Did you know the landscaping services industry in the U.S. was valued at approximately $153.56 billion in 2023 reported by Statista? With such a booming market, understanding lawn care business taxes is vital to protect your hard-earned revenue.
Whether you're just starting or looking to refine your tax strategies, this guide will help you navigate the complexities of taxes in the lawn care industry, ensuring you’re well-prepared for tax season.
What Are the Essential Tax Considerations for Your Lawn Care Business?
What Types of Taxes Will Your Lawn Care Business Face?
As a lawn care business owner, you’ll need to understand the different types of taxes you’ll face. You’ll have to submit tax returns and pay income taxes on the money your business earns. If you're self-employed, you’ll also owe self-employment tax, which covers your Social Security and Medicare contributions.
The IRS requires you to pay 15.3% in self-employed tax, calculated according to your income. Also, if you operate in a state that requires it, you may need to collect sales tax on services like mowing and landscaping. It's essential to keep track of these tax obligations, as failing to account for them can lead to penalties. Don’t forget that you might need to make quarterly payments to the IRS to cover your estimated taxes for the year.
How Can You Properly Track Income and Expenses for Tax Purposes?
Properly tracking your income and expenses is vital to ensure you pay the right amount of taxes and offset your tax liability with the right deductions. Keep track of every business-related expense, including vehicle costs, office supplies, and equipment depreciation.
Consider using a mobile app or accounting software to keep track of receipts and deductible expenses like machinery repair, liability insurance, and office supplies. The IRS allows you to choose between deducting actual expenses or using the standard mileage rate—for 2025, it’s 70 cents per mile. Keeping meticulous records will help you calculate your taxes according to your income and ensure that you owe fewer taxes at the end of the tax year.
Further Reading: Discover the vital role of lawn care business insurance
How Can You Maximize Tax Deductions for Your Lawn Care Business?
What Are Common Tax Deductions for Lawn Care Businesses?
As a landscaper, there are many tax deductions for lawn care you can take advantage of to reduce your tax burden. These deductions for lawn care businesses include vehicle expenses, such as gas and maintenance for your work vehicle, and equipment costs for things like a mower or lawnmower.
Don’t forget to deduct your home office expenses if you run your business from home, including a portion of your rent, utilities, and office supplies like a printer. Advertising expenses, such as money you spend on a flyer, ad, or premium listings, are also fully deductible. Also, any payments related to your work, such as liability insurance or payroll for employees, can be deducted.
How Can You Leverage Tax Write-Offs to Reduce Your Tax Liability?
To significantly reduce your tax burden, you need to leverage tax write-offs effectively. Start by deducting the depreciation on large purchases like a mower or machinery over several years, or take advantage of Section 179 to deduct the full amount in the year of purchase. The IRS allows you to deduct the cost of business-related equipment and even offset some of your liability by writing off the cost of your work vehicle.
Also, consider the benefits of self-employed tax deductions like health insurance premiums. As long as you keep accurate records, you can make sure you get the most out of these specific deductions and legally reduce your tax liability. Consulting with a CPA can help personalize your strategy to maximize the many common deductions available to small business owners.
Further Reading: Learn how to create a winning lawn care business plan
How Do Tax Laws Impact Your Landscaping Business?
What Are the Legal Requirements for Tax Compliance in the Landscaping Industry?
To keep your landscaping business compliant, you need to be aware of several key tax obligations. As a sole proprietor or self-employed business owner, you’ll need to file schedule C with your annual tax return to report your income and expenses. Don’t forget that you’ll also have to pay self-employment tax at a rate of 15.3%, which covers Social Security and Medicare.
Also, if you employ workers, you must deduct their wages and submit the necessary payroll taxes to the IRS. State laws may also require you to collect sales tax on your services, depending on where your business operates. Keeping up with these legal requirements ensures you pay the correct taxes according to your income and helps you avoid costly penalties.
How Can You Stay Updated on Changes in Tax Laws?
Staying updated on tax law changes is vital for managing your landscaping business effectively. Subscribe to updates from the IRS and your state tax authority, as they regularly publish changes that could impact your business. It’s also wise to work with a CPA who specializes in small businesses.
They can keep you informed and help you adjust your tax strategy accordingly. You might also consider using accounting software that updates tax rates and regulations automatically, ensuring your payments related to their work are accurate. By keeping informed, you can manage your business expense and remain compliant with all tax laws.
Further Reading: Launch a lawn care business with zero funds!
What Are the Best Practices for Tax Planning and Filing in a Lawn Care Business?
How Should You Prepare for Tax Season?
Preparing for tax season is all about organization and foresight. Keep a detailed list of tax deductions handy throughout the year, tracking every business expense you incur, from money you spend on advertising to the standard mileage rate for any driving you do for work. The 2025 tax season demands meticulous record-keeping, especially if you need to report rental costs for equipment or garden supplies.
If you're a self-employed business owner, don’t forget to make quarterly payments to cover your estimated taxes, which helps avoid a large tax bill at year-end. Also, make sure to request all necessary forms, like schedule C, ahead of time. By staying organized, you’ll be better prepared to file your taxes on time and maximize your deductions.
What Are the Benefits of Year-Round Tax Planning?
Year-round tax planning offers significant benefits, especially for a landscaping business. By keeping a close eye on your finances, you can better manage business expenses and make informed decisions about major purchases, such as rental equipment or garden machinery, which might be deductible.
Regularly reviewing your income and expenses also helps ensure that you pay the correct taxes according to your income. Also, planning throughout the year allows you to strategically time your payments related to their work and potentially lower your overall tax bill. Consistent planning can help reduce your tax burden and make the next tax season much less stressful.
Key Takeaways
- Track Income: Accurately record all payments received for lawn care services and taxes according to their income.
- Deduct Expenses: Claim deductions for equipment, fuel, and administrative work.
- Quarterly Payments: Make estimated quarterly tax payments, which may include the 15.3% self-employment tax.
- Self-Employment Tax: Pay 15.3 % self-employment tax on your earnings.
- Stay Compliant: Ensure compliance with federal, state, and local tax regulations, reducing your administrative workload.
How can Taxfyle help?
Finding an accountant to file taxes is a big decision. Luckily, you don't have to handle the search on your own.
At Taxfyle, we connect you with licensed, experienced CPAs or EAs in the US. We handle the hard part of finding the right tax professional by matching you with a Pro who has the right experience to meet your unique needs and will file your file taxes for you.
