Your landscaping business in Marlboro generates 85% of annual revenue between April and October. You run a skeleton crew through winter, then hire 6-8 additional workers for peak season. Those seasonal workers represent your biggest labor expense—and your biggest tax planning opportunity and compliance risk.
Seasonal employee tax treatment differs significantly from year-round employees, particularly regarding unemployment insurance, worker classification, and strategic family hiring. Get it wrong, and you'll pay thousands in unnecessary unemployment claims, face Department of Labor audits, or trigger IRS misclassification penalties. Get it right, and you can significantly reduce labor costs while staying fully compliant.
This guide explains everything New Jersey landscaping and lawn care companies need to know about seasonal employee taxation, classification, and strategic hiring to maximize profitability during your busiest months.
The IRS and New Jersey Department of Labor don't have an official "seasonal employee" category—they care whether someone is an employee or independent contractor. However, seasonal employment patterns create unique tax implications.
Seasonal employee characteristics:
Year-round employee characteristics:
Why the distinction matters for landscaping: Your core crew (foreman, equipment operator, maybe 1-2 experienced workers) are year-round. Your additional spring/summer laborers are seasonal. Tax treatment differs, particularly for unemployment insurance.
New Jersey unemployment insurance (UI) taxes are where seasonal employment creates significant cost implications.
Base tax rate: New employers pay 2.8% of first $42,300 of each employee's wages (2026 estimate).
Experience rating: After three years, your rate adjusts based on unemployment claims filed by former employees. Rates range from 0.5% (very few claims) to 5.8% (many claims).
The seasonal problem: Seasonal employees who file for unemployment benefits every winter dramatically increase your experience rating, raising your UI tax rate permanently.
Example: A landscaping company in Jackson employs 4 year-round workers and hires 6 seasonal workers (April-October).
Year-round employee payroll:
Seasonal employee payroll:
Total taxable wages for UI: $327,000 (using $42,300 cap per employee)UI taxable base: 10 employees × $42,300 = $423,000
At 2.8% (new employer rate): $11,844 annually
After 3 years with many seasonal claims (rate rises to 4.5%): $19,035 annually
Cost increase from seasonal claims: $7,191 annually—permanently.
Over 10 years, poor management of seasonal unemployment costs this company an extra $70,000+ in UI taxes.
Strategy #1: Structure contracts to avoid UI claims
Clearly document seasonal employment terms. Use written agreements stating:
While this doesn't eliminate UI eligibility, it establishes clear employment parameters.
Strategy #2: Offer winter work (if feasible)
Even minimal winter work (snow removal, equipment maintenance, 10-15 hours/week) can reduce UI claims. Employees working part-time earn wages that offset unemployment benefits, reducing claim amounts charged to your account.
Strategy #3: Challenge inappropriate UI claims
Not all UI claims are valid. If seasonal workers:
You can challenge their UI claim. Many landscapers don't challenge claims, allowing invalid claims to drive up experience ratings.
Strategy #4: Use New Jersey Shared Work Program
If you reduce seasonal workers' hours (rather than laying off completely), the Shared Work program allows them to collect partial unemployment while working reduced hours. This keeps them partially employed and reduces full UI claim impact on your account.
Many landscaping companies classify workers as 1099 independent contractors to avoid payroll taxes and UI. This is almost always wrong and extremely expensive when caught.
The IRS uses a three-factor test:
Behavioral control: Can you control how work is performed?
Financial control: Do you control business aspects of the job?
Relationship type: How do parties perceive relationship?
Reality for landscaping: Your seasonal crew members are employees, not contractors—the IRS and New Jersey Department of Labor will reclassify them if audited.
A lawn care company in Howell classified 5 seasonal workers as 1099 contractors, paying them $120,000 total over two years.
DOL audit reclassified them as employees:
Total cost: $76,020 for trying to save $9,180 in payroll taxes.
Plus, the company now must reclassify all workers going forward, losing the perceived "savings" permanently.
Legitimate independent contractors in landscaping:
Key factors:
Bottom line: Regular seasonal crew members mowing lawns, trimming hedges, and performing routine maintenance are employees, not contractors.
One of the best tax strategies for landscaping business owners is hiring your children for seasonal work.
Federal tax advantages:
New Jersey considerations:
Requirements for tax benefits:
A Brick landscaping contractor employs two teenage children (ages 16 and 17) for summer work. Each works 30 hours/week for 16 weeks at $15/hour.
Annual wages per child: 30 hours × 16 weeks × $15 = $7,200Total wages (both children): $14,400
Without hiring children (paying unrelated workers):
Hiring own children (sole proprietorship):
Savings: $1,438 annually
Additional benefit: The $14,400 paid to children is deducted from parent's business income (taxed at 35%+ effective rate = $5,040 tax savings), but children pay little to no tax on it (standard deduction covers most of it).
Total tax benefit: $1,438 + $5,040 = $6,478 annually
Over 5 years (while children are in high school): $32,390 in combined tax savings—enough to fund significant college expenses.
For complete details on hiring children, see: Tax Benefits of Employing Your Child and Hiring Family: 4 Keys Jersey Shore Business Owners Should Know
Must be legitimate work: Child must perform actual services. "Paying" them for doing nothing is fraud.
Reasonable compensation: $15/hour for manual labor is reasonable. $50/hour for basic mowing is not.
Proper documentation: Maintain timesheets, pay via check/direct deposit, issue W-2 at year-end.
Business structure matters: The FICA exemption only applies to sole proprietorships and partnerships where both parents are partners. S-Corporations and partnerships with non-parent partners don't qualify—children are treated as regular employees.
Age restrictions: New Jersey labor laws restrict hours and types of work for minors under 16. Review NJ Child Labor Law requirements before hiring young children.
Seasonal employees are regular employees for payroll tax purposes—all normal withholding and reporting requirements apply.
Federal:
New Jersey:
Tip for seasonal workers: Many seasonal employees request maximum withholding (claiming 0 allowances on W-4) to avoid owing taxes at year-end. This is their choice—you must follow their W-4 instructions.
Form 941 (federal quarterly): Due April 30, July 31, October 31, January 31
Form NJ-927 (state quarterly): Same schedule as federal
Form 940 (federal annual): Due January 31
W-2s: Issue to all employees by January 31
Seasonal consideration: You'll have higher Q2-Q3 payroll than Q1/Q4. Ensure proper estimated tax payments throughout the year to avoid year-end surprises.
Professional tip: Most successful landscaping companies use professional payroll services to handle all withholding, deposits, and filings. DIY payroll mistakes cost landscapers thousands annually in penalties—far more than professional service fees.
Related: The Hidden Costs of DIY Payroll for Small Businesses in New Jersey
New Jersey requires workers' compensation insurance for all employees, including seasonal workers.
Rate per $100 of payroll: Varies by classification code (landscaping: ~$8-$12 per $100 typically)Annual audit: Insurance companies audit actual payroll at year-end and adjust premium
Seasonal impact: Your workers' comp premium should be lower because you only pay for the months seasonal employees actually work. However, ensure your carrier properly accounts for seasonal employment patterns.
If you misclassify employees as 1099 contractors, you won't carry workers' comp insurance for them. When an uninsured worker gets injured (falls off ladder, back injury from equipment), you face:
Real-world cost: A landscaping company in Middletown classified crew members as 1099 contractors. One fell from a retaining wall, suffering spinal injury requiring surgery.
Result:
Total: $474,500+ vs. paying ~$8,000 annually for proper workers' comp coverage.
Never worth the risk. Always carry proper workers' comp insurance for all employees.
Landscaping businesses generate highly concentrated income during 7-month seasons. Strategic tax planning turns this seasonal cash flow into tax savings.
Peak season generates cash. Year-end is when you need to deploy that cash for maximum tax benefit.
Strategy: Purchase equipment in Q4 to maximize current-year deductions using Section 179 and bonus depreciation.
Example: A lawn care company in Toms River generated $280,000 profit by September. In December, they purchased:
Total equipment: $24,000
Section 179 immediate deduction: $24,000Tax savings (35% effective rate): $8,400
The contractor needed this equipment anyway for next season—timing the purchase strategically saved $8,400 in taxes.
For complete equipment depreciation strategies, read: Equipment Depreciation Strategies for HVAC Contractors (same strategies apply to landscaping equipment).
Seasonal revenue concentration creates opportunities for large year-end retirement contributions.
Solo 401(k) for owner-only businesses:
Example: A Marlboro landscaping owner nets $180,000. He contributes:
Tax savings: $68,500 × 35% = $23,975
For detailed retirement plan strategies, see: Retirement Plans for Business Owners: Solo 401(k) vs. SEP IRA
The flip side of seasonal concentration: ensuring sufficient cash reserves for winter when revenue drops but expenses continue.
Strategic approach:
For cash flow management strategies, see: Analyzing Cash Flow Is a Must for Your Jersey Shore Small Business
Proper documentation protects you from UI claims, worker misclassification audits, and wage disputes.
For each seasonal employee:
For business protection:
Retention period: 4 years minimum for payroll records, 7 years recommended.
Audit defense: Complete, organized records are your best defense in DOL or IRS audits. Missing documentation often results in assessments even when you're technically compliant.
Many successful landscaping companies use professional bookkeeping services to maintain proper records year-round, preventing costly scrambles when audits occur.
Shore Financial Planning helps landscaping contractors and lawn care businesses throughout New Jersey optimize seasonal employment within comprehensive tax strategies:
Seasonal labor management:
Tax planning integration:
Year-round support:
A successful landscaping contractor in Jackson generating $420,000 annually worked with Shore Financial Planning to optimize seasonal operations:
Seasonal workforce:
Implementation:
Tax planning:
Total annual tax savings: $53,200
The contractor now operates compliantly, avoids payroll penalties, and keeps an extra $53,000 annually that previously went to taxes and compliance issues.
Shore Financial Planning specializes in seasonal businesses throughout Central New Jersey:
We serve landscaping contractors, lawn care services, and all seasonal businesses with specialized expertise in managing workforce taxation, unemployment insurance optimization, and comprehensive tax planning.
Seasonal employment creates both opportunities and risks. Proper classification, strategic family hiring, and UI management can save $10,000-$30,000 annually. Poor handling triggers audits, penalties, and permanent cost increases.
If you're currently:
...schedule a strategy session with Shore Financial Planning.
We'll review your current workforce structure, identify compliance risks, quantify tax savings opportunities, and implement proper systems that reduce costs while eliminating audit exposure.
Contact Shore Financial Planning or call (732) 704-8982.