Here is a rundown of the tax deductions for lawn care business. If you have a lawn care or landscaping business, you know it is an interesting, challenging and lucrative area. While running your own business can be exciting, it can be challenging and sometimes uncertain. One of the biggest challenges for small business owners is often their cash flow, income, and overall earnings. After all, people do business to earn money. The same is true for gardening and lawn care specialists.
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While the field has great potential, especially in some areas, the costs are often high and prohibitive for those just starting out. This is where deductions come into play. It is important to have a basic understanding of the tax system to minimize your payments and therefore earn more. In this post we will discuss the pros and cons of garden tax deductions, to make sure you are maximizing your earning potential.
What are business tax deductions for lawn care?
As a small business owner, you know the importance of having accurate bookkeeping and accounting services. You must record all the income that goes into your business, as well as keep track of all the money that comes out. The reasons for tracking your income are clear and straightforward. Tax authorities require all individuals and businesses to file tax returns and pay taxes appropriately based on their income. This can be a bit more complicated as a small business owner, rather than an employee, so it is always advisable to consult a trusted accountant. You may have to pay self-employment tax (Social Security and Medicare) and other necessary taxes.
To offset some of the tax burdens, as a small business owner, you have many tax deductions that will reduce the amount you have to pay. What does this mean? All business costs can be deducted from your income. As a result, you will be responsible for less tax, since your total profit will be less. While all companies should check with the CPA for their specific deductions, there are many common business tax deductions.
Common Deductions for Lawn Care
In this section, we will discuss the most common tax deductions for lawn care and landscaping. As we have mentioned, it is important to carefully track all costs and keep receipts, to get the full benefits when filing your taxes.
Self-employment tax can be a frustrating cost for small business owners. If you are considered a sole proprietor / independent contractor, you will have to pay this tax. Self-employment tax means you are paying both the employee and the employer for your social security and Medicare. This cost is 15.3 percent of your income. The good news is that part of the self-employment tax is deductible. Your accountant will explain exactly how much and will adjust the amount accordingly on your tax return.
While you are likely to move as a landscaping business owner, there is no doubt that you also have a home office. This is probably where you do the administrative work for your business, ordering supplies, paying bills, customer interaction, and more. For this reason, home office expenses are a tax deduction. These deductions can include the cost of internet, phone, office supplies, furniture, computer, printer, and many more.
Equipment and supplies
Equipment and supplies are a major expense category for business lawn care taxes. To grow a successful business, you have likely invested a large amount of equipment and supplies for your business. Some are great one-time purchases that you can only make every few years (for example, lawnmowers, tree trimming tools, etc.). Other supplies, such as garden supplies, may have a recurring cost. No matter the number of costs, include them as deductions. Some of them can depreciate over the years (meaning you make a few each year on large purchases). Consult your accountant on this matter.
Car costs and mileage
As a landscaping professional, your vehicle is likely to be an important part of your job. You can even have a special car or truck for work purposes. That is why mileage and car costs can be deducted on your tax return. Be sure to keep track of your annual mileage on all vehicles associated with your business and save all gas receipts. In addition to the daily deductions related to your vehicle, repairs and maintenance may be included on your tax return.
No matter what your field is, business insurance is vital for all small businesses today. If something goes wrong with your business, you need to make sure you’re legally and financially protected. We recommend purchasing the appropriate gardening or lawn care insurance to cover the specific circumstances of the field.
Employee payment and contractor expenses
If you have employees or freelancers / contractors working for you, your wages may be deducted from your taxes. This is a significant fee that could significantly reduce your tax burden. For employees, their salary is not only deductible but also other payments related to their work (social security, etc.).
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