements. As an employer, you are responsible for withholding federal and state income taxes from employee paychecks. To remit these withheld taxes, you will need to set up a state withholding tax account with your state's department of revenue, separate from your state unemployment insurance account.
Unemployment insurance. Employers are generally required to pay state unemployment insurance taxes when they meet the conditions for unemployment insurance liability. In the majority of states, unemployment insurance is administered by the department of labor or state workforce development agency.
Workers' compensation. In most states, workers' compensation coverage becomes mandatory as soon as you hire your first employee. For coverage requirements, employers should check with their state's workers' compensation board or state department of labor.
The licenses and permits required from the state, county, or city will depend on your business activities and business location. If you have multiple locations, you must fulfill your license and permit requirements for each location.
General business license. Most businesses need a basic business license to operate in a county, city, or state. This license is sometimes called a business privilege license, business tax registration, or tax certificate. The issuing authority is typically your local municipal government.
Seller’s permit. If your business sells tangible goods or taxable services, you generally must obtain a seller's permit from the department of revenue to collect and remit sales tax on those transactions.
Zoning. Local government zoning laws regulate how real estate or land can be used in certain areas. Your local government may prohibit certain business activities in designated areas or buildings, and zoning laws can also dictate required building size, distance between buildings and lot boundaries, and parking requirements. Check your local zoning regulations to confirm that a laundromat or dry-cleaning business is permitted in your chosen location.
Building permit. If you plan to build, renovate, or remodel your commercial space, you will likely need a building permit from your local building department before any work begins.
Certificate of occupancy. Issued by a local building department or other government agency, a certificate of occupancy certifies that your building complies with local building codes, safety rules, and zoning regulations, clearing the space for commercial use.
Fire safety permit. Fire safety codes help ensure that the building where you locate your laundromat or dry-cleaning business is safe for its intended use. Depending on the equipment you store or the activities you conduct, you may need a fire safety permit. Your local fire department may have additional requirements for sprinkler systems, fire alarms, and other fire prevention measures. Check with your local fire marshal's office to confirm what applies to your business.
Sign permit. Business sign permits help protect the public from poorly installed signs and regulate the size and appearance of signs. Even if your state, county, or town doesn’t require a sign permit, zoning laws may still restrict signage.
Commercial alarm permit. If your laundromat or dry-cleaning business installs a burglar alarm or other monitored security system, your city or county may require you to obtain a commercial alarm permit. Check with your local police department or permitting office to confirm whether this applies to your business.
Because laundromats and dry cleaners use specialized equipment, chemicals, and water systems, they are subject to environmental and safety regulations beyond standard business licensing.
Laundromat operating license. Some cities require laundromats to hold an operating license issued by the local consumer protection department separate from a general business license.
Perc handler certification. Owners, managers, or operators who work with perchloroethylene (perc) dry-cleaning machines may be required to complete an approved training program and pass an examination before operating this equipment. Requirements are typically set by the state environmental agency and vary by state.
Dry-cleaning facility registration. Many states require dry-cleaning facilities that use perc or other regulated solvents to register with the state environmental agency.
Air pollution control permit. Depending on the types of materials used in the dry-cleaning process, your business may have to obtain an air quality permit from your state or local environmental protection authority.
Water and sewer connection permits. If your business involves any new connection, repair, replacement, or plugging of a water line or sewer line connected to public utilities, you will likely need a water connection permit, sewer connection permit, or both from your local water authority.
Industrial waste discharge permit. Because commercial wash water contains detergents, lint, and other chemicals, municipal water authorities often require laundromats and dry cleaners to obtain an industrial wastewater discharge permit before connecting to the public sewer system.
Laundromats and dry cleaners face liability risks tied to handling customers' garments, operating heavy machinery, and in some cases using hazardous chemicals. (Workers' compensation insurance, mandatory in most states once you have employees, is addressed in the "Employer requirements" section.)
General liability insurance. Commercial general liability provides business coverage for bodily injury, personal injury, and property damage caused by the business’s operations, products, or injuries that occur on premise.
Commercial property insurance. This covers your business's physical location, equipment, and inventory against risks like fire, theft, vandalism, and natural disasters.
Bailee's coverage. Because dry cleaners and laundromats temporarily take possession of customers' belongings, bailee's coverage protects against damage, loss, or theft of customer garments while they're in your care.
Equipment breakdown insurance. This coverage helps pay for the repair or replacement of equipment that breaks down due to mechanical or electrical failure.
Pollution liability insurance. Dry cleaners using chemical solvents like perc face potential liability for environmental contamination. Pollution liability insurance covers cleanup costs, legal fees, and third-party claims arising from chemical spills or contamination, which are often excluded from standard general liability policies.
Commercial auto insurance. If your business offers pick-up and delivery services, commercial auto insurance covers vehicles used for business purposes.
Surety bond. Some cities and towns require dry cleaners to obtain a surety bond as a condition of operating in that jurisdiction.
Outsourcing business registration and license research, applications, management, and renewals can help you take the pressure off internal resources. By working with a full-service management provider who specializes in the efficient processing of general business licenses, you can free up your time to focus on starting and growing your laundromat or dry-cleaning business while ensuring you keep up with changing compliance requirements.
For more information on how we can streamline your business licensing, contact a CT Corporation business license specialist.
