You started your own lawn care company, because you have a sense of adventure.
You love working outside with the smell of freshly cut grass and and the feel of a crisp breeze to cool you off.
You love being your own boss. There’s no one to answer to but… well, you! You get to make all the major decisions in your business, and you don’t have to wait for the changes you want to implement.
But most of all… you love doing what YOU LOVE best. Owning your own lawn care business is the best of both worlds.
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.
In order to make your lawn care business legal, you have to come up with a name.
Brainstorm a few names you like (but also are easily marketable). Then, input these names into your state’s business name search database. While, most states offer online name searches, 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.”
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Step 2: Get an EIN (Employer Identification Number)
Do you plan on hiring employees?
If so, 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.
To ensure pesticide applicators know its proper and most effective uses: According to federal law, anyone who applies or supervises the use of RUPs (restricted use pesticides) must be certified with EPA regulations, state, territorial and tribal laws.
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. They’ll let you know 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 7 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 3 policies you should carry for your lawn care business:
- 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.
- 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.
- Property Insurance covers your equipment ranging from aerators, lawn mowers, string trimmers
andapplicators as well as the computers used in your office.
As a lawn care owner-operator, you need to safeguard the heart of your business.
Your equipment and machinery are an investment into your business.
When an inevitable tragedy happens in your lawn business, property insurance ensures your investment won’t be lost.
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.
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The Tax Issue — S Corporation or LLC?
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 reasons, the IRS classifies businesses as sole proprietorships, partnerships, C corporations or S corporations.
But, there’s not an LLC classification. And so, LLCs are taxed as another business type.
Due to this, 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.
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While you may get the bulk of your information from the internet to keep you legal, you still may need help from a professional.
Consider hiring a certified public accountant to handle your business’ finances. They’ll even help you decide how to classify your business for tax purposes. Choosing the right classification will make or break your lawn business.
And if you’re a small business, you might consider looking into volunteer mentors that specialize in helping small businesses get off the ground.
And if you need a little extra financial help, the SBA (Small Business Administration) can help you secure a loan for your lawn company.
When you follow these essential steps, you’ll rest easy knowing your business is official.
I promise: After reading this article, you’ll be ready to make money the legal way!
Updated May 28, 2019 7:00 AM