We specialize in tax returns, bookkeeping, payroll and pro-active tax reduction planning for Contractors, Landscapers, Hardscape Companies & More
If you're a contractor, particularly a landscaping contractor of any size, we specialize in accounting, tax, bookkeeping and payroll for your industry and we'd love to connect.
We’re specialists in helping contractors and small businesses implement the smartest tax reduction strategies available.
We’ll help you be as aggressive as possible to reduce taxes, but we’ll help you ensure you’re not open for IRS trouble.
Right now since bonus depreciation is at 100% (until January 2023 when it becomes 80%) both section 179 and bonus depreciation are decent tax write-off options.
Section 179 is much more flexible in terms of how you can use it to write off the full value of equipment other upgrade purchases, but there is an annual limit of $1,050,000.00 whereas bonus depreciation has no annual limit.
One key thing about bonus depreciation is that you can actually write off more than your business income on it, but if it is a 5 year asset and you write off all of the depreciation in the first year you'll have to keep the asset in the field for the full 5 years or you'll be forced to recapture your depreciation in later years.
The best way to reduce income taxes is to take advantage of tax write offs. And the best way to do that is by progressively planning how you want to reduce your tax liabilities each year.
Most businesses only work on their taxes retroactively, meaning after the year is already over and you can't change anything, but the best benefits are achieved when you look forward and make decisions based on their tax ramifications. We strongly recommend you work with a seasoned tax professional or CPA to achieve this.
Yes, as long as it is a business expense and necessary and ordinary you can write off your equipment.
How you go about this will depend on the cost of the equipment, the type of equipment, and how large of an operation you are planning.
When you get into writing off equipment of any significant size it is always best to consult professionals and seek to proactively plan your taxes for the following years to take the best advantage of these purchases. You will often have opportunities to use section 179, or bonus depreciation to increase the speed at which you can depreciate the item.
This is a state specific question, but the answer for most states is no. Landscaping services are generally required to charge sales tax. You will be required to pay sales tax for the materials you purchase for your clients though.
If you have a 1099 you'll put that into your taxes, but normal self-employed income can be captured via a Schedule C.
Yes! If you're going to work with businesses it is important to know that those businesses can write-off their expenses with you on their taxes. If they are curious or uncertain, let them know it should be deductible.
Technically, almost all deductions are claimable without receipts but it is highly risky and ill advised to do this.
When filing taxes as a self-employed person the odds of getting audited are much higher than as a normal employee. If you were ever to get audited and weren't able to provide receipts and reasons for your deductions then you could end up owing not only back taxes but significant penalties and interest. Take note that missing a receipt doesn't necessarily mean you can't write something off, you'll just need to substantiate your proof that it was a legitimate write off some other way (credit card statement, etc).
Write-offs are typically limited to expenses that are related to normal and ordinary business activities. Things like clothes, equipment, gas, materials, etc. For examples of some of the best write-offs check out the FAQ " What are the best write offs and deductions for landscaping contractors".
The first year you won't owe taxes until you file your tax return, but if you ended up owing any amount then you'll be responsible for quarterly estimated payments the following year. A lot of self employed individuals or businesses will opt not to make quarterly payments though, as the penalties aren't too severe.
You don't need one, but as mentioned in other FAQs on this page, you'll likely want to be an LLC as a landscape company and it is a best practice to have an EIN as an LLC. EINs are quick and easy to get, they are immediately given out through an online portal on irs.gov.
Absolutely. It is a bit harder because you aren't typically paying in taxes as consistently or in a calculated fashion, but if you have more credits or deductions than you have income and some of those are refundable then you'll be able to get a refund. Child care credits and others like this can help make that difference.
Meals are deductible as long as there is a legitimate business purpose. You can typically write off 50% of the cost of the lunch, but recently there have been exceptions allowing 100% of the cost to be written off. The most important part of writing off meals is to keep a log of knowing why it was a legitimate business purpose and not just a normal lunch.
All tax payers can write off the interest on their mortgage, but not their actual mortgage. However, businesses that make use of the home office deduction can write off a portion of the total cost of their home (utilities, etc) but the percentage is limited to the size of the your office compared to your total house size.
Normal lunches aren't deductible as business expenses, but if there was some legitimate business activity, such as meeting with a vendor or discussing a budget with an accountant, etc then you can deduct it.
Normally only 50% of the cost of the meals are deductible, but check with your CPA or tax advisor as the past couple years there have been exceptions made to allow 100% of the cost of the meals to be deductible. Make sure you keep track of your business purposes. Maybe write on the receipt the reason for the business write off, etc.
You'll need the basic knowledge and equipment and desire, but beyond that its actually quite simple.
You can work as a landscaper under your own name and just keep track of your profit/loss statement for filing taxes at the end of the year, or if you want to have a business name you can simply file a DBA with your state or county and choose a business name. If you are working as a sole proprietor then you can typically just use your own personal bank account and you won't need an EIN from the IRS as you'll use your SSN.
However, a landscaping business has certain inherent risks involved in the use of potentially dangerous machinery that will typically be operated at your clients place of residence or business. This means there are liabilities that are in play.
It is strongly recommended that you consider opening an LLC to reduce this liabilities impact on your life.
In the event of an accident where lawsuits are involved, an LLC will shield your personal assets from liability and only allow your business assets to be collectable. If you choose to go the LLC route, you can file for an EIN from irs.gov and then open a bank account in your business name. You'll need to keep your money separate to maintain the LLC's liability benefits, otherwise the court can "pierce the veil" and go after your personal assets.
It will depend on how the company wants to treat you, but if you are a sole prop then the answer is most likely yes. That company has to report that they've paid you income and they'll need your information to do so.
If you are an LLC or have an EIN they can typically use that instead, but as a general rule companies will want to give you a W9 when working with you for decent amounts of money or time.
A general rule of thumb is 10% more than you would if you had a salary of that amount as an employee. This normally works out to ~20-25% of your income should be saved for taxes. It can vary a lot depending on your tax planning and how many expenses you have, but that is a general rule.
Self employed landscapers will file taxes in a normal tax return, but they will claim their income on a schedule C. Sometimes if you work for a business you may have to fill out a W9 and receive a 1099, but all of the self employed income goes into the Schedule C.
In addition to the suggested requirements for becoming an S-corporation mentioned in other FAQs, the process of actually converting to one or electing to be one for tax purposes is extremely easy.
In order to be taxed as an S-corporation you'll just need to fill out form 2253 with the IRS and from then on you'll be taxed as an S-corporation, but you'll also need to make sure you meet the various requirements - payroll, etc.
If you make more than the average landscaper salary of $35,240 then you may want to be taxed as an S-corporation as you can save on your self employment taxes that are due for Social Security and Medicare (15.3% for self employed vs 7.65% for W2 employees).
LLC's don't have that ability, but S-corporations do.
In order to qualify you'll want to have consistent enough income that you can pay yourself a salary on payroll of the $35,240, which will take care of your SS and Medicare tax liability, while you will receive the remaining portion of your profit only subject to your normal income tax rate.
If you are a self-employed landscaper and your primary office is working from your home, then you can write off a percentage of your housing expenses (utilities, mortgage payment, etc).
That percentage will be the total square feet used for the home office divided by the total square feet of the house. For example, if you have a 150 sq foot office and your house is 1500 sq feet you'll be able to write of 10% of your total housing expenses.
Yes, as long as it is a business expense and necessary and ordinary, you can write off your website expenses.
There are multiple ways to write off a vehicle.
You can use mileage to give an estimated cost of write-offs, or you can use the actual costs.
When using the actual costs you can deduct large portions of your truck, but it will be over a few years and you'll have to make sure the truck doesn't cost more than the luxury vehicle limit.
You'll also need to make sure you are using the truck for business purposes, as you won't want to get audited and have to recapture any of the depreciation as it will be an extremely costly mistake.
Writing off your truck and whether you are eligible can be a bit complex so we highly recommend consulting with a professional before attempting to do so.
The cheapest way is most likely to use QuickBooks Self Employed and email invoices while receiving payment via cash or check. If you collect payment via credit cards there will usually be a fee involved, but Quickbooks makes it easy to setup.
The best way to reduce social security taxes is by opting to be taxable as an S-corporation.
Before you do this you will want to be an LLC and have consistent earnings of 60-80k/year. You'll also need the ability to consistently pay a salary to yourself.
Once you've met those requirements you'll want to file an election to be taxed as an S-corporation and then begin paying yourself a "reasonable salary." A good idea is to use the Bureau of Labor Statistics, which classifies an average salary for a landscaping company as ~$34,000. You'll then be responsible for SS and Medicare taxes only on that $34,000, while any money you make above that will only be subject to your normal income tax rate.
As long as the expense is ordinary and necessary (meaning it fits within the normal standards of the industry) you will be able to deduct any marketing expenses.
Bonus depreciation is a way to super-charge your tax write-offs early, rather than taking depreciation evenly over the usable life of your equipment.
Right now bonus depreciation is expanded temporarily for the next couple years, so it can be even better than normal. This will apply to assets like equipment that would normally be depreciated over time.
A landscaping contractor is responsible for sales tax on all of the materials they use in a project as well as their state income tax (if applicable) and the federal income tax and Social Security/Medicare tax.
We will leave state income tax on the side as something you should look into on your own as we can't list all of the different state income tax requirements here.
For federal income tax you'll be taxed at a progressive bracket depending on your net income amount and then you'll owe an additional 15.3% tax for SS and Medicare.
Generally, most states don't require sales tax on landscaping services. Consult with a local professional (CPA or attorney) to confirm for your state, but you are likely in the clear.
This answer is similar to the FAQ about "What's the best invoicing software for a landscaping contractor." Once again, QuickBooks Online Self Employed is a great option, or even one of the more expensive options of QuickBooks, but if you are looking for a system that can integrate and accomplish lots of various goals in your landscaping business then check out Service Pro.
The beauty of an LLC and an S-corporation is that you can be both at the same moment.
The LLC is an extremely flexible business entity and one that is very valuable for lawn services. It will isolate your personal assets from liability and provide an option to build out rules and other business directives as you grow.
Becoming an actual S-corporation has some requirements that can be a bit burdensome and aren't as flexible as an LLC, but the IRS allows you to be taxed as an S-corporation while maintaining your LLC business identity.
This is the best of both worlds as you can retain the flexible and easy to work with LLC, while also getting the tax benefits from being an S-corporation. S-corporations allow for significant tax savings on your Social Security and Medicare tax portions as you can reduce the amount.
For more information look at other FAQ's that deal more specifically with this.
Generally, most states don't consider landscaping services as a taxable service. You will typically have to pay sales tax on any of the materials you use for the project though such as shrubs, trees, etc.
This is an answer that varies from business to business based on your end goals, but the most likely answer for landscaping contractors is that an LLC will be the best entity type.
It is extremely flexible for creating structures and rules in the future if you grow, but more importantly it shields your personal assets from liability based on your business actions.
Essentially, if you were to cause property damage or hurt someone while performing your job, then only your business assets would be subject to a lawsuit. Since landscaping carries a certain level of inherent risk (think about what would happen if you were mowing and hit a hidden metal pipe that flew out and hit someone, etc), then your best bet is to go with an LLC to shield yourself in the future.
One of the best write offs for landscaping contracts is probably the ability to write off or depreciate equipment.
A landscaping service typically requires large amounts of expensive equipment that can sometimes be written off against profit to reduce your tax liability. You can even sometimes write off your vehicle expenses.
Another potentially great tax write-off for self employed landscapers is the home-business deduction. There is more information on this in another FAQ, but this should help a lot. Finally, the QBI deduction for qualified business income, is 20%, which comes off of the net profit and is definitely something you'll want to take advantage of.
If you're looking for a standalone software option for invoicing customers and keeping track of your accounting in one place, then QuickBooks Self Employed is a great option.
However, if you're looking for an integrated solution that covers all kinds of needs in your lawn care business, check out Service Pro, which has all kinds of customized solutions specific to lawn care businesses.