Lawn care season moves fast. One week, you’re mowing a handful of yards. Next, you’re turning away customers and hiring a few crew members just to keep up with the demand. And once you have employees, you have one more responsibility.
You have to run payroll.
Payroll for a lawn care business isn’t entirely like payroll for an office or a retail shop. Seasonal hiring, long summer workweeks, and crews that bounce between job sites add a few wrinkles.
So, how do you handle lawn care payroll without spending your evenings on paperwork? Read on to learn the payroll rules that trip up lawn care owners, and how using payroll software can take them off your plate.
Why is lawn care payroll different?
Like any business, you need to run payroll when your lawn care business hires employees. That means calculating gross wages, withholding taxes and deductions, paying employees, and filing the right forms.
But unlike all businesses, your lawn care business tends to have:
- Seasonal swings: You likely have higher demand in the spring and summer. You may even close for the winter.
- Long, irregular hours: Your employees might work well over 40 hours a week to keep up with demand during peak season.
- Multiple job sites: Your employees go from yard to yard throughout the day.
Should you keep your team year-round?
Lawn care businesses might do one of the following:
- Close up (and lay off the team) at the end of the season
- Add off-season services, like snow plowing
If you want to keep your crew through your off-season, you might add several off-season services such as leaf removal and fall cleanups, snow plowing and removal, holiday light installation, and gutter cleaning.
How to handle payroll for lawn care businesses
From overtime to worker classification, you need to make several payroll-related considerations for your lawn care business.
| Step | What to Do |
|---|---|
| Hire to meet demand | Collect Forms I-9 and W-4, plus any state W-4 forms. Report new hires to your state. Add employees to payroll. |
| Plan for overtime | Track hours worked and pay nonexempt employees 1.5 times their regular rate for hours over 40 in a workweek. Check state overtime laws for daily overtime rules. |
| Decide on a pay rate | Pay employees an hourly rate, a salary, or piecework pay. |
| Classify workers correctly | Determine whether each worker is an employee or independent contractor based on worker classification rules, such as who controls the work and whose equipment is used. |
| Get workers’ comp insurance | When you hire employees, you’ll need workers’ comp to cover work-related injury or illness. |
1. Hire to meet demand
For lawn care businesses, demand typically ramps up in the spring and summer months. You might increase hiring to meet demand and avoid turning away jobs.
When you hire new employees, you need to gather new employee forms, including:
- Form I-9 to verify they can legally work in the United States
- Form W-4 so you know how much to withhold in federal income taxes when you run payroll
- State W-4 forms so you know how much to withhold in state income taxes when you run payroll
You also need to report new hires to your state. Federal law requires new hire reporting within 20 days of hire, but check with your state for more information.
If you rehire employees within three years of the original hire date, you can update the rehire section of Form I-9 instead of starting a new one.
You might work with 1099 contractors, too. For example, you might hire an independent contractor who specializes in weed control and pesticides. When you hire a 1099 contractor, you need them to fill out Form W-9 instead of Form W-4. You do not add contractors to payroll (aka do not withhold payroll taxes from contractor payments or offer benefits). However, most payroll software providers let you pay contractors in payroll alongside your employees.
2. Plan for overtime
Your crew might blow past 40 hours in a week if you have 60 yards to mow, 20 yards to weed, and 30 yards to mulch. And that’s when overtime pay kicks in.
Under the Fair Labor Standards Act (FLSA), you must pay nonexempt employees at least 1.5 times their regular rate for hours worked over 40 in a workweek. Most lawn care crew members are nonexempt and entitled to overtime.
Let’s say you pay a crew member $20 per hour. They work 48 hours in one week. Here’s how their pay breaks down:
| Pay Type | Hours | Rate | Total |
|---|---|---|---|
| Regular pay | 40 | $20 | $800 |
| Overtime pay | 8 | $30 | $240 |
| Gross pay | 48 | $1,040 |
Keep in mind that some states have stricter overtime rules than the federal government. For example, California requires overtime pay for hours worked over eight in a workday.
3. Decide on a pay rate
Will you pay an hourly rate, a salary, or piecework pay? There’s more than one way to pay a lawn care crew.
Here’s a quick comparison of the three.
| Pay Method | How It Works |
|---|---|
| Hourly | Pay a set rate for each hour worked |
| Salary | Pay a fixed amount each pay period |
| Piecework pay (per yard) | Pay a set amount for each job completed |
4. Classify workers correctly
As you get more help, one of the most important decisions you’ll make is worker classification. Do you need an employee or 1099 contractor?
Employees are added to payroll, you withhold taxes, and you offer benefits. 1099 contractors work for themselves and do not receive benefits or have their taxes withheld.
You do not choose worker classification on a whim.
Misclassifying an employee as a contractor to avoid employer responsibilities leads to back taxes, penalties, and interest.
Ask yourself questions such as:
- Who controls the work? If the answer is you, the worker is likely an employee.
- Whose equipment is it? If you provide the equipment, the worker is likely an employee.
- Is the relationship ongoing? If the work is ongoing, the worker is likely an employee.
- Does the worker run their own business? Contractors typically have their own clients, set their own rates, and can make or lose money on the job.
Lawn care workers you hire are typically employees. But sometimes, you may need to offer additional services to clients, such as pesticide spraying or hardscaping. In these situations, you might hire a 1099 worker.
The 1099 reporting threshold is $2,000, which means that you must complete a Form 1099-NEC if you pay a contractor more than $2,000 during the year.
5. Get workers’ comp insurance
Workers’ comp insurance is a state-mandated insurance employers get to cover work-related injuries and illnesses. So whether it’s an office job or a physically-demanding industry like lawn services, workers’ comp is a must.
Almost every state requires that employers carry workers’ comp once they have between 1 – 5 employees, depending on the state’s specific rules. Only South Dakota and Texas do not require workers’ comp.
Consider looking into pay-as-you-go workers’ compensation, which aligns payments with each payroll run.
How payroll software helps lawn care businesses
Each payday, you need to calculate your employees’ gross pay (don’t forget to account for overtime), taxes and deductions, and net pay.
Taxes include:
- Federal, state, and local income taxes
- Social Security and Medicare taxes
- Federal unemployment tax (FUTA)
- State unemployment tax (SUTA)
- State-specific taxes
Manually calculating overtime and payroll taxes can eat up your time and leave room for error. Payroll software handles the calculations so you can get back to your lawn care business. Full-service payroll also handles tax deposits and filings for even more time savings.
Here are just a few ways payroll software like Patriot Software streamlines payroll for lawn care businesses:
- Employee self-onboarding: Each time you hire new crew members, let your new hires self-onboard to reduce your admin work.
- Pay contractors in payroll: Pay 1099 contractors with employees in the same payroll, with direct deposit if applicable.
- Overtime calculations: Select each employee’s pay type (i.e., nonexempt or exempt) when setting up payroll, and the software will automatically calculate overtime where applicable.
- Workers’ compensation: Seamless workers’ comp integration means your premium is calculated and withdrawn automatically.
Lawn care businesses trust Patriot Software for payroll
Businesses in all industries trust Patriot Software to make running their business simple, affordable, and automated.
And now, Patriot Software has partnered with lawn care marketplace GreenPal to further support lawn care businesses. The GreenPal Partners Program gives GreenPal vendors discounts from companies that serve the landscaping industry.
FAQs about lawn care payroll
Yes, many lawn care workers are nonexempt and entitled to overtime pay for hours worked over 40 in a workweek. Some states require daily overtime.
Yes, piecework pay is an option, but be sure to pay at least the minimum wage and overtime as applicable.
Worker status depends on the working relationship. Typically, crew members who work set schedules, use your equipment, and follow your instructions are employees.
Nearly every state requires workers’ compensation insurance when you have employees.
