Get An Employer Identification Number
If your business is of the sole proprietorship variety, you wont need an employer identification number.
However, if youre planning on having employees work in your lawn business, youll need to get one to open a business account, apply for a business license, or to get a loan.
You can see what an application looks like here.;
To get yours, apply at the IRS website.
Its totally free.
Lower Workers Comp Costs With Risk Management
Landscaping is filled with risks involving hazardous equipment, tools, and chemicals. You can create a safer work environment with:
- Employee safety training
- Proper equipment, such as gloves and goggles
- Equipment maintenance
Through risk management and a safe work environment, you can decrease workplace accidents. That means fewer claims and potentially a lower insurance premium.
Learn More About Peformance Pay
The best book on this subject I have found is Lawn Maintenance Piecework and the Beautiful Business: Getting Your Employees to Pull with You.; David Tucker wrote the book and it goes into great detail on this subject specifically for lawn care and landscaping companies.
You can also get David Tuckers book for FREE if you sign up for a FREE Audible Trial.; You can click the link below to get your first 2 books FREE.
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Rates Vary A Little By Location
Much of this depends on what part of the country you live in.;
For example, pricing for lawn maintenance services in warmer climates such as Florida or California are more competitive than they are as compares to cooler climates.
You might be wondering why this is?;
Well, think about it. The lawn care business is more stable in climates where the grass needs cutting year-round. Naturally, in an area where grass grows for shorter seasons, lawn care services have to figure out how to make ends meet, during the wintertime.
Put another way, lawn mowing services are treated more as a commodity in warmer climates.
And more as a luxury service in Northern climates.
How To Start A Landscaping Business In 5 Steps
Considering the range and depth of landscaping from residential to commercial, maintenance to removal and designing to tree care the economics of starting your own landscaping business are remarkably simple. It can be as easy as renting a lawnmower and knocking on doors.
My previous company was a lawn care business that I grew from myself and a push mower to over 125 employees, says Bryan Clayton, the founder of GreenPal, an online lawn care ordering service that is a bit like the Uber of landscaping.
Most customers have to deal with shoddy and unprofessional competitors, says Clayton. Creating a successful landscaping business is almost easy if you simply answer the phone when your customer calls, return their voicemails promptly, and do the work that you agree to with your clientele.
Sounds simple enough, right? But what else can a landscaping business owner do to move beyond the basics? Here are some tricks of the trade as you start your landscaping business.
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What Do American Lawn Care Workers Get Paid
Believe it or not, there are people out there paying close attention to what American lawn and garden employees are getting paid. The US Bureau of Labor and Statistics does its homework on US lawn maintenance employees, and finds that, as of 2011, the average lawn care worker made about $25,650 per year, or $12.33 an hour. The Bureau projects that a quarter of a million jobs will be added to this industry by 2020. They also note that there is a lot of variation in worker pay, depending on job and location.
Here are some of the details about who’s making the most, and why. Check out where your company fits into the national picture:
People who work on government- and school-owned lawns were the highest paid. These employees saw higher pay than those who worked for private contractors.The Northeast and Pacific coast had the highest paid lawn care workers while workers in the South were some of the lowest paid.Employees who specialized in skills like pesticide application were better paid than those with more general skills like lawn mowing. The average pesticide specialist was paid $31,690 per year, or $15.85 per hour. Some reported rates as high as $17.83 per hour.Trimmers and pruners were the highest paid of all, earning $32,970 per year or $15.85 per hour. A high portion of those polled received $18.74 an hour, or more.
Get Employment Law Liability Insurance Before You Scale
Another form of insurance you’ll need when starting a landscaping business is employment law liability insurance, which covers your business in case you make mistakes around calculating overtime and wage and hour violations.
Considering the uncertainty around the future of overtime wages, and the fact that many small-business owners tend to go it alone at first without the aid of a lawyer or an accountant, this insurance could be a life-saver or more accurately, a business-saver.
Clayton describes his personal nightmare that resulted from not having this insurance as follows:
In 2009 my company was audited by the Department of Labor and they determined that our crew leader managers could not be paid a salary they needed to be paid as hourly wage employees, he says. This, in turn, kicked in additional overtime charges that were due to 80 employees, and it resulted in a $450,000 fine that my company had to pay.
Not having that insurance almost killed Claytons company. Take his experience as a lesson that having that insurance in place particularly before you scale is crucial to your landscaping business.
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Caveats Of Performance Pay
There are a couple of things that get a little tricky paying this way.
How do you compensate your employees for doing maintenance such as oil changes, sharpening blades, and so on?
I have thought of 3 ways to do this but only recommend 2.; Please note:; If you are not familiar with my lawn care company, we only mow lawns and treat lawns.; We have cut out all other services as my employees were best suited to perform these services and limiting our service offerings has shot our profit through the roof!; My point is, I do not have to worry about variable material costs.; I will cover this though at the end of this page.; It should not be much of an issue if you are staying on top of your numbers!;
Get The Required Business Insurance Licenses And Ein
There are a few necessary forms of business insurance you need to obtain to conduct business at all. The most important is general liability insurance, which covers everything from the cost of repairs to legal fees to damages that need to be paid out if you or an employee accidentally causes damage. Accidents like running over a sprinkler head with the mower, for example happen, and you want to be covered when they do.
You might also need workers’ compensation insurance, depending on what state youre operating in, though as Clayton puts it, Many states require both insurances to operate a legitimate business regardless of whether you have employees or not. Workers’ comp covers you in the event an employee is injured on the job, from medical expenses to court costs.
Other forms of insurance that arent required, but may come in handy, include inland marine insurance , commercial auto insurance and commercial umbrella insurance .
Additionally, if youre looking to apply pesticides as part of your services, most states have a pesticide charter that needs to be acquired. Clayton calls this a very involved process and doesnt recommend it until youre well-established in your field.
Before you start operating your business, make sure you also have any business licenses you need for the state you’re operating in and that you’ve registered to pay taxes and received your employer identification number, also called a business tax ID number.
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Start Timing Your Lawns
If you are not already doing this then you need to start timing your lawns.
I know the times for all my lawns and the average amount of time that I spend driving between them. . This allows me to sell the lifestyle and not the job.
I will say something like eight hours a day including driving time turning over $400 based on my average times
This line will sound a lot better to a buyer then you need to go out and mow 10-12 lawns a day for $400, and they both mean the same thing.
First Set A Price For Lawn Mowing Services
Wondering how much lawn care costs, including mowing? Short answer, it depends. Here are a few factors that can influence what you charge:
Your experience: Seasoned lawn care professionals can charge more for their services. But when youre building your customer base, you may need to start with a lower price point. Then, once you get a few customers under your belt, you can raise them incrementally.
The location of your business: Theres an amount that people in your area are willing to pay for lawn care services. Do some research to find out that amount. Higher-end neighborhoods and businesses will often pay more. Meanwhile, lower-income neighborhoods usually want lower pricesor they might not need your services at all. Call a few lawn care companies in your area. Ask their prices. Then use those numbers as a starting point on how to price your lawn care services.
If you work with businesses or residents: Most commercial businesses who value quality are willing to pay top dollar. Homeowners, on the other hand, may be more budget conscious. Caveatall of this depends on your area, of course. Poke around. Do some research. Find out which clients are willing to pay more in your area.
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Hire The Right Talent For Seasonal Work And Treat Them Well
I hire mostly summer university students. They worked really well with my service window: we would start in May and theyd be done school in April, and theyd go back to school in September.
Its the perfect labor market because theyre young, fit, and want to be outside. We had a couple older staff who would start a bit earlier and end in October, too.
Because we worked with summer students, I knew we could get 3-4 years of work with them. But, we would make it really clear to them how they could stay on board with us. I would level with them a lot.
Sometimes Id say, hey I get it, you want vacation time, you want to go to music festivals no problem. Just let me know a month in advance and we can figure it out.
You need to make it clear that if they do a good job, they like the job, and if I like them, they would be able to come back for years and never have to worry about a summer job again. I would offer them a raise for the next summer if they came back.
Edward Ramsden, Owner of Enviromasters
A Word On Irrigation Technicians
Its also worth mentioning that we do also hire irrigation technicians, which is even more of a specialty trade than our other roles. These pros must have horticultural knowledge and a good understanding of landscape water requirements. There is also a strong need for mechanical aptitude since irrigation techs are diagnosing and fixing problems.
Irrigation technicians make between $18 and $25 an hour.
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Lawn Care Insurance Policy Information
Lawn Care Insurance. As a lawn care professional, you’re aware of how important your service is to the community. Lawn maintenance services are required for public parks, private homes, and corporate exteriors. Lawn mowing, weeding, fertilizing and seeding are labor-intensive task that primarily involves maintaining the owner’s yard as per their expectations. And, accidents happen in such a line of work.
You might be having an endless list of clients who clamor to hire you. But, just one unfortunate incident is enough to put you and your startup at risk for significant financial loss, regardless of whether you’re a victim of happenstance or you’re the one at fault. If you’re a sole proprietor, you’d be held personally liable for damage or loss if you don’t have a lawn care insurance policy. That could imply losing personal property, including your home, in some cases.
Lawn care insurance protects your business from lawsuits with rates as low as $27/mo. Get a fast quote and your certificate of insurance now.
Below are some answers to commonly asked lawn care insurance questions:
Types of Lawn Care Insurance Policies
General Liability Insurance – Your services entail working on a property that belongs to other people for the most of your day. As such, it’s important to ensure your insurance package provides coverage for personal injury or property damages which could arise from the business operations.
Additional Lawncare Insurance Tips
There Are Legitimate Personal Expenses That Your Business Can Cover
This;list is just a general idea as different locations have different rules. You will need to see an accountant for professional advice for your business.
Health insurance We have some of our policies covered by our business. Others dont qualify, and we have to pay these ourselves personally. You can find out more here.
Home office If you have an area set out in your home solely for business use you will be able to claim for it. This;claim will not cover the kitchen table, but it will include a desk in the corner of a room. You can get the most up to date information about this at the IRS site here.
The use of your personal car for quoting If you find yourself doing a lot of quoting or visiting customers in your family vehicle you can claim for this. You will need to keep a logbook. You can find out about that here.
There is a multitude of other expenses that can be covered therefore reducing your taxable income such as entertainment and travel but I wont go into them here. I suggest you see your account for a full list of what you can claim in your location.
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Open A Business Bank Account And Credit Card
Setting up a business bank account is another important step. Even if youre operating as a sole proprietor, a business bank account is a good idea. It keeps your personal and business expenses separate and makes bookkeeping and tax filing easier.
Starting an account at a brick-and-mortar bank is a good idea if you accept cash for your services. Large banks offer the convenience of many branch locations, while a local bank keeps your money in the local economy.
There are also a number of benefits if you choose online banking. Online banks typically have lower fees and less paperwork.
A business credit card can also help separate personal and business expenses. These cards typically offer better terms and higher limits than personal cards. And they have the added benefit of perks like rewards points and cash-back offers.
Consider your current needs as well as what you might need in the future. With a little research, you can find the best checking account and credit card options for your business.
How Much Does Workers’ Comp Cost For Landscapers
The amount you pay for workers compensation is a specific rate based on every $100 of your businesss payroll. Your premium is determined by the type of work done by your employees , your experience modification rate , and your payroll .
The formula is:Classification rate; x Experience modification rate; x = Premium
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Cost Of Seeding Your Lawn
Lawn seeding is another great way to improve and/or maintain the long-term health and vibrancy of your lawn. It depends on how large of a lawn you have, but the average cost of seeding your lawn is between $850 $1,700. The more area you need seeded the higher the price because it will take longer, and you will need more seed to finish the job.
Starting A Landscaping Business: The Economics
Most lawn care operators make between $30 and $50 per hour. If youre interested in going further if you feel like you have the work ethic, dedication, people skills and willingness to learn little is stopping you from starting your own landscaping business.
Clayton went on to sell his business in 2013, in the largest acquisition in the lawn care industry in a decade, before starting GreenPal. And remember: He got started on his own, with just a push mower to his name. Success isnt guaranteed to everybody who gets into landscaping, but its a field that shows no sign of disappearing anytime soon. And theres no time like the present to capitalize on peoples love of a well-manicured lawn.
This article originally appeared on JustBusiness, a subsidiary of NerdWallet.
About the author:Eric is a former insurance writer at NerdWallet.Read more
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Structural And Legal Expenses
Business License You dont need any type of permit specifically for a lawn care business, but you do need to get a business license for your company and a name. An LLC typically costs around $100. In some states, you can file a fictitious name fee, also known as a DBA, which costs around $50. Other expenses might include legal fees for setting up a corporation.
Taxes You also have to register with the federal government and IRS to get a number for withholding taxes.
In addition, most states require you to collect and pay sales tax on services completed. Check with your states department of taxation for the requirements of your state.
Insurance You also have to get insurance if you plan to hire staff. Workers compensation insurance is mandatory. Workers’ compensation rates range from $0.50 – $2.00 per $100 of covered payroll.
You also have to pay any company or employee insurance premiums, which are usually based on estimated income. Youll also have to open a business bank account for your company to process checks and make cash deposits so that you can pay your bills with business checks. The alternative is accepting cash only, which will severely limit your customers and make it impossible to offer expensive services.
It may sound complex, but it is possible to complete these procedures in as little as one day. With all of the resources available online, its easier than ever to get started.
