Do I Need an LLC for My Landscape Design Business?
Starting a limited liability company (LLC) for your landscape design business can provide several benefits.
Most importantly, an LLC structure offers limited liability to its owners, which can protect their personal assets from lawsuits and creditors.
For a landscape design business, lawsuits can arise from things like giving a client reckless advice (which ends up significantly increasing their total costs) or accumulating debt as a result of employment law disputes.
LLCs are also affordable, highly flexible (from a tax point-of-view), and can make your landscape design business seem more credible.
Recommended: Use Northwest to form an LLC for $29 (plus state fees).
Should I Start an LLC for My Landscape Design Business?
LLCs are a simple and inexpensive way to protect your personal assets and save money on taxes.
You should start an LLC when there's any risk involved in your business and/or when your business could benefit from tax options and increased credibility.
LLC Benefits for a Landscape Design Business
By starting an LLC for your landscape design business, you can:
- Protect your savings, car, and house with limited liability protection
- Have more tax benefits and options
- Increase your business’s credibility
Limited Liability Protection
LLCs provide limited liability protection. This means your personal assets (e.g., car, house, bank account) are protected in the event your business is sued or if it defaults on a debt.
Landscape design businesses will benefit from liability protection because of the risks involved with interacting with clients’ property, trademark infringement, and libel.
Example 1: While walking into your office, one of your employees falls down and hits their head on your desk, which leads to a pretty serious head wound and leaves them unable to work for a period of two weeks. If they were to sue your LLC in order to seek compensation, limited liability would shield your personal assets regardless of whether your business was legally required to compensate the claimant.
Example 2: You decide to hire a digital marketing team to advertise your landscape architect business and agree to pay them a fixed fee of $3,000 a week. After a substantial fall in revenue, you begin struggling to cover your short-term expenses and end up owing them three weeks' worth of pay. When they file a lawsuit against your business, your personal assets will remain protected regardless of how the claim progresses.
Example 3: After a customer is unhappy with your performed landscaping service, they claim that it’s full of defects and that you have consequently failed to carry out your work competently. As a result, they sue you and your business for compensation. Assuming that you didn’t personally act negligently, your personal assets will remain protected as a result of your limited liability in law (meaning that you will not need to personally compensate the claimant).
Example 4: A client is unhappy with their new landscape design and decides not to pay for it. They sue to try and get out of their contract.
An LLC will also protect your personal assets in the event of commercial bankruptcy or loan default.
To maintain your LLC's limited liability protection, you must maintain your LLC's corporate veil.
LLC Tax Benefits and Options for a Landscape Design Business
LLCs, by default, are taxed as a pass-through entity, just like a sole proprietorship or partnership. This means that the business's net income passes through to the owner's individual tax return.
The business’s net income is then subject to income taxes (based on the owner's tax bracket) and self-employment taxes.
Sole proprietorships and partnerships are taxed in a similar way to LLCs, but they do not offer limited liability protection or other tax options.
S Corp Option for LLCs
An S corporation (S corp) is an IRS tax status that an LLC can elect. S corp status allows business owners to be treated as employees of the business (for tax purposes).
S corp tax status can reduce self-employment taxes and will allow business owners to contribute pre-tax dollars to 401k or health insurance premiums.
The S corp status requires that the business pay the employee-owner(s) a reasonable salary for the work they perform.
In addition, the business might need to spend more on accounting, bookkeeping, and payroll services. To offset these costs, you'd need to be saving about $2,000 a year on taxes.
We estimate that if a landscape design business owner can pay themselves a reasonable salary and at least $10,000 in distributions each year, they could benefit from S corp status.
You can start an S corp when you form your LLC. Our How to Start an S Corp guide will lead you through the process.
Credibility and Consumer Trust
Landscape design businesses rely on consumer trust. Credibility plays a key role in creating and maintaining any business.
Businesses gain consumer trust simply by forming an LLC.
A growing business can also benefit from the credibility of an LLC when applying for small business loans, grants, and credit.
Northwest will start an LLC for you for just $29 (plus state fees).
How to Form an LLC
Forming an LLC is easy. There are two options for forming your LLC:
- You can hire a professional LLC formation service to set up your LLC for a small fee
- Or, you can choose your state from the list below to start an LLC yourself
Select Your State
- Alabama LLC
- Alaska LLC
- Arizona LLC
- Arkansas LLC
- California LLC
- Colorado LLC
- Connecticut LLC
- Delaware LLC
- Florida LLC
- Georgia LLC
- Hawaii LLC
- Idaho LLC
- Illinois LLC
- Indiana LLC
- Iowa LLC
- Kansas LLC
- Kentucky LLC
- Louisiana LLC
- Maine LLC
- Maryland LLC
- Massachusetts LLC
- Michigan LLC
- Minnesota LLC
- Mississippi LLC
- Missouri LLC
- Montana LLC
- Nebraska LLC
- Nevada LLC
- New Hampshire LLC
- New Jersey LLC
- New Mexico LLC
- New York LLC
- North Carolina LLC
- North Dakota LLC
- Ohio LLC
- Oklahoma LLC
- Oregon LLC
- Pennsylvania LLC
- Rhode Island LLC
- South Carolina LLC
- South Dakota LLC
- Tennessee LLC
- Texas LLC
- Utah LLC
- Vermont LLC
- Virginia LLC
- Washington LLC
- Washington D.C. LLC
- West Virginia LLC
- Wisconsin LLC
- Wyoming LLC
For most new business owners, the best state to form an LLC in is the state where you live and where you plan to conduct your business.
Do LLCs Need Insurance?
All businesses need insurance to protect their business assets — even LLCs. This is because the limited liability protection from an LLC protects your personal assets, not your business assets.
For an industry such as landscape architecture, business insurance policies may also be legally required depending on your state, sector, and whether your business hires employees.
Common Situations Business Insurance May Cover for a Landscape Design Business
Example 1: A thief breaks into your yard, and your guard dog bites him. He threatens a lawsuit if his medical bills are not paid for. General liability insurance could cover his medical costs.
Example 2: A potential customer visits your office to get ideas for an upcoming project. While there, she trips over a display of rocks, breaking her wrist. General liability insurance should cover her medical bills and additional costs should she decide to sue.
Example 3: While delivering a boulder for a design project, your employee loses control of it, causing damage to several sections of the driveway. General liability insurance should pay to repair the damage.
Other Types of Coverage Landscape Design Businesses Need
While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some other types of insurance all landscape design businesses should obtain:
Commercial Property Insurance
Commercial property insurance provides coverage for owned buildings and its contents, should a covered loss occur. You should discuss your business model and financial responsibilities with an insurance agent to protect your business investments.
Commercial property insurance is generally purchased as part of a business owner’s policy (BOP).
Commercial Auto Insurance
Personal auto policies exclude business-related losses, it may be necessary to purchase a commercial auto insurance policy. Depending upon the coverage written, this policy would cover the cost to repair or replace owned autos, medical payments, and liability damages.
Many choose to carry only the minimum limits required by the state, but this leaves many underinsured. For this reason, purchasing limits higher than the state-mandated minimums is often recommended.
Inland Marine Insurance
If you and your team take business-owned tools and equipment offsite, an inland marine policy may be necessary. Commercial property insurance covers loss at the insured location but limits the coverage while in transit or at another property. Inland Marine Insurance fills this coverage gap.
Workers’ Compensation Insurance
Once your business has grown enough to hire a team, your state may require a workers’ compensation insurance policy. This covers medical bills associated with an on-the-job injury, employee lost wages, and legal representation for the business owner in the case of a lawsuit.
Business Interruption insurance
If you experience a commercial property loss, your business could face a serious financial setback. Business interruption insurance provides loss of income and fixed expense coverage and assists in moving the insured to a temporary location while their claim is being settled.
This insurance is generally offered as part of a business owner’s policy (BOP) package.
Should I Start an LLC FAQ
Choosing the right business structure depends on your business’s unique circumstances and needs. However, unless your business is very low risk (like a hobby), an LLC is likely the better option.
Visit our LLC vs. Sole Proprietorship guide to learn more.
At a minimum, you’ll need general liability insurance and commercial auto insurance.
Read our Business Insurance for Landscape Design Businesses article for more info.
Generally speaking, you will likely need to spend between $5,000 and $10,000 in startup costs in order to start a small- to medium-sized landscape design business.
When it comes to maintenance, you will need to pay for:
- Rent and utilities
- Maintenance of tools and office supplies
- Design software upgrades
Visit our How to Start a Landscape Design Business guide to learn more about the costs of starting and maintaining this business.
The main ongoing expenses will include the cost of utilities, software and digital tools, labor, and office upkeep.
Learn more about running a landscape design business.
Landscape design businesses make money by charging clients flat or hourly rates for project designs.
Learn more about starting a landscape design business.
Landscape design businesses are involved in the design and implementation of plans for the landscaping of residential and commercial properties. Rather than doing the actual work of landscape installation, they are usually only involved in the design.
The average profit margin for a landscape architect is between 10% and 15%.
Learn more about starting a landscape design business.
