You started your own lawn care company because you have a sense of adventure.
There are parts of your business that you love:
- working outside,
- being your own boss,
- and doing what you love best.
But to start your lawn care business on the right foot, you need more than a sense of adventure. You need to get “official.”
Here, I’ll walk you through the 4 steps to make your new lawn care business legal:
Step 1: Find the Perfect Name for Your Lawn Care Company
Give your new company a name that highlights who you are as a business. Then make that name official.
David Ingram talks about how to name your Lawn Business:
“Legal businesses need a name, and you may not have been using a name other than your own for business purposes up to this point.
“Come up with a few name ideas and check them against your state’s business name search database. Most states provide online search services, but some ask for mail-in submissions or in-person visits.”
Choose a name that is unique to you, but also conveys the benefits of your services. For example: “Better Lawns by John.”
Step 2: Get an EIN (Employer Identification Number)
Do you plan on hiring employees?
If you do, you need an EIN number. You can find how to get your EIN number by going to IRS.gov to fill out your application online.
The process is different in Canada. Instead of EINs, you will need to get your employees SIN (Social Insurance Number). Read more about the Canadian hiring process here.
Step 3: Make Your Business an LLC
An LLC is a Limited Liability Company where you, as the owner, are a separate “member” of your company.
Many folks turn their sole proprietorships to LLC status to protect their personal assets from a lawsuits.
We’ll talk more about whether you should choose an LLC or an S Corp further down the page.
Get the Right Applicator Licenses, Certifications and Business Licenses
If you plan on providing weed and pest control, you need to be certified or licensed by your state (again, the rules in Canada are different).
In the US, the EPA is there to make sure you stay compliant.
Here’s what they say:
“Federal law requires any person who applies or supervises the use of restricted use pesticides (RUPs) to be certified in accordance with EPA regulations and state, territorial and tribal laws.
“Pesticide applicators must know how to apply RUPs properly and effectively.”
Other Licenses and Certifications to Consider
Your local government may require you to have a business license as well as a contractor’s number.
Make sure to check with your county clerk’s office and the cities you’ll be serving whether you need a contractor or business license to work in those areas.
Other Certifications to Consider
At the National Association of Landscape Professionals, you can expand your knowledge and service options by getting certified through NALP’s seven different certifications, including these three lawn care courses:
- Lawn Care Manager
- Lawn Care Technician
- Lawn Care Technician National
Step 4: Get the Right Insurance for Your Lawn Service
Before you step out of your truck to take care of your first customer’s lawn, you need to obtain the right insurance to protect your business from any legal problems.
There are three policies you should carry for your lawn care business:
1.General Liability Insurance protects you and your technicians in case an accident occurs on your customer’s or their neighbor’s property, and you’re at fault.
For example, if your mower runs over an irrigation line and causes a flood on your client’s lawn.
2. Workers Compensation Insurance protects you if one of your employees gets hurt while on the job. It covers the gamut from doctor’s visits, hospital stays and other medical bills.
It also helps cover the employee’s lost wages due to the injury or accident.
3. Property Insurance covers your equipment ranging from aerators, lawn mowers, string trimmers and applicators as well as the computers used in your office.
As a lawn care owner-operator, you need to safeguard the heart of your business.
“There’s a good chance you’ve invested a lot of money in your equipment, and perhaps you acquired the best machinery over the course of years.”
“Property Insurance ensures that all of that will not be lost if and when a devastating event befalls your business.”
Other insurance policies to consider for your lawn service company include:
- Business Owner’s Policy
- Commercial Auto Insurance
- Umbrella Insurance.
For more in-depth discussions about the insurance that you need for your particular business, contact your insurance agent.
The Tax Issue — S Corporation or LLC?
Ben Franklin once said:
“…in this world, nothing can be said to be certain, except death and taxes.”
The IRS, as well as your state and county tax collectors are very good at getting the money you owe them.
You need to make sure you incorporate your company under the right tax entity, so you know how much you need to pay Uncle Sam.
Here’s the difference between an S Corp and an LLC:
“For tax purposes, the IRS classifies businesses as sole proprietorships, partnerships, C corporations, or S corporations.
“There is no “LLC” tax classification and, therefore, LLCs are taxed as though they are another type of business.”
So, if your lawn care company is a sole proprietorship LLC, you’ll need to pay self-employment taxes, which are social security and Medicaid.
Your company’s entire profit for a particular year is taxed.
To save money on your taxes, you may want to consider an S Corp.
If you’re an LLC with an S Corp, you, as the owner, will be paid a salary.
Thus, your salary gets taxed for social security and Medicaid rather than your company’s total profit paying for these two taxes.
More Resources to Keep Your Lawn Care Company Legal
While you may get the bulk of your information from the Internet to keep you legal, you still may need help from a professional.
Here are some websites to visit to find those valuable folks:
- Certified public accountant: You can find a CPA in your area through their national association’s website.
- A mentor for your business: Score.org is a national organization that has volunteers who help small businesses get off the ground.
- The Small Business Administration (SBA) also has business-building advice, and can help you secure a loan for your new company.
When you follow the 4 steps above, you’ll rest easy knowing your business is official, and ready to make money the legal way.
Wendy Komancheck is the owner of The Landscape Writer. She writes for lawn care, landscape and other field services. You can email her at email@example.com. When Wendy’s not working, she’s at the local high school cheering on her two sons' volleyball games, taking walks with her dog, Hope, or helping out at church.Author's Website