So you’ve decided to take the plunge and open a lawn care business. You’ve done your homework on things like how to start a lawn care business and how to set lawn care pricing and quotes, and you’re ready to get started. But before you begin to purchase equipment, there’s one crucial element you need to examine—and that’s how to start a lawn care business legally.
There are several things you must do to make your lawn care business legal. Let’s take a look at the steps you need to take before you open your doors for business.
- Decide on the Perfect Name for Your Business
The first thing you have to do is choose the right name for your lawn care enterprise. It may sound like the easiest step on this list, but it can be deceptively tricky. You want to make sure the name is the perfect fit for you, and you also want to pick something easy to market.
Once you think you have the right fit, be sure to check both your state’s business names database and the web domain you plan to use to make sure it’s available.
- Obtain an Employee Identification Number
The next question to ask yourself is whether or not your lawn care business will have employees. If the answer to this question is yes, you need to apply for an Employee Identification Number, or EIN. The IRS uses this number to identify employer tax accounts, and banks also require an EIN to open a business bank account.
You can apply for one online with the IRS. The process is simple, free, and takes just a few minutes. Print out the confirmation page and make a note of your number, as you will not be able to access it later.
- Open a Business Bank Account
Opening a business bank account is an essential part of making your business legal, as doing so keeps your assets separate from your company. Having a dedicated business account makes accounting and filing taxes more manageable, but more importantly, it keeps things like your home and vehicle safe in case you are sued.
It’s also a good idea to obtain a credit card, too. Getting a credit card allows you to start building credit, which is helpful for when you apply for financing.
- Register Your Business
Next, you should register your business as a legal entity. Registering your business as a legal entity means that it’s separate from your assets, which protects you in case the company is sued. It also protects your assets from business debts.
There are a few different business structures you can choose from, including sole proprietorships, limited liability corporations(LLCs), and S-corporations. Most lawn care companies are LLCs, which provides a higher level of protection than sole proprietorships.
Some business owners decide to set up their lawn care company as an S-corp, which may help them save on taxes. Whether or not to go this route depends on your business structure and tax needs, however. Make sure you understand the difference before registering your business and consider speaking with an accountant to aid you in making the right decision.
- Obtain the Proper Licenses
If you’re wondering, “Do I need a business license for lawn care?” the answer in most states is yes. The Small Business Administration has plenty of information on state licensing requirements, so be sure to consult those before starting your business.
And aside from a state lawn care business license, there may also be local licensing requirements in your area. We recommend checking with your county clerk and the state department of business regulation. You may also want to consider consulting a lawyer as well to make sure all your licenses are in order.
Other Licenses You May Need
Besides business licenses, some states require you to obtain permits for other practices standard in lawn care. For example, if you plan to use pesticides or apply fertilizer, check with your state to see if a lawn care license is necessary. Some states also require you to have a contractor’s number, and if you live in the Southwest, licensing may be needed if you plan to irrigate.
- Certifications to Consider
While not strictly necessary to make your lawn care business legal, obtaining certifications is an excellent idea for new businesses. Certifications are a tangible way to demonstrate your skills to your clients and give you credibility. They also help your employees develop a solid foundation from which to build upon.
The National Association of Landscape Professionals offers several certifications that can help your enterprise stand out. While many of them are helpful, we recommend starting with relevant lawn care certifications, like Lawn Care Manager and Lawn Care Technician.
Having the proper lawn care business insurance policies is highly recommended. There are several policies that you should have:
• General liability insurance
• Worker’s compensation insurance
• Property insurance
• Commercial auto insurance
General liability insurance protects you in case something goes wrong on the job, and you’re at fault.
Worker’s compensation insurance is a requirement in some states, and it protects you if one of your employees gets injured on the job.
Don’t forget property insurance, which covers all the (often expensive) equipment that’s fundamental to the successful operation of your business, as well as things like computers in your office.
Finally, you should have commercial auto insurance. Your employees will drive trucks to transport the equipment they need to customer homes, and these trucks require coverage, as well.
Though these are the most common policies, it’s never a bad idea to speak with your insurance agent and get their recommendation.
Lastly, you have to register for all state and federal taxes required before opening your business. You’ll need to use your EIN to do so.
Taking The Next Steps
Congratulations! You now know what boxes you need to tick to make your lawn care business legal. Once you’ve completed those tasks, it’s time to start learning some basics of networking and thinking about the best software to transform your office. Your enterprise will be up and running before you know it.