Like any small business, owning a landscaping company requires you to juggle many tasks, including job estimates, managing your work crews and handling finances. With everything going on in your business, it may be hard to sit down to find out where you can be saving money on your taxes. With Barta Business Group, a small business accounting firm in Denver Colorado we will look at the various tax deductions for landscaping companies.

Tax Deductions for Landscaping Companies: What You Need To Know

With the helpful insight of Barta Business Group, providers of small business accounting services in Denver, we can look at tax strategies for landscaping companies. This way you can save the most money on your taxes, potentially saving thousands of dollars from going out the door. 

For example, section 179 lets landscaping companies get big tax breaks for making large purchases such as heavy equipment and vehicles intended for business use. However, smaller operating expenses can really add up to give you significant breaks on your taxes as well. 

Let’s look at what those look like.

Understanding the business structure

Before diving into the world of tax deductions and write-offs, the first step is to know your business structure, since this will ultimately help to inform what deductions, you are eligible for. The best way to understand the different corporate structures is to consider C corporations vs. all other business structures:

• C Corporation: C Corps are subject to double taxation. The C Corp files a tax return and pays taxes on net income (profit). The owners can retain after-tax earnings for use in the business, or pay shareholders a cash dividend. If a dividend is paid, the dividend income is taxable income and is added to other sources of income on the shareholder’s personal tax return.
• Pass-through entities: Most other business structures pass the company profits and losses directly to the owners. Sole proprietorships, partnerships, S corporations and many other businesses are referred to as pass-through entities.

Tax Deductions

These are a few of the most common tax deductions for a landscaping business.

1. Advertising – You can deduct the cost of things like online ads, advertising flyers, and an ad run in the community newspaper.
2. Car and truck expenses – You can deduct the actual expenses of operating your vehicle, or take a standard mileage rate. Actual expenses include maintenance and repair costs incurred on vehicles during the year. In 2018, for example, the standard mileage rate was 54.5 cents per business mile driven.
3. Contract Labor – The IRS defines contract labor as workers who are not treated as employees, including independent contractors.
4. Depreciation expense – Depreciation expense is posted as each asset is used to generate revenue. You can calculate the annual depreciation expense for your tax return.
5. Insurance – Any insurance coverage premium for vehicle insurance and liability insurance. This does not include personal health insurance permiuems.
6. Legal and professional services – Any attorney or accountant services can be deducted.
7. Rent or lease – You can deduct the cots to rent or lease vehicles, machinery or equipment.
8. Repairs and maintenance – Any vehicle or equipment use will lead to repair and maintenance costs, which can be deducted.
9. Wages – Any employee wages paid are tax deductible as well.

Final Tips: Tax Deductions for Landscaping Companies

If you want to take full advantage of tax deductions available than keeping records of your business, the transaction is a must. If you fell behind on your record-keeping last year, then keep your records updated this year to make the most out of next year’s tax breaks. 

There is software out there that can help with this. Programs such as Xero and QuickBooks can import your transactions and help you sort them into business and personal categories. This kind of software can also help you file your quarterly taxes and estimate your upcoming tax payments so you don’t get hit with any surprises. With that, you can also write off the subscription fees or payments you make for the software as business expenses.

About Barta Business Group

Most businesses are great at their craft, but not great at the financial back of the house. Our team of bookkeeping, accounting, and finance professionals guides business owners in making better decisions, so they can focus on doing what they love in their business. We understand the peace of mind that comes from knowing your financial information is done right every time. We value being able to support businesses in turning financial data into actionable insights, so you may plot a course for your company’s future with confidence.