A Statista report claims that between the years 2009 and 2017, the average household spent $503 on lawn care and gardening services. With many homeowners with busy schedules rely on these services to take care of their home’s green spaces. At the same time, entrepreneurs are ready to capitalize on this growing need and want to know how to start a lawn care business in the most effective way possible.
The lawn care industry has great potential across the country. In fact, another Statista report estimated that by the end of the year 2020, landscaping and related services markets in the United States will amount to over $97.8 billion.
Considering these trends, the lawn care business is a viable opportunity for many entrepreneurs. However, one needs to do the proper homework before starting a lawn care business. It involves more than just buying a lawnmower and some tools to start and launch a lawn care business.
A lawncare company may need to obtain licensure, insurance, and a business license in order to operate in some jurisdictions. On top of that, there are considerations of the capital you will need to invest and the services you will be offering. You might want to offer grass cutting and trimming services or extend the services to include landscaping, turf and grass installation/maintenance, and more. You may want to run the company and provide the services yourself as a single-member LLC, or hire a crew to be able to offer services to more clients.
Before we offer a step by step plan on how to start a lawn care business, let’s have a brief discussion about licensure.
Do I Need a Business License for Lawn Care?
Each state in the U.S. has different requirements when it comes to acquiring licenses relevant to the business. In some states, businesses that use or supervise the application of Restricted Use Pesticides are required to be certified with the EPA.
Other certifications and licenses may include all or any of the following: a business permit issued by the state, city or county. For example, the state of Connecticut requires lawn care businesses to be issued a work permit. On the other hand, Florida requires a business license issued by the Florida Department of State Division of Corporations.
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In case you register your company as an LLC or any other type of business structure in your state, you will need an Employee Identification Number or EIN as per the IRS’s requirements.
Which Type Of Licence Would I Need If Any?
Concerning other types of licenses, there are a few that institutions such as the Irrigation Association and the National Association for Landscape Professionals (NALP) offer.
In the end, license and certification issues concerning a lawn care business depend on the state, city, and county it is located in.
How to Start a Lawn Care Business
A lawn care business can be a single-member LLC or a multi-member LLC (partnership).
With licenses and certifications discussed above, let’s go over the steps on how to start a lawn care business.
Step 1: The Business Plan
The purpose of the business plan is to convince possible investors and financial institutions to sign off on loans and investments after reviewing the validity and profitability of the venture.
For a local small business owner who seeks to serve a considerably small market, a complete business plan is not necessary. However, some form of a blueprint is critical as it maps out your goals, your market, investment numbers, breakeven points, and the name of your lawn care business.
You may want to establish different scenarios based on a hypothetical number of clients when you’re figuring out how to start a lawn care business.
- How many clients would you need to have to remain profitable?
- How do your estimated expenses affect your bottom line?
- What is the capacity of your lawn care business with your current workforce? How many weekly, bi-weekly or monthly contracts can you handle without incurring delays?
Costs
When you’re researching how to start a lawn care service, cost plans are the hardest to come up with. You need some financial representation of how much money to invest in the business to get it off the ground. Without those estimates and eventually confirmed costs, it will be hard to figure out your break-even point.
Besides business insurance and worker’s compensation insurance, you need to consider costs for the equipment, fuel for the equipment, vehicles to transport tools and personnel to the job site, signage, marketing expenses, internet and phone services, business cards, etc. along with other ongoing expenses.
Target Market
The second pre-planning consideration is your target market. For service industry businesses such as lawn care, the target market is restricted to a local area – unless the business expands and branches out to other locations.
Target market information is necessary as you are likely to spend on both digital and conventional marketing. Also, figuring out the pricing and charges for the services with profit is essential for breaking even sooner rather than later.
A preliminary market survey, research, and comparative analysis of your immediate competitors can reveal insightful information.
Naming the Business
This is an important part of your business plan as, without a name, you wouldn’t have a business to tell people about. Again, this requires careful consideration.
Pick a name that is easy to remember but also unique just to you. You might need to check with your local agencies to make sure another business is not already registered under that name. It’s important to note here that you will be likely to use the same name for your website domain. Make sure it isn’t too long, hard to remember or spell.
Step 2: Making it Official – Registering your Lawn Care Business as an LLC
Now that you have a name and a plan of how you want to develop your lawn care business, the next step is making it official. Registering your lawn care business as an LLC is simple. The LLC legal business structure provides limited liability in the case of litigation. You have the option to register the company as a sole proprietorship or partnership. However, as a sole proprietorship, you will lose the legal protection that an LLC provides in the event that your business is sued.
The two main advantages of forming an LLC for your lawn care business include limited liability and taxation benefits.
Limited Personal Liability
In a sole proprietorship, you and your business are the same entity – legally. On the other hand, LLCs have the ability to protect your personal assets from being seized in order to pay off creditors or settle debts the business might owe.
An LLC is considered a disregarded entity by state and federal agencies such as the IRS. This means that, for example, if the company owed the IRS money in unpaid taxes while facing bankruptcy, the IRS can’t simply collect the debt by confiscating your personal assets.
An LLC will shelter your personal assets in case of a lawsuit against your lawn care business.
Tax Advantages
An LLC is taxed as a sole proprietorship or partnerships by the IRS unless the member(s) opt to be taxed as an S- or C-Corporation. If not, the LLC is considered a pass-through entity. This means that the LLC doesn’t have to pay corporate taxes.
Instead, LLC owner(s) in the case of a multi-member LLC report the company’s income and losses on their personal tax returns.
Forming an LLC involves a few steps. It begins with registering the business with the local state agencies for state and federal taxes and submitting the Articles of Organization along with other necessary documents. The required documents vary from state to state. The next step is obtaining an EIN or Employee Identification Number if you plan on hiring employees.
Turnkey LLC Formation Services
Although it is possible to form an LLC on your own with your Secretary Of State, you may want to outsource the service to save yourself some time and possible headaches if it is not done right.
LLC formation services, take care of all the necessary steps including submitting your articles of incorporation and acting as your registered agent.
Professional Limited Liability Company
Do I need a business license for lawn care?, begs another question; do I need to register the business as a regular LLC or a PLCC?
For the most part, a lawn care business does not require special licensure, which is the first requirement for a PLCC. A PLCC is most often needed for dentists and law firms as they require federal licenses in order to become operational. Without the license, they will not be considered legal.
A lawn care business does not require such a license that it necessitates the need for a PLCC (Professional Limited Liability Company).
Step 3: Bank Accounts
Once you have formed your LLC with your secretary of state, you can set up a bank account under the business’s name. This is vital for keeping personal and business finances separate and protecting personal assets.
Business bank accounts are also necessary as you will be using the account to make the owner’s draw from.
Step 4: Do I need A Business Licence For Lawncare?
At the beginning of this article, we discussed what types of licenses might be necessary to obtain prior to providing lawn care services. In some cases, failing to show proper licensure can lead to fines.
The Small Business Association has compiled an extensive list of both state and federal licenses that a lawn care business may need. Most importantly, check with your local city or county clerk’s office for further clarification.
For a service business such as lawn care, a services contract is necessary. It is used to manage customer expectations and prevent the LLC from being fined.
Step 5: Insurance
Business insurance is another important consideration for lawn care. While operating a lawn care business, there is always the risk of getting a workplace injury.
General liability insurance is one of the most common types of insurance policies small businesses invest in to cover risks such as bodily harm, property and vehicular damage, medical payments, legal fees, etc. Worker’s Compensation Insurance will protect your company in case an employee files a lawsuit against it.
What’s Next?
We have covered several key points on how to start a lawn care business and whether you need a business license for lawn care. Permits, licenses, and insurance together with a business name and registered legal entity such as an LLC are all part of doing the groundwork. The way forward involves marketing the business.
Using suitable promotional tools and tactics such as SEO (search engine optimization), social media marketing, PPC (Pay-per-Click),etc., your lawn business can develop a brand image that can hold its own in the market. This is why a memorable yet unique business name is essential.
From there onwards, lawful and safe business operations with compliance to federal and state legislation and regulation should pave the way for a long-lasting lawn care business.
