How to do Accounting for Landscaping Business
Accounting is confusing and time consuming. We will show you how to do accounting for a landscaping business.
Tracking landscaping business expenses can be daunting and might not be as enjoyable as transforming a client’s empty yard into a lush lawn or garden. From crunching payroll numbers to handling invoicing and miscellaneous costs while juggling multiple responsibilities, landscapers often face unique challenges that can hinder growth or pose an existential threat to the startup.
Fortunately, accounting for landscaping business can be simplified with the right tools and strategies, freeing you to focus on finding new customers and keeping your existing clients happy. Explore this guide to learn about the secrets and potential hurdles to avoid when managing expenses for landscaping business.
Why Accounting is Essential for Landscaping Businesses
Like any other business, your landscaping startup must be profitable and compliant with regulations to remain competitive and unlock growth opportunities. By implementing proven strategies or leveraging tools that optimize accounting for landscapers, you can manage your cash flow, budget and taxes efficiently, while staying updated on legal obligations at the state and federal levels.
This enables you to get accurate insights into your company’s financial health and prepare statements in time for banks and tax authorities. Additionally, it empowers you with profound knowledge to make prudent business decisions and outfox other landscapers through fair competition.
Common Accounting Challenges in the Landscaping Industry
While technology has alleviated prevalent accounting pain points for landscapers, many businesses still grapple with the ins and outs of bookkeeping, which can lead to wasted resources, unnecessary operational costs and dwindled productivity. Here are some common challenges to expect:
- Payroll management: Landscaping businesses with operations in multiple states must withhold taxes for employees in different locations while complying with federal and state laws, making payroll management challenging. Navigating State Income Tax Apportionment: Understanding the Basics.
- Expense management: A mixed economic outlook across the country has put landscapers and their accounting teams under pressure to analyze and reduce operating costs while seeking opportunities for enhanced profit margins.
- Financial reporting: Complying with financial reporting requirements has proven challenging recently, especially with the new changes in the U.S. Generally Accepted Accounting Principles (GAAP) for preparing accurate and consistent statements.
- Upskilling after automation: As accounting automation gathers momentum, landscapers are torn between pursuing business goals and upskilling to boost their technical skills in data analysis, financial modeling and forecasting.
Five Accounting Tips for Landscaping Startups
Now that you understand the challenges of bookkeeping for landscaping business, let’s explore proven tips to help you solve them and position your startup for financial success. It will help if you:
1. Keep Records
Make it a habit to maintain meticulous records of all income and expenses if you want to account for every penny that flows through your business. For instance, you can set up a custom chart of accounts to track multiple expenses for landscaping business, such as labor, equipment, and material costs, as well as income from maintenance, landscaping design and hardscaping services.
2. Create a Budget
Running a landscaping business on a weak or non-existent budget will likely lead to negative cash flows and ultimate failure, which is the fear of many entrepreneurs. When preparing a budget, calculate the gross income of your startup and set achievable sales goals to estimate accurately how much you’ll spend on day-to-day operations, marketing and expansion. You must also account for overhead costs on travel, uniforms, utility bills and office supplies.
3. Separate Personal and Business Expenses
Although it might be tempting to mix personal and business finances when starting out, making it a habit robs you of various advantages of segregating funds. For example, keeping separate accounts gives you legal protection over personal assets if the business is sued and simplifies accounting and tax reporting. Moreover, it allows you to claim relevant tax deductions and keep a professional image for healthy relationships with partners, investors and lenders. More about Bookkeeping for Contractors.
4. Manage Tax Obligations
In addition to bringing peace of mind, managing tax obligations prudently can help minimize liabilities while maximizing opportunities for landscaping business tax deductions, positioning your startup for ultimate financial success. It will help if you pay owed taxes to the IRS quarterly and file annual returns to stay compliant and avoid potential fines and legal actions, which can taint your startup’s reputation and lead to unintended losses.
5. Choose the Right Accounting Software
According to the latest data insights, 64.4% of small business owners, including those in the landscaping industry, use accounting software to optimize financial management by simplifying bookkeeping and automating various tasks. However, this accounting strategy isn’t a one-size-fits-all fix for bookkeeping, and the experience you get will vary with the type of tool you choose. Understanding Bookkeeping for Construction Companies.
When choosing modern accounting software for landscaping business, pick an option that seamlessly integrates with all your existing digital solutions, like project management platforms and CRM systems, to keep a pulse on expenses across all departments. Other factors you might want to consider include the tool’s ease of use, scalability, customization capabilities, customer support, and acquisition cost to ensure it matches your needs and preferences.
Ready to simplify your landscaping business accounting?
Benefits of Using Accounting Software for Landscaping Business
Besides helping you to keep tabs on expenses and categorize them to get a clear picture of where every penny is flowing, accounting software can help your landscaping business unlock an array of benefits, including:
Instant generation of financial reports
Say goodbye to endless waiting as your administrative assistant sorts through a pile of records to extract data for reporting. With a software tool, you can customize built-in reports that can be automatically updated and retrieved with a click of a button. This means instant access to income statements, balance sheets, and cash flow statements for quick reconciliation with banks, clients, and relevant authorities.
Synchronized financial data
Cloud-based bookkeeping software synchronizes all your financial data for seamless access across multiple platforms and devices without compromising information security or integrity. This allows you to collaborate efficiently with internal and external teams while staying in touch with the financial health of your landscaping business around the clock.
Simplify Payroll Management
While it’s advisable to integrate a specialized payroll management tool with your business at some point, using a standard accounting tool can help you automate this task while the startup is still growing. Depending on your payroll needs, the tool can generate accurate payroll tax information, automate employee salaries, and calculate their respective healthcare, retirement, and insurance contributions.
Wrapping Up: Know When to Consult an Expert
While it can be tempting to manage business finances manually, leveraging modern tools like accounting software for landscapers can help you automate tasks and foster prudent decision-making with actionable data insights, ultimately stimulating cash flow and profitability.
Combining this approach with expert guidance from a professional accountant, especially when seeking legal clarity on taxes, will help you navigate the financial world better, saving time and money.
