If you own a lawn care or landscaping business, you know what an interesting, challenging and lucrative field this can be. However, tax time is probably not one of the more interesting parts of your job. Still, it's crucial for being a successful business owner.
Knowing about tax deductions and how to use them is important because it helps you minimize your payments and earn more money. Luckily, several common lawn care and landscaping tax deductions can help reduce your tax payment and keep more money in your pocket.
What are landscaping business tax deductions?
As an entrepreneur, you know how important it is to have accurate bookkeeping and accounting services. You also know to record all income that comes into your business and track all of the money that goes out.
The reasons for tracking your income are clear: The IRS makes you! The IRS requires each individual and business to submit tax returns and pay taxes according to their income. This process gets more complicated when you're a small business owner, than when you're an employee.
As a small business owner, you will have to pay self-employment tax (Social Security and Medicare) and potentially other necessary taxes. And if you’re self-employed, you have to submit estimated taxes quarterly.
It’s a lot of work — and a lot of taxes! — but to offset some of these tax burdens, self-employed individuals are offered many tax deductions to lower their tax bills. As we’ll see, small business owners can deduct most business-related expenses from their income. As a result, you will owe fewer taxes, increasing the amount you take home.
While each business should check with a certified public accountant (CPA) or other tax professional about its specific deductions, many common landscaping tax deductions may be available to you.
Common lawn care and landscaping business deductions
Note: It's important to track all your expenses carefully and save receipts to receive the full benefits when filing your taxes.
While these are some of the most common deductions, it’s not all there is. Check this post for more self-employed tax deductions.
1. Self-employment tax
Self-employment tax can be a frustrating expense for small business owners. You'll have to pay this tax if you're considered a sole proprietor or independent contractor.
Basically, this tax means you pay both the employee and employer sides of your Social Security and Medicare. This cost totals 15.3% of your income.
The good news is that part of the self-employment tax is deductible – in fact, half of it is. This is because the IRS considers the employer portion of the tax to be a business expense. If you have an accountant, they can explain exactly how much and will adjust the amount accordingly on your tax return.
2. Home office deduction
While you are most likely on the move as a landscaping business owner, you probably keep an office as well. If that office is part of your home, you can deduct some of those expenses.
Whether you use the space for administrative work, scheduling jobs, bill paying, customer interaction, or more, as long as you exclusively use it for your business, you can write off a portion of it.
Additionally, some of your home office expenses are also tax deductible.These deductions may include the cost of internet, phone, office supplies, furniture, computer, printer, and more.
Read up on the home office tax deduction here.
3. Equipment and supplies deduction
Equipment and supplies are a big lawn care and landscaping expense category. To grow a successful business, you're investing a great deal of money into equipment and supplies for your business.
Some are one-time large purchases that you may only make every few years (for example, lawnmowers, tree trimming tools, etc.). Other landscaping costs may be recurring expenses, such as materials for gardening or daily supplies.
No matter the size of the expenses, include them as deductions. You may also be able to write off equipment depreciation.
4. Rent expense deduction
Many landscapers and lawn care professionals rent storage space to keep their equipment and supplies. Or, if they have a separate work vehicle, they might rent a secured garage to keep their vehicle and equipment.
You can deduct these rental property expenses if they're used expressly for business purposes and you don't own them in any way. If you have equity in or a title to the property you rent, it's not deductible.
Also, renting isn’t limited to property; you can deduct equipment rentals necessary for business use. For example, if you are a landscaper and rent lawnmowers, this counts as a tax write-off.
5. Advertising deduction
Getting the word out about your business is essential in any field, but especially in the competitive world of lawn care and landscaping. Fortunately, the money you spend on advertising your business is tax deductible.
That counts for everything: Business cards and flyers. Facebook or LinkedIn ads. A billboard, a TV commercial, or a radio spot. Even website design and maintenance. Any advertising expenses can be written off and help lower your tax burden.
6. Car expenses and mileage deduction
As a landscaping professional, your vehicle is likely an important part of your work. You may even have a dedicated car or truck for work purposes.
Good news: Car expenses and mileage can be significant deductions for you. Make sure to keep track of your yearly mileage on each vehicle related to your business throughout the tax year and save all gas receipts.
The IRS decided to bump up the standard mileage rate during the 2022 tax season due to rising fuel costs. You can deduct 58.5 cents per mile when you use your car, truck, or van for business purposes from January 1 to June 30, 2022. From July 1 through December 31, 2022, the deduction jumps to 62.5 cents per mile.
In addition to everyday deductions related to your vehicle, you can also include repairs and maintenance on your tax return.
7. Business insurance deduction
No matter your field, business insurance is critical for all small businesses today. If something unexpected happens, you want to ensure you’re protected both legally and financially.
We recommend purchasing the appropriate landscaping insurance or lawn care insurance to protect you from the risks involved with your job. With insurance, you’re not stuck paying out of pocket for a cracked window due to a rogue rock flung from a lawnmower.
Even better, you can deduct the premiums for many different kinds of business insurance, including business liability, business vehicles, and more.
Learn more about business insurance tax deductions.
8. Employee wages and contractor expenses
If you have employees or freelancers/contractors working for your landscaping or lawn care business, you can deduct their wages from your taxes. This can be a significant amount that can reduce your tax burden substantially.
Not only is their salary deductible, but also other payments related to their work, such as social security and more.
How NEXT keeps your business growing
While taxes may feel overwhelming and confusing for many, knowing what landscaping tax deductions you can make can ultimately reduce your tax bill. As always, we recommend consulting a tax professional specializing in small businesses to make sure you are deducting and filing taxes correctly.
Where does NEXT Insurance fit into that? We help thousands of self-employed business owners protect their businesses with customized business insurance.
We’re 100% online, so you can complete an application, see your coverage options, get a quote, purchase insurance and get your certificate of insurance in less than 10 minutes.