Capital landscaping is an investment that elevates your commercial property and improves the quality of the experience for employees, customers and visitors. It also can improve the appearance of your business and increase its value for investors and potential buyers. However, it’s important to understand that the distinction between capital expenses and recurring maintenance is a fine line and that you must carefully consider the benefits of each project before making any final decisions about whether to capitalize on commercial landscaping costs.

The IRS defines capital improvements as expenditures that add substantial value to real estate, upgrade existing facilities or make the property more useful. The definition also stipulates that the improvement must be permanent. If you want to know more about the distinction between capital expenses and recurring maintenance, you can check out IRS Publication 527 or ask your tax professional.

Landscaping that meets the criteria for capitalizing on your commercial property will typically include anything that improves your business’s image, facilitates a positive environment or boosts safety. Examples of this type of landscape work include adding walkways or paving, installing irrigation systems, creating gardens and building hardscapes like firepits, patios and retaining walls.

If you’re thinking about starting a commercial landscaping company, you should start by setting up your business model. This includes looking at your profit projections and figuring out how you’ll grow the business. Ideally, you’ll find that you can sign up clients on recurring services that will provide you with steady revenue. This will enable you to plan ahead for future needs and invest back into the business.

You can also use your financial projections to determine the profitability of each of your service lines. This will help you determine which services are most profitable and will allow you to put plans into place to grow those areas of the business.

For example, you might notice that hedge trimming is one of your most profitable service lines. This may encourage you to put plans in place to increase your customer base in that area and expand the service into new territories.

Before making any decisions about capitalizing on your commercial landscaping, it’s important to consult with a qualified tax or accounting professional. They’ll be able to help you distinguish between taxable repairs and tax-exempt capital improvements. However, there are some general rules you can follow that will give you a good idea of what types of landscape projects qualify for capitalizing.