• Employee taxation. If you have employees, you will be responsible for withholding and remitting applicable deductions. Once you hire employees, you definitely should get professional advice to be sure you are complying with all existing regulations. The penalties for non-compliance can be severe, and ignorance is no excuse.
• Workers’ compensation. If you have employees, you must register with workers’ compensation in your area and pay a percentage of wages to cover employees if they are hurt on the job. If you have no employees and are running a sole proprietorship, you usually can choose whether or not you want workers’ compensation. You may want to compare workers’ compensation rates with those of private insurance companies, which provide coverage 24 hours a day, not just on the job. This is the kind of coverage you need if you are self-employed and your business relies on you.
4. Bylaws And Zoning
You need to ensure that you are legally allowed to operate your business from your home. Some jurisdictions have restrictions on what kind of business may be home-based. For example, there may be a limit on the number of employees you can have.
Even if bylaws do permit you to operate your business from your home, you should always be considerate of your neighbors. If you have large crews showing up at your home at 7:00 a.m., starting and cleaning equipment and leaving trucks idling for long periods, you won’t win any friends in your neighborhood.
Also check out the noise bylaws in the areas where you will be working. Some places restrict the use of portable equipment, such as backpack leaf blowers, because they are often overused or used inappropriately. (See section 4.2 of chapter 12 for more information on using a backpack blower without being a nuisance.) Most jurisdictions also have rules about what time of day you can start working outside (e.g., not before 8:00 a.m. on weekends).
5. Insurance
Stuff happens, as they say, and insurance can protect you when that stuff happens. Be sure to speak to a professional about the type and amount of insurance you need. An oversight can be expensive. It may even cost you your business. Here are some of the types of insurance you’ll need to consider when you work for yourself:
• Vehicle insurance. It’s a given that you need vehicle insurance, but will you need special coverage? Who will drive the vehicle (just you, or staff members as well)? Do you require special commercial plates on the vehicle? Do you qualify for fleet insurance (when your business gets a little larger)? Note that in most cases only items that are “attached” to the vehicle are covered. Your vehicle insurance will likely not cover damage or theft of your equipment (see the paragraph on equipment insurance below).
• Liability insurance. When you start bidding on commercial properties, you will be asked to prove you have sufficient coverage to protect against things like injuries to bystanders and property damage.
• Equipment insurance. Your power equipment should be covered for loss by theft or fire. You may find it more difficult to find an insurer for your portable equipment because it’s so easy to steal. Keep looking, though, because such insurers are available. Consider saving money by having a high deductible (around $500). If you have a single piece of equipment stolen, don’t tarnish your record by claiming it; just buy a new one. On the other hand, if all of your portable equipment disappears, then $500 is a small price to pay to replace it.
• Personal disability insurance. In many small businesses, if the owner is out of action, the money stops coming in. You should have enough personal disability insurance to cover your business overhead and perhaps the cost of hiring a replacement so the work can go on. In most areas you can opt to have workers’ compensation coverage, but this will not apply if you are injured off the job.
• Life insurance. You probably already have life insurance, but you might want to review your coverage now that you plan to be self-employed. If you are supporting others, how will they be supported if you die prematurely?
• Medical insurance. Availability of supplemental medical insurance varies by jurisdiction. Be sure you are adequately covered.
• Home office insurance. Check to ensure that your current home insurance (theft, fire, etc.) will cover your home office. There may be a specific rider that excludes it.
• Business interruption insurance. This is designed to cover you for a period of time to allow recovery from disasters such as loss of premises or files.
• Employee benefits. Group insurance is available for even small companies. It is a great benefit and worth investigating.
6. Using Professional Advisors
It’s wise to rely on the advice of professionals early in the planning of your business. It isn’t possible for an individual to stay on top of all the changing regulations, bylaws, and requirements for small business, so don’t be afraid to contact a lawyer or accountant whenever you need help.
Professional accountants will usually be well versed in local law and taxation regulations, since they deal mostly with small and medium-sized businesses. In the United States look for the designation CPA (certified public accountant) and in Canada look for CGA (certified general accountant) or CA (chartered accountant).
You may require the services of a lawyer if you plan to incorporate or sign a partnership agreement. The best way to find a lawyer is through referral. If you have friends in business, ask them who they use and if they are pleased with the services provided.
Finally, your local insurance agency should be able to offer further advice on the amount and kind of insurance you need for your business.
3
Money Matters
Let’s face it: Starting a business takes money. And while it is true that you don’t have to buy everything for your landscaping business right away, ideally you’ll have enough basic equipment to cover a variety of jobs. Without sufficient capital at the start, running your business may quickly become tiresome and stressful. You need to consider funding sources and develop your business plan.
1. Financing Options
The money you need for your business can come from a variety of sources. Keep in mind, though, that you should always be careful of debt and work hard to keep it under control. If you borrow, borrow only what you need and when you need it.
1.1 The bank of Mom and Pop
If you are just starting out in the world of business, your best bet for securing needed funds may be your parents, other relatives, or friends. Use good judgment when borrowing from family and friends. Friends are forever, but money can be gone tomorrow, and if it’s not paid back, it can wreck your relationship. If you do borrow, prepare a promissory note that details the terms and conditions of your arrangement.
1.2 Personal loans
If close relatives are not an option and you have decided (probably wisely) not to borrow money from your friends, a personal loan from the bank may be your answer. Good credit is required, as is collateral. Your lawn care equipment will probably not be sufficient for collateral (unless you have some particularly large and costly pieces of equipment), but vehicles are good collateral if you own them, as are stocks, bonds, and other assets that can be liquidated. Equity in your home is like gold.
1.3 Business loans
A business loan is another