The landscape needs of commercial properties change over time. That’s why Keffer likes to recommend an update, such as removing those junipers for low-maintenance, fire-resistant shrubs or xeriscaping.
Landscaping businesses can be high-risk for loan applicants due to seasonality and cash flow challenges. A financing solution such as invoice factoring can help these businesses maintain operations and fuel growth.
Landscape Design
Landscape design is a broad field, encompassing everything from the design and planning of gardens to the creation of public spaces. It can also include hardscapes, such as retaining walls and decks, and softscapes, like planting designs and mulching.
Some landscape designers work for landscaping companies, while others are self-employed and work as independent contractors. The latter often charge an hourly rate, which varies depending on their level of experience and deliverables. Some landscape architects specialize in specific projects, such as public works or residential design.
Commercial properties need to appeal to customers and tenants alike, and a full-scale landscape renovation can be considered a capital improvement. A comprehensive update can elevate the entire property and boost its value.
Installation
Adding large hardscape areas such as retaining walls, patios, and driveways can elevate a commercial property to the next level. These types of landscaping projects are typically considered capital improvements.
A qualified tax professional can help distinguish whether a particular improvement qualifies as a capital improvement or a repair. It is important to understand that a capital improvement adds to the value of real property, while repairs preserve existing value.
Greenhouse and nursery operators should make sure they have a properly completed Form ST-124, Certificate of Capital Improvement, from each customer before performing work on the customer’s property. This will exempt them from collecting sales tax for building materials used to perform the work on the customer’s property. For more information, see Tax Bulletin Contractors — Repair, Maintenance, and Installation Services to Real Property (TB-ST-129). Tax-exempt customers should also keep a copy of the form in their records. The landscaper will need this document when the customer requests a credit for the sales tax collected on building materials.
Maintenance
When it comes to commercial landscaping, maintenance is a huge part of the equation. It is essential to keep up the appearance of your property to attract visitors and tenants and maintain a safe, inviting atmosphere.
Some types of maintenance can be capitalized, while others fall under the category of repairs. For example, replacing old junipers with low-maintenance shrubs like lilacs could be considered a capital improvement. Similarly, replacing cracked concrete walkways with pavers may also be classified as a capital improvement since it will improve the look and safety of the property.
However, it is crucial to consult a tax or accounting professional before capitalizing landscape maintenance costs. The IRS has specific rules for determining what is and is not considered a capital improvement, as well as when these expenses can be capitalized. It is important to know these guidelines so your company can make the best financial decision for its goals. Katharina takes care of billing, calls to the office, employment applications and other various office functions. She enjoys salsa dancing in her spare time.
Snow Removal
Depending on what region of the country you live in and how much snow your area gets, offering snow removal services can be a major source of recurring revenue for landscapers. Rorie says it brings in 15 to 25 percent of his business. Vander Vennen says it’s a big reason they package their snow plowing with their maintenance services, especially for commercial properties.
If the work performed is considered a capital improvement, you do not need to charge sales tax on it (see Sales and Use Tax Bulletin Construction – Repair, Maintenance, and Installation Services to Real Property—Capital Improvements (TB-ST-124)). However, you must collect sales tax on the materials used in the project.
Phil Keffer, co-owner of Capital Landscaping, says he tries to schedule commercial projects for September through November because the ground is warmer and roots can grow more effectively. He also believes it helps to keep his costs down. Katharina has been with the company since its beginning and takes care of billing, calls to the office, employment applications, and other general offices functions.