Tax deductions for landscapers - What you need to know to save money

As someone who gets their income through a business in lawn care, you may also be eligible to get tax deductions for landscapers. After all, you will likely have a lot of expensive gear to buy and business-related expenses to handle.

With that in mind, what are the tax deductions that you are eligible for as a landscaper? What can you do to make your tax-keeping easier? Do you get tax money back when you buy business equipment? Read on to figure out what tax deductions you may take advantage of.

Note: If you want to maximize your landscaper tax deductions, try Bonsai Tax. Our app scans your bank/credit card receipts to discover potential tax write-offs automatically. Users typically save $5,600 from their tax bill with our software. Claim your 7-day free trial today.

Do landscapers need to pay self-employment tax?

If you work as a landscaper or gardener, offering your service to other people, then the IRS will see you as a self-employed business owner who is subjected to income tax. This means that you will need to report your income and your tax deductions when you file for tax return.

Besides the income tax, a person who has a landscaping business will also have to pay self-employment tax. This will include taxes that will go into your Social Security and Medicare.

A total of 15.3% goes to self-employment tax. Of that, 12.4% goes to Social Security, while 2.9% goes to Medicare. You must pay quarterly estimated taxes throughout the tax year, by the due dates set by the IRS.

Try our free tool to calculate how much you'll owe in self-employment taxes.

Can landscapers deduct landscaping on their taxes?

As long as you meet the qualification, the IRS allows you to put landscaping as a tax-deductible business. Bear in mind that your name needs to figure as the business owner, as well as the owner of the property where the income goes to.

If you are a renter, then you may not be able to deduct the costs of landscaping, no matter if you pay for the lawn care costs or not. This is because the IRS deems it a capital investment.

Small business owners working from home but meeting the clients at their houses may be eligible for tax returns. They may deduct a portion of the total costs, depending on how much of their property is used as a business.

In other words, even if you have a lawn care business that takes you into the gardens of other people, you must have at least a room in your house you can call your "home office." That home office may contain everything from your paperwork to your landscaping gear.

What can landscapers write off?

Like every small business that a self-employed person may have, a landscaping business also gives you the opportunity for tax deductions. If you are into lawn care, here are the tax deductions that you may write off when tax time comes strolling.

• Lawn mowers and the gas needed for it
• Business license fees
• Legal and professional services (as well as other start up fees)
• Lawn equipment that might be needed for your small business
• Safety gear necessary for your landscaping business
• Internet, phone, and any potential data plans needed to keep your small business running
• Mileage driven by the business owner for business-related purposes (try our free mileage template)
• Vehicle maintenance or expenses needed for repairs
• Services and electronics that your truck may need, along with the cost to repair them
• Items for vehicle maintenance, such as paper towels, window cleaners, etc.
• Home office supplies, such as paper, pens, and envelopes (use our worksheet for home office expenses)
• Postage fees for invoices
• Marketing expenses that the small business owners need to go through in order to advertise their lawn care company
• Insurance expenses connected to your lawn care business
• Miscellaneous items that can help you do your job as a lawn care business owner

Landscaping tax affects everyone differently, which is why you may want to collaborate closely with the IRS and your tax advisor. Whatever tax deduction you may have to write off, they can help you with your tax return.

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Can landscapers write off lawn mowers on their taxes?

The lawn mower is tax-deductible. Everything small business owners use for their company may be written off. You just have to prove that you are using the lawn mower for your landscaping business, and you should be able to write off the purchase price on your taxes.

It is mandatory to keep the records of every purchase that you make for your business. It's very easy to lose track of expenses, even the ones necessary to keep the lawn mower running - i.e., the gas. In the event of an audit, you must have a way to prove your expenses.

The lawn mower is considered a capital expense for your business. As a result, the tax deductions you receive may be spread over the total years you expect the lawn mower to last.

For example, the average $5,000 lawn mower lasts about 5 years when used continuously for business. Multiplying $5,000 by 20%, you get $1,000. This is the amount you can claim each year for the next five years.

Tax tips for landscapers

Tax deductions for landscapers may be given to anyone owning a landscaping business. All you need to do is keep a record of your expenses when you file for tax return.

The tax law is set - and as long as you meet the requirements, you can get your deductions. With that in mind, here are some tips that you'll want to keep in mind if you want to get the most out of your tax return.

How to depreciate your costs

It might be tempting for you to claim one-time tax deductions for business equipment. However, if you want to save on your taxes, you might want to try the depreciation method instead.

Take an essential piece of equipment, and depreciate its cost over the past couple of years. You might receive more out of that depreciation when you get your tax return.

Check state laws for landscapers

Depending on the state that you live in, you may or may not be subjected to sales taxes when offering your services.

Check with your state laws and make sure that you are handling your expenses and taxes correctly. The last thing you want is to have the IRS at your doorstep.

How to calculate vehicle travel expenses correctly

When deducting travel expenses for your truck, be careful with calculations—specifically, the cents-per-mile rate. The IRS mileage rate for businesses in 2024 is 65.5 cents per mile. You may also use the truck expense options provided by the IRS. Read our article on claiming the standard mileage deduction versus actual expenses.

Know what landscapers can't deduct

As a landscaper, there are certain expenses you may not get a deduction for at the end of the tax year. For example, while you may be able to deduct equipment, you may not be able to deduct an expense that was already reimbursed to you by the person who hired you.

When and why to hire professional bookkeeping or tax help for landscaping

Recognizing the right time to hire bookkeeping help

Landscaping businesses should consider hiring professional bookkeeping help as soon as their financial records become too complex to manage efficiently. This often happens when the business grows beyond a few clients or when multiple employees and equipment expenses start to accumulate. For example, if you handle over 20 active clients or have seasonal payroll, managing invoices and expenses manually can lead to costly errors.

Outsourcing bookkeeping early can save time and reduce stress. Tools like QuickBooks Online or Xero are popular among landscapers, but without bookkeeping expertise, you might miss deductions or misclassify expenses. A professional bookkeeper can ensure your records are accurate and up to date, which is essential for cash flow management and preparing for tax season.

To decide when to hire, track how many hours you spend on bookkeeping each week. If it exceeds 5 hours and takes away from client work, it’s time to bring in a pro. This investment often pays off by improving financial clarity and freeing you to focus on growing your landscaping business.

Why professional tax help is crucial for landscapers

Professional tax help is essential for landscapers because tax laws related to equipment depreciation, vehicle expenses, and labor costs can be complex and frequently change. For the 2024 tax year, landscapers can take advantage of Section 179 deductions to write off up to $1,160,000 on qualifying equipment, but only if properly documented and filed.

Additionally, landscapers often deal with state-specific tax rules, such as sales tax on materials or services. For instance, California requires landscapers to collect sales tax on certain services, while Florida does not. A tax professional familiar with your state’s regulations can prevent costly audits and penalties by ensuring compliance.

Hiring a tax expert helps maximize deductions related to fuel, tools, and subcontractor payments. They can advise on quarterly estimated tax payments to avoid surprises. Partner with a tax professional like a CPA or enrolled agent specializing in small businesses to keep more of your hard-earned income.

How to choose the right bookkeeping or tax professional

Choosing the right bookkeeping or tax professional starts with finding someone who understands the landscaping industry. Look for professionals with experience working with small service businesses or contractors. You can ask for referrals from local landscaping associations or check platforms like LinkedIn and Yelp for reviews.

Interview candidates about their familiarity with landscaping-specific expenses and software like Jobber or ServiceTitan. Also, confirm their credentials—bookkeepers should be certified through organizations like the American Institute of Professional Bookkeepers (AIPB), while tax preparers should have CPA or EA designations.

Once hired, set clear expectations on communication frequency and deliverables. For example, monthly financial reports and quarterly tax reviews can keep your business on track. Establishing this relationship early helps you avoid last-minute scrambles during tax season and supports better financial decision-making year-round.

Tax compliance and bookkeeping best practices for landscapers

Organize your income and expenses with dedicated accounts

Landscapers should separate business finances from personal accounts to maintain clear records. Using a dedicated business checking account helps track income and expenses accurately, which is essential for tax reporting and financial analysis. This separation also simplifies bookkeeping and reduces errors during tax season.

For example, landscapers can use accounting software like QuickBooks Online or FreshBooks, which allow linking bank accounts directly to track transactions automatically. Categorize expenses such as equipment purchases, fuel, and payroll to capture all deductible costs. In 2024, the IRS emphasizes accurate record-keeping to support deductions and avoid audits.

Start by setting up a business bank account if you haven't already, then connect it to your chosen accounting software. Regularly review and categorize transactions weekly to stay on top of your books. This habit prevents last-minute scrambles and ensures compliance with tax laws.

Track payroll and contractor payments accurately

Landscapers often hire seasonal workers or subcontractors, making payroll tracking crucial for tax compliance. The IRS requires proper reporting of wages and contractor payments, including filing forms like W-2 for employees and 1099-NEC for independent contractors. Accurate payroll records help avoid penalties and ensure correct tax withholding.

Using payroll services such as Gusto or ADP can automate tax calculations, filings, and payments. For example, Gusto integrates with accounting platforms and handles federal and state tax filings, which is especially helpful for landscapers operating in multiple states with varying tax laws. Keep detailed records of hours worked, pay rates, and payment dates to support your filings.

Implement a consistent payroll schedule and document all payments to contractors. This practice not only guarantees compliance but also builds trust with your workers. Regularly reconcile payroll reports with your bookkeeping records to catch discrepancies early.

Stay current with tax deadlines and deductible expenses

Meeting tax deadlines is vital for landscapers to avoid fines and interest charges. For 2024, quarterly estimated tax payments are due on April 15, June 17, September 16, and January 15, 2025. Mark these dates on your calendar and set reminders to prepare payments in advance. Missing deadlines leads to costly penalties.

Landscapers can deduct a wide range of expenses, including vehicle mileage, equipment depreciation, supplies, and business insurance. The IRS allows a standard mileage rate of 65.5 cents per mile for 2024, which can simplify vehicle expense tracking if you log your miles accurately. Using apps like MileIQ or Stride can automate mileage tracking and generate reports for tax deductions.

Review your expenses monthly to identify deductible items and keep receipts organized digitally. Staying proactive with tax deadlines and deductions reduces stress and maximizes your tax savings. Consider consulting a tax professional familiar with landscaping businesses to optimize your tax strategy.

Understanding financial statements for landscaping companies

Profit and loss statements

Profit and loss statements show your landscaping company’s revenue and expenses over a specific period, usually monthly or quarterly. They provide a clear picture of whether your business is making money or losing it. For example, tracking costs like labor, materials, and equipment rental against your income helps you identify which services are most profitable.

Using accounting software like QuickBooks, FreshBooks, or Xero can simplify creating and analyzing these statements. These tools automatically categorize expenses and generate reports, saving you time and reducing errors. Regularly reviewing your profit and loss statement helps you spot trends, such as seasonal dips or rising supply costs, so you can adjust pricing or cut unnecessary expenses.

To make the most of your profit and loss statements, schedule a monthly review. Compare actual results against your budget to stay on track. This practice helps you make informed decisions about hiring, marketing, and equipment purchases, ensuring your landscaping business remains financially healthy throughout 2024 and beyond.

Cash flow statements

Cash flow statements track the actual cash entering and leaving your landscaping business, which is crucial for managing day-to-day operations. Unlike profit and loss statements, cash flow focuses on liquidity, showing if you have enough cash to cover payroll, supplies, and unexpected expenses. For example, a profitable month on paper might still leave you short on cash if clients delay payments.

To manage cash flow effectively, use tools like Pulse or Float that integrate with your accounting software to forecast cash availability. These platforms help you anticipate shortages and plan for expenses like seasonal equipment maintenance or tax payments. Maintaining a cash reserve equal to at least one month’s operating expenses is a smart strategy for landscaping companies facing variable income.

Review your cash flow statement weekly during busy seasons, such as spring and summer, when expenses and income can fluctuate rapidly. This habit lets you avoid surprises and negotiate payment terms with suppliers or clients proactively, keeping your business running smoothly throughout the year.

Balance sheet analysis

The balance sheet provides a snapshot of your landscaping company’s financial position at a specific date by listing assets, liabilities, and equity. Understanding this statement helps you assess your business’s stability and ability to invest in growth. For instance, knowing your current assets like cash and equipment versus liabilities such as loans or unpaid bills informs smart borrowing decisions.

Landscapers should pay close attention to accounts receivable on the balance sheet, which represent money owed by clients. High receivables can strain cash flow, so consider tightening credit terms or using invoicing software like HelloBonsai to send reminders and automate payments. Additionally, tracking depreciation on landscaping equipment ensures your balance sheet reflects accurate asset values for tax purposes in 2024.

Regularly analyzing your balance sheet, at least quarterly, helps you monitor debt levels and equity growth. This practice supports strategic planning, such as applying for a small business loan or deciding when to upgrade machinery. A strong balance sheet signals financial health to lenders and partners, enabling your landscaping company to thrive long term.

Choosing the right accounting software for landscaping businesses

Key features to look for in landscaping accounting software

The right accounting software for landscaping businesses must handle job costing, invoicing, and expense tracking efficiently. Job costing is crucial because it helps landscapers track labor, materials, and equipment costs per project, ensuring profitability. Look for software that allows you to assign costs directly to specific jobs, such as QuickBooks Online, Xero, or FreshBooks, which offer customizable project tracking features.

Invoicing capabilities should support progress billing and recurring invoices, common in landscaping contracts. For example, FreshBooks allows you to automate recurring billing and send professional invoices with payment reminders, reducing late payments. Expense tracking should integrate with bank accounts and credit cards to capture purchases like:

• Fertilizers
• Tools
• Fuel

Choosing software with mobile apps is also beneficial since landscapers often work on-site. Tools like Jobber and ServiceTitan provide mobile access to update job statuses and capture expenses in real time. Prioritize software that combines these features to streamline your accounting tasks and improve cash flow management.

How payroll management integrates with landscaping accounting

Payroll management is a vital component of accounting for landscapers, especially as labor costs often represent the largest expense. Software that integrates payroll with accounting can simplify tax calculations, wage tracking, and compliance with labor laws. For instance, Gusto offers full-service payroll that automatically calculates and files federal and state payroll taxes, which is essential for landscapers operating in multiple states.

Landscapers should also consider software that supports seasonal and hourly employee tracking, since many landscaping businesses hire temporary workers during peak seasons. Tools like ADP Workforce Now provide flexible payroll options and time-tracking features that sync directly with accounting records, reducing manual data entry errors.

Integrating payroll with your accounting software helps maintain accurate financial statements and ensures timely tax payments. When evaluating options, verify that the software complies with 2024 tax regulations and supports electronic filing to avoid penalties.

Steps to select and implement accounting software for your landscaping business

Start by assessing your business size, budget, and specific accounting needs. Small landscaping businesses with simple invoicing might find affordable solutions like Wave or FreshBooks sufficient, while larger operations may require robust platforms like QuickBooks Online Advanced or Sage Intacct. Consider the number of users and whether you need features like inventory management or detailed job costing.

Next, take advantage of free trials and demos to test usability and feature sets. During this phase, involve your bookkeeper or accountant to ensure the software integrates smoothly with your existing workflows. For example, QuickBooks Online offers a 30-day free trial and extensive online tutorials to help new users get started.

Finally, plan for a phased implementation by migrating your financial data carefully and training your team. Use HelloBonsai’s invoicing and expense tracking templates to complement your accounting software and maintain consistency. Regularly review your software’s performance and update it as your business grows to keep your accounting efficient and accurate.

Managing cash flow and seasonal fluctuations in landscaping accounting

Understanding cash flow challenges for landscapers

Landscapers face unique cash flow challenges due to the seasonal nature of their work. Cash inflows often peak during spring and summer, while fall and winter can bring slower business or downtime. This uneven revenue stream makes it essential to plan finances carefully throughout the year.

To manage these fluctuations, landscapers should track monthly income and expenses using accounting software like QuickBooks or FreshBooks. These tools help visualize cash flow trends and forecast periods of low income. For example, setting aside a portion of spring earnings can cover fixed costs during slower months.

Regularly reviewing cash flow reports allows landscapers to spot potential shortfalls early. This proactive approach enables timely decisions, such as negotiating payment terms with suppliers or arranging short-term financing. Consistent cash flow monitoring is key to maintaining business stability year-round.

Strategies for managing seasonal income fluctuations

One effective strategy for handling seasonal income swings is creating a detailed budget that accounts for peak and off-peak months. Landscapers should estimate expected revenue and expenses for each season, including labor, equipment maintenance, and marketing costs. This budget acts as a financial roadmap to avoid overspending during busy periods.

Another approach is diversifying services to generate income during slower months. For instance, offering snow removal or holiday lighting installation can provide additional revenue streams in winter. Using platforms like Jobber can help schedule and invoice these varied services efficiently.

Additionally, setting up a dedicated savings account for taxes and emergency funds ensures landscapers are prepared for unexpected expenses. Experts recommend saving at least 20-30% of seasonal profits to cover lean periods and tax liabilities. This financial cushion reduces stress and supports sustainable growth.

Using technology to streamline seasonal accounting tasks

Technology plays a crucial role in simplifying accounting for landscapers, especially when dealing with seasonal fluctuations. Cloud-based software like Xero or QuickBooks Online offers real-time access to financial data, enabling landscapers to update records on the go and stay organized.

Automated invoicing and payment reminders reduce delays in receiving payments, which is vital during busy seasons. For example, integrating payment gateways such as Stripe or Square can speed up cash collection. These tools also generate reports that highlight seasonal trends and help with tax preparation.

Landscapers should also consider time-tracking apps like TSheets to monitor labor costs accurately during peak periods. Accurate labor tracking ensures pricing reflects actual work done, preventing undercharging. Leveraging these technologies streamlines accounting tasks and improves cash flow management throughout the year.

Setting up a chart of accounts for landscaping businesses

Understanding the chart of accounts structure

A chart of accounts (COA) is an organized list of all accounts used to record financial transactions in your landscaping business. It categorizes income, expenses, assets, liabilities, and equity, making it easier to track financial health and prepare reports. For landscapers, a well-structured COA helps separate costs like labor, materials, and equipment, which are critical for accurate job costing.

Typically, the COA is divided into five main categories: assets, liabilities, equity, income, and expenses.

For example, under assets, you might include accounts for:

• Landscaping equipment
• Vehicles

Income accounts could include:

• Lawn maintenance services
• Hardscaping projects

This clear structure allows you to see where your money is coming from and where it’s going, which is essential for managing cash flow.

To set up your COA, start by reviewing your common transactions and grouping them logically. Using accounting software like QuickBooks Online or Xero, which offer customizable COA templates, can simplify this process. A tailored COA ensures your books reflect your business operations accurately, setting a solid foundation for financial management.

Key accounts to include for landscaping businesses

Landscaping businesses should include specific accounts that reflect their unique expenses and income streams. Labor costs are often the largest expense, so accounts like 'Employee wages' and 'Subcontractor payments' are essential. Tracking these separately helps you analyze profitability per project and manage payroll taxes effectively.

Materials and supplies are another major category. Accounts like:

• Plants and shrubs
• Fertilizers and pesticides
• Mulch and soil

allow you to monitor inventory costs. Equipment-related expenses should also have dedicated accounts like:

• Equipment maintenance
• Fuel and oil

Separating these costs helps with budgeting and identifying areas to reduce expenses.

On the income side, create accounts for different service types, such as:

• Lawn care
• Tree trimming
• Irrigation installation

This granularity enables you to evaluate which services generate the most revenue and adjust your marketing or pricing strategies accordingly. Regularly reviewing these accounts ensures your financial data stays relevant and actionable.

How to customize your chart of accounts for tax and reporting needs

Customizing your COA to align with tax reporting requirements can save time and reduce errors during tax season. For example, the IRS requires landscaping businesses to separate deductible expenses like 'Vehicle expenses' and 'Contract labor.' Creating specific accounts for these categories ensures your records are tax-ready.

State-specific tax rules may also affect your COA setup. For instance, if you operate in California, you need to track sales tax collected on certain landscaping services. Adding a 'Sales tax payable' liability account helps manage these obligations. Check with your state’s Department of Revenue or consult a tax professional to tailor your accounts accordingly.

Using accounting software with built-in tax features, such as QuickBooks Desktop Premier Contractor Edition, can automate categorization and reporting. Regularly updating your COA to reflect changes in tax laws or business operations keeps your accounting accurate and compliant. This proactive approach reduces the risk of audits and penalties.

Maintaining and reviewing your chart of accounts regularly

Regular maintenance of your chart of accounts is crucial for keeping your landscaping business finances organized. As your business grows or changes, some accounts may become obsolete or new ones may be needed. Schedule quarterly reviews to assess whether your COA still fits your current operations and reporting needs.

During these reviews, look for accounts with minimal activity or those that could be combined to simplify your books. For example, if you rarely use separate accounts for 'Fertilizers' and 'Pesticides,' consider merging them into a single 'Supplies' account. Simplifying your COA reduces confusion and improves the clarity of financial reports.

Additionally, ensure your team or bookkeeper understands the COA structure to maintain consistent categorization. Providing training or documentation on how to use the COA correctly prevents errors and saves time during bookkeeping. A clear and well-maintained COA supports better decision-making and financial control in your landscaping business.

Choosing the right accounting method for your landscaping business

Understanding cash and accrual accounting methods

Cash and accrual are the two main accounting methods landscapers use to track income and expenses. Cash accounting records transactions only when money changes hands. This method is simpler for small landscaping businesses with straightforward finances. Accrual accounting records income and expenses when they are earned or incurred, regardless of payment timing. It offers a more accurate financial picture.

For example, if you complete a landscaping job in December but get paid in January, cash accounting records the income in January, while accrual accounting records it in December. This difference affects how you report income and expenses on your taxes and manage cash flow throughout the year.

Choosing between these methods depends on your business size, invoicing practices, and tax requirements. Understand these basics to decide which approach aligns with your landscaping business goals and simplifies your bookkeeping process.

When to choose cash accounting for your landscaping business

Cash accounting is often the best choice for small landscaping businesses with less than $27 million in annual revenue, as allowed by IRS rules in 2024. This method works well if you primarily accept immediate payments or deposits and want to keep bookkeeping simple. It helps you track actual cash flow, which is crucial for managing day-to-day expenses like equipment purchases and payroll.

For instance, if you receive a $5,000 payment for a landscaping project upfront, cash accounting lets you record that income immediately. This clarity can help you avoid overspending and plan for upcoming expenses. Many landscapers using QuickBooks Online or FreshBooks find cash accounting easier to maintain without needing extensive accounting knowledge.

To implement cash accounting, ensure your invoicing and payment systems are aligned to record transactions only when cash is received or paid. This approach reduces complexity, makes tax filing straightforward, and helps you focus on growing your landscaping business.

When accrual accounting benefits landscaping businesses

Accrual accounting benefits landscaping businesses that handle multiple projects with delayed payments or offer credit terms to clients. It provides a clearer picture of your financial health by recognizing income and expenses when they occur, not when cash is exchanged. This method is especially useful for businesses tracking inventory, equipment depreciation, or long-term contracts.

For example, if you complete a large landscaping job in November but receive payment in January, accrual accounting records the income in November, matching it with related expenses like labor and materials. This matching principle helps you understand profitability per project and make informed decisions about pricing and budgeting.

Implementing accrual accounting requires detailed record-keeping and often the use of accounting software like Xero, Sage Intacct, Jobber, or ServiceTitan. Landscapers with growing businesses or those seeking loans and investors choose this method for its accuracy and compliance with Generally Accepted Accounting Principles (GAAP).

How to switch accounting methods and set up your system

Switching between cash and accrual accounting requires careful planning and IRS approval if you have already filed taxes using one method. In 2024, small businesses can request a change by filing Form 3115 with the IRS. Before switching, review your financial records and consult an accountant to ensure the transition aligns with your business needs.

Setting up your accounting system starts with choosing software tailored for landscapers, such as Jobber or ServiceTitan, which support both cash and accrual methods. Configure your chart of accounts to track typical landscaping expenses like fuel, equipment maintenance, and seasonal labor. Automate invoicing and payment reminders to maintain accurate records regardless of your chosen method.

Regularly reconcile your accounts and review financial reports monthly to catch discrepancies early. This proactive approach helps you maintain compliance, optimize cash flow, and make strategic decisions that grow your landscaping business.

The bottom line for landscaper accounting

Owning a lawn care business generates income if you like gardening. Like other self-employed service providers, you need to pay taxes. Use this guide to help handle your tax return accurately and efficiently.