Bookkeeping and taxes for auto repair shops
Every repair order sells parts and labor, and states tax them differently. We keep that split clean in your books, run technician payroll, file sales tax on what's taxable and track the lifts and scanners behind your depreciation.
Where do shop books usually go wrong?
We see the same handful of problems in almost every shop we take over.
Parts and labor lumped together
One "sales" line hides your parts margin and makes sales tax easy to get wrong.
Deposits that don't match tickets
Card batches, fees, fleet accounts and cash, tied back to closed repair orders.
Technician pay that drifts
Flat-rate hours, spiffs and tool allowances set up properly in payroll.
How do we set up a shop?
We work from your Tekmetric, Shopmonkey or Mitchell 1 reports.
| Section | Accounts |
|---|---|
| Income | Labor sales, parts sales, tire sales, sublet repairs, shop supply fees |
| Cost of sales | Parts cost, tire cost, sublet cost, technician wages |
| Operating | Rent, service writer wages, shop software, card fees, tools |
| Balance sheet | Lifts and diagnostic equipment, fleet receivables, core deposits, sales tax payable |
- Hourly and flat-rate technicians in Gusto or ADP
- Minimum wage and overtime checks in slow weeks
- Service writers, spiffs and tool allowances
- An owner salary if the shop is an S-Corp
- Parts are taxable nearly everywhere with a sales tax
- Repair labor is taxable in some states and not others
- Shop supply and tire fees follow their own rules
- Lifts and scanners often qualify for Section 179 or bonus depreciation, which is back to 100% for equipment acquired after January 19, 2025 (what changed)
Illustrative example, not a client story. A three-bay shop arrives with every repair order booked as one sales line. We split the year into parts and labor from shop reports, find parts margin is 8 points lower than the owner thought because of unbilled shop supplies, fix the shop system setup and move payroll to Gusto with flat-rate pay set up properly.
Which numbers run a shop?
Clean books make these visible every month, not just at tax time.
Average repair order
Sales divided by repair orders closed.
Effective labor rate
Labor sales over hours actually billed.
Parts gross margin
What you keep on parts after cost.
Technician productivity
Hours billed against hours paid, by tech.
Car count
Repair orders per month, read with average ticket.
Payroll as a share of sales
Tech and writer pay against sales, monthly.
Shop owners ask us.
Ask anything else on a free 30-minute call.
Book a callSource: IRS Publication 946, depreciation
Free tools: Markup calculator, Sales tax calculator, Overtime calculator
Do you work with my shop management software?
We work from the sales, parts and payment reports your system already produces, and use its QuickBooks Online connection where it has one.
Is labor taxable on a repair?
It depends on the state. Parts are taxable nearly everywhere with a sales tax, and repair labor is taxable in some states and not others. We set up your shop system so the right items carry tax.
Should my shop be an S-Corp?
Many profitable shops are. We run the numbers with a reasonable salary for your role before you elect. See our S-Corp page.
Tell us what's messy. We'll tell you what it takes.
Tell us what you need and get a fixed price before any work starts. No pressure and no contract.