Dear Lawn or Landscape Business Owner,
If you ever hear yourself saying, “My accountant takes care of my taxes,” you are probably overpaying your taxes big time!
No one…and I mean NO ONE, is going to be more concerned about YOUR money than YOU are! Lawn and landscape business owners like you must learn about tax reduction strategies so you can have meaningful conversations with your CPA regarding tax reduction.
Tax deductions lower taxable income. But tax credits lower your taxes on a dollar by dollar basis. You’ll want to use BOTH strategies to reduce your tax liabilities.
When I meet with my accountant, you can bet that we are going to discuss a NEW tax reduction strategy OR tax credit strategy in every single conversation.
The only way I can be prepared to do this is to read, research, discuss and learn about tax reduction strategies. In case tax reduction education has not been on your personal reading list…you’ll enjoy this concise but powerful list of tax reduction strategies.
Keep more of YOUR money with some (or all) of these tax reduction and tax credit strategies.
- Equipment & Vehicle Depreciation:
- Take advantage of depreciation deductions for the cost of business equipment, such as lawnmowers, trimmers, trailers and vehicles. Section 179 allows you to deduct the full cost of qualifying property in the year it is placed in service, up to certain limits. It is possible to write off the total expense of your equipment in the year purchased, even though you use financing to spread the payments out over several years. This can be a BIG boost to your company cash flow!
- Home Office Deduction:
- If you use a portion of your home exclusively for your lawn service business, you may qualify for a home office deduction. This can include a percentage of your mortgage or rent, utilities, and other home-related expenses. However, it’s important to meet the specific criteria set by the IRS for claiming this deduction. We know you work from home! Take advantage of this deduction to lower your tax bill.
- Family Employment:
- Consider employing family members in the business. Wages paid to family members for legitimate work can be deductible as a business expense. This strategy allows you to shift income to family members who may be in lower tax brackets (like kids, retired parents or spouses), potentially reducing the overall tax liability for the family.
- Cost Segregation for Property:
- If your lawn service business owns property (land, buildings), consider a cost segregation study. This study can help identify certain assets that can be depreciated more quickly, accelerating depreciation deductions and reducing taxable income. It’s especially relevant when the business invests in landscaping improvements or structures. If you own commercial property, talk with your CPA about this strategy. There is no good reason to overpay your taxes.
- Qualified Business Income (QBI) Deduction:
- Take advantage of the Qualified Business Income deduction, which allows certain pass-through entities, like sole proprietorships, partnerships, and S corporations, to deduct up to 20% of their qualified business income. This deduction can result in significant tax savings for eligible businesses. You can thank our 45th President, Donald S. Trump for this tax deduction! If your CPA overlooks this deduction, find yourself another CPA!
- Research and Development (R&D) Tax Credit:
- Explore the R&D tax credit, which is not limited to high-tech industries. If your business invests in developing new or improved processes, equipment, or services related to lawn care, you may qualify for this credit. It can provide a significant reduction in federal and sometimes state tax liabilities.
- Health Savings Accounts (HSAs) and Health Reimbursement Arrangements (HRAs):
- Implement tax-advantaged health benefit plans for family members involved in the business. Contributions to HSAs and HRAs are deductible as business expenses, and they can also provide tax-free benefits to family members for qualified medical expenses.
- Strategic Timing of Income and Expenses:
- Strategically time the recognition of income and expenses to optimize your tax position. This could involve delaying income recognition to a future tax year or accelerating deductible expenses into the current tax year. December is the very best month of the year to use this strategy to lower your taxes.
- Off Road Fuel Tax Credit:
- If you purchase gasoline or diesel fuel at the gas pump but use that fuel in off road equipment such as lawn mowers, string trimmers, blowers, skid loaders, snow blowers, tractors, excavators or spraying equipment, you should claim your fuel tax credit. We have written about this overlooked tax credit for landscapers for many years. We are always very happy to help our brothers in landscaping get a few thousand dollars in tax refunds using this strategy. If this tax credit is not found on your latest business tax return, please read this article and discuss it with your CPA.
- State and Local Tax (SALT) Planning:
- Be mindful of state and local tax incentives and credits that may be available to businesses in your location. These can vary widely, so staying informed about regional tax opportunities is crucial. For example, we discovered that our company was eligible for state tax credits by locating our facility in a rural county. (Note the use of tax credits – not tax deduction). Tax credits are always better than tax deductions!
Personally, my goal is to learn about and implement at least one new tax reduction strategy each and every year I live.
I’m proud to say as a small business owner, I have been successful using every single one of the strategies listed above.
But here’s the part of this story that’s the most important. My accountant only brought me 3 of these strategies over the years. I bring tax reduction strategies to my accountant year after year.
How about you? Are you bringing tax reduction strategies to your accountant each and every year?
If you are, what is your new tax reduction strategy for this year?
Send me a message on X (formerly Twitter) and let me know. @TonyBassSLT
Tony Bass, founder
PS – I thought you might like to know that Super Lawn Trucks can help you reduce your tax bill using Section 179 expensing for vehicles. We have a handful of Super Lawn Trucks demo models ready for immediate delivery for year-end tax deductions.
Please note: year-end special pricing of 2023 DEMO models is limited to just a handful of completed Super Lawn Trucks.
PPS – If you own a lawn or landscape business we highly recommend you watch The Confident Landscaper 2024 Plan webinar recording here: https://superlawntoolkit.com/clp-2024/
You will learn the latest techniques for:
- Finding, Recruiting and Keeping Employees
- Finding and Winning Highly Profitable Clients
- Avoiding the 2 Biggest Pricing Mistakes
Successful business owners know that the only sustainable competitive advantage is to outlearn your competition. Join Tony Bass, the founder of Super Lawn Technologies and the co-author of The E-Myth Landscape Contractor and get your competitive advantage in time for 2024. https://superlawntoolkit.com/clp-2024/