If you own a lawn care or landscaping business, you know what an interesting, challenging and lucrative field this can be. Tax time is probably not one of the more interesting parts of your job, but it's an important part of being a business owner. Luckily, several lawn care and landscaping tax deductions help reduce your tax payment.
Knowing about tax deductions and how they apply to the tax system is important because it helps you minimize your payments and earn more money. This post will discuss the ins and outs of landscaping tax deductions to make sure that you are maximizing your earning potential.
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 keep track of all of the money that goes out.
The reasons for tracking your income are clear. The IRS requires each individual and business to submit tax returns and pay taxes according to their income. This process gets a bit more complicated when you're a small business owner, as opposed to when you're an employee.
For instance, you will also 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, which is why it is always recommended to consult a trusted accountant.
However, to offset some tax burdens, self-employed individuals have many tax deductions to lower their tax bills. Small business owners can deduct most business-related expenses from their income. As a result, you will owe fewer taxes, as your total profit will be lower.
While each business should check with a certified public accountant (CPA) about its specific deductions, there are many common landscaping tax deductions.
Common lawn care and landscaping business deductions
It's important to track each expense carefully and save receipts, to receive the full benefits when filing your taxes.
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. If you’re considered a sole proprietor or independent contractor, you’ll have to pay this tax.
Basically, this tax means that you pay both the employee and employer side 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 – about half of it. This is because the IRS considers the employer portion of the tax 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 undoubtedly have an office as well, even if it’s part of your home. This is likely the place you do the administrative work for your business, supply orders, bill paying, customer interaction and more. Because of this, your home office expenses are a tax deduction.
These deductions may include the cost of internet, phone, office supplies, furniture, computer, printer and more.
3. Equipment and supplies deduction
Equipment and supplies are a big lawn care and landscaping expense category. To grow a successful business, you have most likely invested in a great deal of 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.
No matter the size of the expenses, include them as landscaping tax deductions. You may also be able to write off equipment depreciation.
4. Rent expense deduction
You might not have a separate office space where you run your business, but some 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 lawn mowers, this counts as tax write-offs.
5. Utilities deduction
As mentioned above regarding your home office, if you work from home, you’ll be able to deduct various home expenses on your tax return.
These may include your typical home utility expenses such as electricity, water, gas and heat. Each situation is individual and considers the size of your home and type of business.
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 a big landscaping tax eduction 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.
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 make sure that you are 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 affordable insurance, you’re not stuck paying out of pocket for a cracked window due to a rogue rock flung from a lawnmower.
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 learn more about costs, complete an application, see your coverage options, get a quote, purchase insurance and get your certificate of insurance in less than 10 minutes.
Our licensed, U.S.-based insurance professionals are standing by if you have questions.