Structuring your lawn care business
Once you determine if your lawn care business needs a license and you have obtained the proper lawn care
business license, you then need to look at what type of business you wish to run. The big decision to be
made is whether to form a business entity or keep the business as a sole proprietor. A sole proprietor
business calls for no government filings. An LLC, or limited liability company, requires filing the
proper paperwork with your state.
A sole proprietor is simply a business run by an individual with no formal corporate structure. In
essence, the company is the person. This may seem great, but there are several downsides to operating a
business this way. The main problem is liability. A person running a lawn care business under a sole
proprietor risks all of their personal assets and money. Should anything go wrong during lawn care
operation, the owner would be personally liable for all damages. For example, if you were mowing grass
and a rock was thrown through the mower, and hit a person standing on the sidewalk, you would be liable
to that person for any injuries.
An LLC has many business benefits. First, it protects your personal assets and money. An LLC is treated
as a separate entity from its owners. If something were to go wrong and your lawn care business was to
be sued, a properly formed and operated LLC would shield your personal assets from being in jeopardy.
The second advantage is taxation. An LLC is taxed as pass-through income. This means for tax purposes,
the income from an LLC is reported on the individual's income taxes as regular income. This is the same
way sole proprietor income is taxed.