As a Landscaper you are always on the go and spending money left and right to make things happen. Whether you are helping fix an issue at a Personal Residence or helping a commercial property owner, you are always spending money. Have you ever thought which for these expenses are tax write are off? In this article we will be discussing “19 Best Tax Deductions for Landscapers and Landscaping Business in 2021-2022″.
These Tax Strategies for Landscaping Business Owners can dramatic effect your tax Bill. Read on to learn these 18 Tax Deductions for Landscapers and also see our bonus tip at the end.
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Contents
Materials and Supplies
As a Landscaper and Landscape Business owner one of your largest expense is buying Materials, other supplies for Landscaping. You buy Gas for Lawn mowers, tools for landscaping, artificial grass, sand, pavers and hundreds of small items to take care of your customers. All these parts and supplies are tax deductible on your tax return.
We recommend keeping track of these as not only you will need them for your income tax purposes, depending upon your state laws, you may have to collect sales tax on these parts and submit to your state.
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Advertising & Marketing for Landscapers
As most of the Landscapers get their business from online these days, you can deduct your expenses such as Website, Business Cards, Website Hosting cost, domain cost and so on. You probably also spend money on Yelp, Google AdWords, Facebook and other online advertising platforms. All these expenses are tax deductions for federal and state tax purposes.
If you still do mailing campaigns such as postcards and ads in magazines, you can deduct those expenses as well.
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Education And Training for Landscapers
One of the things we have learned by talking to hundreds of successful Landscapers that they always invest money in their earning ability. Many work with other successful Landscaper Contractors or General Contractors to learn and upgrade their skills. Many Landscapers also spend money on continuing education requirements to stay on top of legal and business requirements.
Many successful Landscapers also buy Audio book subscription from Amazon or Auto Technology books, and online courses. These expenses not only reduce your taxable income but also can help you increase your earned income as well.
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Required Licenses And Dues For Landscapers and Landscape Businesses
In order to work as a Landscaper you are required to maintain your license and in pay for dues either on year or quarterly basis. This may include but are not limited to City License, County License and State Licenses. All these expenses can be legal tax write off.
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Phone, Internet & Fax
Mechanics spend a large amount of the time over Phone, Internet either answering prospective customers phone or doing marketing. As a Landscaper you can write off large portion of your Cellphone (Verizon or AT&T), Internet, and Fax/E Fax Charges.
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Insurance for Landscapers and Landscape Businesses
Landscaper are required to carry various insurance to protect the public. These insurance include E&O, General Business Coverage Insurance and Business Vehicle Insurance.
If you are successful enough to have your own office, you may have employees and will need to pay Workers Compensation. This is also tax deductible.
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Landscapers Vehicle (Truck or Van) Tax Deduction
If you are a Mobile Landscaper then you probably spend more than 60% of their time using you business vehicles, either traveling from job site to site either performing work or providing quotes to customers. You also spend time going to part stores buying parts to use at the job sites.
Vehicle expense are important deduction and its crucial that you learn all the options before making your choice.
You have two options when claiming Landscaper Vehicle Tax Deduction:
Simple Method (Standard Mileage Deduction)
The simple method where you take a cost per mile for miles you driven for business.
For 2021, the standard mileage rate is 56 Cents per mile.
For Example: if you drove 10,000 miles, you could deduct $5,600 from your
In addition to Standard Mileage expense, you can also get to deduct DMV Registration fees and taxes, car loan interest, Vehicle Cleaning, Bridge Tolls, and parking fees to the standard mileage deduction.
Actual Method
Actual method is typically used by many Landscapers especially when their actual expenses are significantly more than the standard mileage method.
In actual method, you itemize the list of expenses pertaining to your vehicle. Vehicle Repairs and maintenance, Parking, Vehicle Lease Expense, Vehicle Cleaning, DMV fees and Depreciation.
Tip: We recommend looking into Tax Deductions for Landscapers regarding Pickup or Large Vehicle Purchase. This is especially helpful if you purchase a business vehicle that is equal or greater than 6000 Pounds. In this case you may be able to depreciate the vehicle 100 %( Given its purely used for work and not for personal use)
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Business Travel & Meals
If you work across state or across country you may have to travel a lot. Many of the Travel Expenses are fully tax deductible. These expenses may include Airfare, Hotel Stay & Lodging and Travel Meals.
On the other hand if you are not travelling and taking a client out for a business meal and taking another Landscaper, or vendor out to discuss business you can write off Meals. Usually meals are 50% deductible but in 2021 and 2022 laws may be slightly different and may allow up to 100% deduction of meals.
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Home Office Deduction for Landscapers and Landscape Businesses
Many Landscaping business owners work from their home. They usually have their computer, printer and other equipment setup at home.
IRS requires that portion of the home deducted on your tax return is exclusive area and is not share for personal purposes.
For example you cannot have a small table on side of bedroom. There are two methods for deducting your home office. Simple & Complex Method.
Simplified Method for Landscapers
Simple method allows you to take your square footage and multiply by 5 dollars a square foot. Max amount you can write of under this methods is $1500.
An example would be a 100 square foot room that you use exclusively as your office. Multiplying that by $5 gives you $500 that you can deduct for your home office.
Detailed Method for Landscapers
In order to calculate home office deduction under this method
first you find out what is total size of your home office, example 200 Square foot then you divide that by total home size, example 2000 Sq Feet. So Office is 10% of the total home.
Secondly, you take home expenses such as Mortgage interest, Insurance, Property Tax, Repairs and Utilities and come up with the total example $20,000
Thirdly, you take 10% of $20,000 which will be $2000
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Rent And Utilities for Landscaping Business
If you rent warehouse space for your Painting or Paint contractor business, then the rent you pay is tax-deductible along with Office utilities such as electricity, water & trash service.
This is an important Tax Deductions for Landscapers for 2021-2022 as many Landscapers rent warehouses or part of the warehouse to store their equipment, trucks or inventory.
- Business Gifts ($25 Deduction Limit)
IRS allows Business Gifts of $25 Per person Per year. If you pay anyone more than that then it may be taxable depending up the purpose and what was the Gift intended to accomplish.
If a payment can be considered other income or referral and you pay someone $600 or more then you are required to issue them a 1099M or 1099 NEC.
- Self-Employed Health Insurance Deduction for Landscapers
If you are self-employed, most likely you have to buy your own health insurance. You can deduct health insurance you pay for yourself or your family. This is written off as a Adjustment in your income taxes.
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Landscaper Tools and Equipment
Landscapers business owners often purchase standard business equipment like computers, plumbing tools, iPad for invoicing.
Most of these items are fully deductible (expensed) in the year you purchase them versus having to depreciate them over multiple years.
However, if you find yourself buying expensive items such as Laptops, Commercial Presser Washers and other items over $2500, be sure to check with your Tax Accountant & CPA if it can be deducted or depreciated over time.
You may be able to take Section 179 or Bonus Depreciation on some of the items.
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Office Supplies & Software
Landscapers regularly use office supplies such as Envelopes, Folder, Paper and Pens when writing Commercial proposals or reports, visiting homes to customers and mailing or sending paperwork.
If you use any software to contact potential customers, keep track of your offers, Contact current customers or keep track of your finances using software such as QuickBooks.
- CRM( Example Sales Force)
- Quickbooks
- Marketing System like Mail Chimp
- Employee Payroll & Payroll Taxes
If you have employees that work for you such as receptionist, admin, bookkeeper or sales support, you pay them on hourly or salary basis.
You can deduct their W2 Salary and any employer payroll taxes(Such as FICA, State Unemployment Taxes) that you pay in addition to the payroll.
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Retirement Plan Contribution
It is important to start putting away money for retirement. You can not only have money available when you are older but you can save a thousands of dollars if you
There are a several good plans to choose from; we have provided top 3:
SEP IRA
2022 limit is the lesser of $61,000 or 25% of income. As self-employed, this plan allows Landscapers to invest significantly more money each year into retirement versus the traditional IRA plan.
Keep in mind that if you do have employees other than yourself or your spouse, you’ll need to match whatever contribution percentage that you elect for yourself, for your eligible employees as well.
IRAs(Traditional & Roth)
2022 limit for Traditional IRA is $6000 and $7000 if you are over 50 years old. If you don’t want to put a large amount of money away, then a Traditional (Pre Tax) or Roth IRA (Post Tax) might be for you.
Solo 401k
2022 individual contribution limit is $22,000, $27,000 if over 50. However, like a corporate 401k, your company can also contribute to this plan – as much as 25% of your compensation. The max individual plus business contribution to this plan can be as high as $58,000 or $64,500 if over 50, for 2022.
Key requirement is you need be self-employed with no employees in your business ( Basically you and your spouse only) It is ok to have independent contractors as long as they are properly classified.
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Legal or Professional Services
If you pay an Attorney, CPA or a bookkeeper for your plumbing business, you can deduct these professional fees.
Don’t forget to issue 1099M or 1099 NEC as needed. See our guidelines for 1099s.
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Set up a S Corporation for Landscapers
Landscapers and Landscaping Business owners can save thousands by incorporating their business as an S-Corp election, Landscapers can save thousands or even tens of thousands of dollars on self-employment tax versus being a sole proprietor.
The IRS typically charges self-employed business owners 15.3% for self-employment (12.4% for social security and 2.9% for Medicare).
If you are a Sole Proprietor
If you haven’t set your company up as an S-Corp, you will pay this 15.3%, in addition to your income tax, for all of your adjusted gross income.
For example, if you earned $100,000 in after deductions, adjusted gross income, your SE tax alone would be $15,300 (not including what you’d pay for income tax).
Your Business Setup as an S-Corp
If you set yourself up as an S-Corp, you will pay yourself a reasonable salary and also receive distributions (K1) Based on number of hours work if a Landscapers salary is around $40,000 annually then the Shareholder will take 40k in w2 and 60k in K1
Going back to our example of $100,000 adjusted gross income, let’s assume you paid yourself a salary of $40,000 and took $60,000 in dividends.
In this case, you’d only pay the 15.3% SE tax on the $40,000.
In this example, your self-employment tax is $6,120, effectively lowering your tax burden by nearly $9,000.
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Landscapers Credit Card Commissions
If you are a Landscaper or Landscaper business owner that accepts credit cards from your customers, then you may be aware that credit card companies charge you a commissions. For example visa and master card may charge from 1.5 to 2.5% commissions and American Express may charge from 2.5 to 3.5 per cent commissions.
You are allowed to deduct this commissions from your income as an expense. You can typically get a printout from their online portal of how much commissions you paid during the year or you can download their monthly statement and total the amount and provide to your tax preparer or accountant.
In Conclusion
Finally, Tax Deductions for Landscapers in 2021-2022: Ultimate Guide provides comprehensive list of expenses for Landscapers and Landscaping Contractors
These deductions can help you lower your taxes. These will only benefit you if you track them and keep supporting documents.
Use this Ultimate guide as a reference and discuss these with your CPA and see how they apply to your tax situation.
Bonus Tip:
1099 NEC Forms are Due January 31st
If you paid subcontractor contractors such as Other Landscapers, Helpers, Vendors, or hauling companies, don’t forget to issue them a 1099 NEC form by no later than January 31st each year to not receive a penalty.
See IRS page here for more info about 1099 Forms
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