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.
Navigating legal lawn care as a lawn care professional and lawn care business owner may feel daunting, but taking the right steps upfront can save you from potential headaches down the line. From securing necessary permits to understanding tax obligations and liability insurance, there are several key components to consider before launching your operation. In this article, we will break down the essential steps to make your lawn care business legal and set you up for success.
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 to become a successful lawn care business.
The first thing you have to do is choose the right name for your lawn care enterprise or landscaping business. 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 name database and the web domain you plan to use to make sure it’s available.
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.
Opening a business bank account is an essential part of startup costs and 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 when you apply for financing.
Next, you should register your business as a legal business 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 provide 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.
If you’re wondering, “Do I need a business license for lawn care?” or “Do I need a business license to mow lawns?” 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 lawn care business license requirements before starting your business.
Aside from a state lawn care business license or lawn care 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 to make sure you have the proper business license for lawn care.
When researching how to get a license for lawn care or answering “What type of business license do I need for landscaping?”, be aware that besides business licenses like landscape contractor 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 as part of the lawn care services offered.
While it is 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.
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.
Choosing the right insurance company and getting 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.
Understanding your tax obligations is crucial for running a legal lawn care business. As a business owner, you will be responsible for various taxes at the federal, state, and possibly local levels. Here are some key points to consider:
1. Business Structure: The way you structure your business (sole proprietorship, LLC, S-corp, etc.) will affect your tax responsibilities. Each structure has different tax implications, so it’s essential to choose one that aligns with your business goals and financial situation. More on this later.
2. Sales Tax: Some states require you to collect sales tax on the services you provide. Make sure to research your state’s regulations regarding sales tax and determine if it applies to your lawn care services.
3. Income Tax: As a business owner, you’ll need to report your business income on your personal tax return or corporate tax return, depending on your business structure. Keep accurate records of all income and expenses to make tax filing easier.
4. Employee Taxes: If you hire employees, you’ll be responsible for withholding their income taxes and paying employer taxes such as Social Security and Medicare. Ensure you familiarize yourself with the relevant payroll regulations in your state.
5. Estimated Taxes: As a business owner, you may need to make estimated tax payments throughout the year. This is especially important if you expect to owe more than a certain amount in taxes at year-end. Be sure to estimate your income and set aside funds accordingly to avoid any penalties.
6. Tax Deductions: Take advantage of tax deductions available to business owners. Common deductions in the lawn care industry include expenses related to equipment, supplies, vehicle maintenance, marketing, and insurance premiums. Keep thorough records of all business-related expenditures to maximize your deductions.
7. Consult a Tax Professional: Given the complexities of business taxes, it’s often beneficial to consult with a tax professional or accountant who specializes in small businesses. They can provide guidance on optimizing your tax strategy and ensuring compliance with all regulations.
Running a lawn care business requires more than just mowing lawns and trimming hedges; it involves navigating legal requirements to protect yourself, your employees, and your assets. Here’s a comprehensive guide on how to best organize your lawn care company.
Structuring your lawn care business is an important decision that can affect your taxes, liability, and overall operations. Here are some common structures to consider:
1. Sole Proprietorship: This is the simplest form of business structure, where you operate your lawn care business as an individual. There’s minimal paperwork involved, and you report income on your personal tax return. However, you’re personally liable for any debts or legal issues that arise from your business activities.
2. Limited Liability Company (LLC): An LLC provides personal liability protection while allowing for flexible tax treatment. As an owner, you won’t be personally responsible for the company’s debts or legal judgments, and profits can be passed through to your personal tax return without facing corporate taxes.
3. Corporation: A corporation is a more complex business structure that provides the strongest protection from personal liability. However, it also comes with more regulations and requirements, such as holding regular meetings and keeping detailed records. Corporations are taxed separately from their owners, which can lead to double taxation on profits—once at the corporate level and again when dividends are distributed to shareholders.
4. Partnership: If part of your business plan is to run your lawn care business with a partner, a partnership could be an appropriate structure. In this setup, both partners share profits, losses, and management responsibilities. There are two types of partnerships: general partnerships, where all partners are equally responsible for the business’s debts and obligations; and limited partnerships, which have both general partners (who manage the business) and limited partners (who invest but have no control). Partnerships benefit from pass-through taxation, meaning profits are reported on the partners’ personal tax returns, avoiding corporate tax.
Technology has greatly improved the efficiency and organization of running a lawn care business in today’s digital era. Utilizing lawn care business software can enhance organization, and efficiency, and foster business growth.
An advantage of lawn care business software is its ability to schedule appointments, monitor job progress, and conveniently handle invoices and payments on a single platform. This system helps prevent double bookings, track client preferences, and ensure timely payments.
Partnering with RealGreen for your lawn care business can bring numerous benefits. RealGreen offers professional lawn care software specifically designed for lawn care businesses, making it easier for you to manage all aspects of your operations.
Some of the key benefits of partnering with RealGreen include:
1. Streamlined Operations: Streamline your day-to-day operations, from scheduling appointments to managing invoices and tracking employee performance. This can save you time and reduce the likelihood of errors.
2. Improved Customer Service: Easily keep track of customer information, preferences, and history. This allows you to provide personalized service and build stronger relationships with your clients.
3. Mobile Application: Provides technicians with the necessary tools to efficiently complete service and work orders, document conditions for potential upsells, and enhance the overall customer experience.
4. Enhanced Reporting and Analytics: Provides valuable insights into your business performance, allowing you to make informed decisions and improve your operations over time.
5. Financial Services: You can borrow anywhere from $1,000 to $1 million to help with your business needs. With quick access to funds in as little as 24 hours, you can ensure that your operations run smoothly and efficiently.
*Funding is provided by YouLend; WorkWave is not providing the credit. Prequalified offers are based on sales and are subject to a credit check. YouLend terms and conditions apply.
Making your lawn care business legal involves several key steps, including obtaining the necessary insurance policies and registering for taxes. By ensuring you have general liability, worker’s compensation, property, and commercial auto insurance in place, you can protect your business from unforeseen circumstances and safeguard your assets.
Moreover, leveraging technology through lawn care business software can significantly enhance the efficiency of your operations. RealGreen stands out as a valuable partner for lawn care businesses, providing specialized software that can help streamline operations, improve customer service, and enhance financial management. By adopting these tools and practices, you can position your business for growth and success in a competitive market. Reach out today to schedule a free demo!
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