Kentucky

Cleaning Business Licensing in Kentucky (2026)

Last updated Q2 2026 · Authored by the Opora Editorial Team · Cited statute: KRS §14A (Business Entity Registration); KRS §139.200 et seq. (Sales Tax); KRS §342.001 et seq. (Workers' Compensation); KRS §67.750 et seq. (Local Occupational License Tax)

Kentucky is a right-to-work state — a designation that has been in effect since January 9, 2017 when Governor Matt Bevin signed Senate Bill 1 into law, making Kentucky the 27th right-to-work state at the time. For commercial cleaning and building service contractors (BSCs), right-to-work means employees cannot be required to join a union or pay union dues as a condition of employment. While janitorial workers in certain large commercial facilities may be represented by SEIU or other service-industry unions, the union shop arrangements that historically existed in Kentucky's manufacturing-adjacent cleaning sector no longer have mandatory financial participation. The more immediate compliance priority for most Kentucky BSCs, however, is the state's expanded sales tax on janitorial services — a change enacted in 2018 that caught many small operators unprepared.

Kentucky does not require a statewide specialty license for commercial cleaning or janitorial businesses. The state's licensing portal, Kentucky Business One Stop, confirms that no occupational license applies to janitorial services at the state level. Business registration is handled by the Kentucky Secretary of State. LLC Articles of Organization: $40 online; $50 paper. Annual report: $15. Corporations: $40 online formation; $15 annual. Trade names (DBAs) must be registered with the Secretary of State for $35. After entity formation, all businesses must register with the Kentucky Department of Revenue (KDOR) for a Commonwealth Business Identifier (CBI) and applicable tax accounts through revenue.ky.gov.

Sales Tax on Janitorial Services: KRS §139.200(h)

Kentucky dramatically expanded its sales tax base effective July 1, 2018 under House Bill 366 (2018 Ky. Acts ch. 207). The legislature added a long list of services to the taxable services enumeration under KRS §139.200, including — critically for the cleaning industry — janitorial services. Under KRS §139.200(2)(h), "janitorial services, including but not limited to residential and commercial cleaning services, and carpet, upholstery, and window cleaning services" are now subject to Kentucky's 6% sales tax.

The full scope of taxable cleaning services under Kentucky DOR guidance includes:

• Commercial janitorial services (office buildings, warehouses, retail)
• Residential cleaning services (housekeeping, maid services)
• Carpet and upholstery cleaning — both on-site and at a plant
• Window cleaning — all types
• Duct work cleaning services
• Restoration cleaning (water extraction, wall cleaning, grout cleaning, deodorization, protectant application)

There is no exemption for commercial clients (unlike some states that exempt B2B service sales). The taxable event is the sale of janitorial services, regardless of who the customer is. One key distinction: the removal and reinstallation of real property (e.g., carpet removal and replacement) constitutes a contractor service not subject to sales tax; the cleaning component within such a project is taxable, and BSCs should invoice those components separately.

Kentucky BSCs must register for a Kentucky Sales and Use Tax Account through KDOR, collect 6% from all janitorial service customers, and remit returns monthly (for businesses with over $150 in monthly tax liability) or quarterly. Failure to register and collect is treated as a failure to remit tax, and KDOR assessments include a 10% penalty plus interest. KDOR contact: 501 High Street, Frankfort, KY 40601; (502) 564-5170.

Right-to-Work and Labor Relations

Under Kentucky's right-to-work law (KRS §336.130(2)), no employee may be required to become or remain a member of a labor organization, or to pay dues, fees, or other assessments to any labor organization, as a condition of employment. This applies equally to commercial cleaning and building services companies. Collective bargaining agreements cannot contain union security clauses (mandatory membership or dues checkoff) for Kentucky employees.

In practice, many BSCs operating in Louisville and Lexington commercial markets do have unionized workforces — typically through voluntary union certification. In those cases, the BSC must still bargain in good faith under the National Labor Relations Act (NLRA) but cannot contractually compel union membership. Kentucky's right-to-work status is occasionally contested in public policy debates, but the 2018 Kentucky Supreme Court ruling upheld the law's constitutionality under the Kentucky Constitution.

Workers' Compensation: Kentucky Labor Cabinet Administration

Kentucky's workers' compensation program is administered by the Kentucky Labor Cabinet, Department of Workers' Claims (DWC) under KRS Chapter 342. The threshold for mandatory WC coverage in Kentucky is one or more employees — there is no small-employer exemption for cleaning businesses with fewer workers. All employers with any W-2 employee must carry WC insurance through a private carrier licensed in Kentucky or qualify as a self-insurer.

Kentucky uses the NCCI classification system. Commercial cleaning is rated under NCCI Class Code 9014 — Janitorial Services by Contractors, No Window Cleaning Above Ground Level. Kentucky WC is administered under a competitive private market; there is no state fund for non-hazardous industries. Sole proprietors and LLC members with executive officer status may elect to be excluded from WC coverage (and the count of employees for threshold purposes). DWC contact: 657 Chamberlin Avenue, Frankfort, KY 40601; (502) 564-5550. Online resources: labor.ky.gov/dwc.

The Kentucky DWC has broad enforcement authority. Operating without WC insurance is a misdemeanor for the first violation and a Class D felony for subsequent violations. The DWC can issue stop-work orders and assess penalties of up to $1,000 per day of non-compliance.

Independent Contractor Classification

Kentucky uses the common-law control test for most employment purposes, not an ABC test. Under KRSB 342.640, independent contractors in Kentucky are those whose work is free from the control of the hiring entity both in contract and in practice. For cleaning companies, the key factors reviewed by the Kentucky DWC and the Kentucky Education and Workforce Development Cabinet in classification audits include: whether the worker works for multiple clients simultaneously, whether the worker supplies their own tools and supplies, whether the worker sets their own schedule, and whether the relationship is governed by a written IC agreement.

Kentucky follows the federal Economic Reality test for unemployment insurance purposes under KRS 341.050. Cleaning companies that use 1099 subcontractors for recurring route work face audit risk because recurring, controlled, route-based work strongly suggests an employment relationship under both the control test and economic reality test. KY UI tax obligations, WC premium audits, and wage-hour liability can all flow from a misclassification finding.

Local Business License Requirements

Kentucky cities and counties widely impose local occupational license taxes (OLTs) on business income or payroll. This is separate from a business license per se — it is an income or gross receipts tax assessed by the local government. Major Kentucky markets with OLTs affecting cleaning companies:

• Louisville/Jefferson County: Louisville Metro Revenue Commission collects an OLT of 2.2% of gross receipts (for businesses) or net profits; a separate Louisville city license is required for businesses operating within city limits
• Lexington-Fayette Urban County: Revenue Division imposes an OLT of 2.0% of net profits; annual business license fee approximately $50–$200
• Covington: 2.45% OLT on net profits; city business license required
• Most other cities/counties: 1%–2.5% OLT on wages paid or business net profits; verify with the county or city clerk

The Kentucky Department of Revenue maintains the Local Occupational License Tax Form Database pursuant to KRS §67.766, which lists all taxing districts and their forms. BSCs operating across multiple Kentucky counties must track and file OLTs in each jurisdiction.

State Unemployment Insurance

Kentucky UI is administered by the Kentucky Education and Workforce Development Cabinet (KEWDC), Office of Unemployment Insurance. New employers must register within 20 days of hiring their first employee through uiclaims.ky.gov. New employer tax rate: 2.7% on the first $11,400 of wages per employee (2024 wage base). Experienced employers are rated on a 5-year schedule with rates ranging from 0.3% to 9.0%. Kentucky also charges a Stabilization Fund Assessment and a Federal Loan Interest Assessment, which can add 0.1%–0.3% to effective rates in years when the state trust fund is below adequate reserve.

Bond and Insurance Requirements

Kentucky has no statewide statutory bonding requirement for janitorial businesses. However, state and municipal government cleaning contracts routinely require performance and payment bonds for contracts above $25,000. Standard commercial cleaning contract insurance requirements for Kentucky BSCs include:

• Commercial General Liability: $1,000,000 per occurrence / $2,000,000 aggregate
• Workers' Compensation: Statutory limits per KRS §342
• Fidelity/Janitorial Bond: $10,000–$25,000 per employee for facilities with sensitive assets
• Commercial Auto: $500,000–$1,000,000 CSL for company vehicles

Primary sources

Disclaimer & review notice

This content is maintained by the Opora editorial team and last reviewed in Q2 2026. State licensing rules, fees, and tax treatments change frequently — verify current details directly with the named state agency before relying on any specific dollar amount or threshold. Opora does not provide legal or tax advice; this page is a starting point for further due diligence.