What are the costs to start and maintain a tree service?

Startup costs are typically between $10,000 and $50,000, accounting for a business license, liability insurance, disability insurance, a warehouse, auto insurance, equipment insurance, umbrella insurance and workers’ comp. The cost additionally includes equipment needs: Trucks Safety gear Ladders Chainsaws Wood chipper Pruning shears Computers Wheelbarrows Invoicing software Accounting system Payroll system Visit our How to Start a Tree Service guide to learn more about the costs of starting and maintaining this business.

Should I Start an LLC for My Tree Service?

Starting a limited liability company (LLC) for your tree service 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 tree service, lawsuits can arise from things like property damage caused by a tree falling onto a client’s property, road accidents involving the company’s vehicle, and personal injury suffered by the client.

LLCs are also affordable, highly flexible (from a tax point-of-view), and can make your tree service seem more credible.

Recommended: Use Northwest to form an LLC for $29 (plus state fees).

Do I Need an LLC for a Tree Service?

LLCs are a simple and inexpensive way to protect your personal assets and save money on taxes.

You should form 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 Tree Service

By starting an LLC for your tree service, 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.

Tree services will benefit from liability protection because of the relatively high risk of property damage and workplace accidents.

Example 1: While pruning a client’s trees a large branch falls down and cracks the windshield of their personal vehicle. They demand you pay for the repairs. Your personal assets could not be taken to pay for this since they are protected with limited liability as an LLC.

Example 2: A few days after performing maintenance on a client’s trees, one falls onto their home causing significant damage. The homeowners are suing you, claiming you are at fault for not better maintaining the tree. Should you be found in the wrong, the settlement could not take any personal assets as limited liability protects those for LLC owners.

Example 3: The company vehicle you use is in an auto accident on the way to a job, colliding with another motorist. They demand you pay for the medical and repair expenses. Neither expenses could be paid with personal assets since being an LLC protects them with limited liability.

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 Tree Service

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 tree service 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

Tree services 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).

Get Started

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

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.

A lot of danger comes with maintaining and removing trees, so if any injuries occur as a result of your service having insurance can help with medical costs, legal fees, and replacing tools.

Common Situations Business Insurance May Cover for a Tree Service

Example 1: A tree accidentally falls into the property owner’s window while your team is trying to remove it. Their glass is not only broken, but the window frame is also damaged from the branches. General liability insurance would most likely cover the cost of fixing the window and any surrounding damage.

Example 2: You take down a tree for a customer and remove the stump. After filling the hole, the customer claims that you damaged the roots to their other tree, causing them to die. General liability insurance would most likely take care of the ensuing costs.

Example 3: A customer trips over some of your equipment while you are on lunch. They sprain their ankle and demand you pay for the medical expenses. General liability insurance would most likely cover the costs.

Other Types of Coverage Tree Services 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 tree services should obtain.

Commercial Auto Insurance

Tree services rely on their vehicles to haul equipment and get from one property to the next. A personal auto insurance policy will not cover potential damages to the vehicle — even if the driver is technically off-duty at the time of the crash.

Commercial auto insurance covers both the vehicle and any other property damage in the event of an accident.

Commercial Property Insurance

If your tree service business owns its own office or warehouse space, then you’ll need commercial property insurance to cover both the physical structure and the property inside of it.

If your business keeps expensive equipment inside the property or sells specialized tools to its customers, then commercial property insurance will most likely pay to repair the building and replace the tools in the event of certain covered events like a fire or severe storm.

Professional Liability Insurance

Professional liability insurance is there for business owners in case their work causes any type of damage to the physical structure or surrounding grounds. This coverage extends to errors or omissions made by your employees. So if someone accidentally cuts down the wrong tree, you will most likely be covered.

Product Liability Insurance

If your business sells products to its customers, such as pruners or hedge clippers, then you’ll need product liability insurance. Even if your business didn’t actually make the products, you can be held liable for any damage they caused simply because you sold them.

Commercial Umbrella Insurance

Whether it’s a lawsuit from a competing tree service company or a medical claim brought on by pesticide use, commercial umbrella insurance can cover a wide array of potential costs should they exceed the limits of your primary general liability insurance policy.

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, commercial auto insurance, and workers’ compensation insurance.

Read our Business Insurance for Tree Services article for more info.

Startup costs are typically between $10,000 and $50,000, accounting for a business license, liability insurance, disability insurance, a warehouse, auto insurance, equipment insurance, umbrella insurance and workers’ comp. The cost additionally includes equipment needs:

Trucks
Safety gear
Ladders
Chainsaws
Wood chipper
Pruning shears
Computers
Wheelbarrows
Invoicing software
Accounting system
Payroll system

Visit our How to Start a Tree Service guide to learn more about the costs of starting and maintaining this business.

In addition to paying your workers an income, you’ll need to ensure you have the proper safety equipment, gas, promotion expenses, and related insurance.

Learn more about running a tree service.

Depending on the services that you provide, money is made through routine maintenance of customers' trees, with the most reliable money coming from projects related to trimming and pruning clients’ trees.

Learn more about starting a tree service.

Tree services are responsible for the installation and removal of trees for residential homes and businesses alike. Additional services they might provide can include scheduled tree maintenance, including trimming or pruning. Whether a tree service provider helps remove roots, stumps, or fallen branches and trees, they are aware of local regulations and codes that allow them to operate legally.

Individual tree service providers can make anywhere from $21,000 to $49,000 a year, with tree service businesses making upwards of six figures.

Learn more about starting a tree service.