Bookkeeping for Mechanical Garages
If you have a mechanics or garage business, you must be aware of the common problems that arise when it comes to accounting and bookkeeping. It’s still largely a paper-based industry and most purchases are cash based . The manual nature of keeping track of expenses and revenue often makes it challenging to keep track of costs, vital for tracing and accounting profitability accurately .
What is bookkeeping for mechanics and garages all about?
Bookkeeping for mechanics and garages involves tracking financial transactions such as income from repairs and sales, expenses for parts and labour, and payments to suppliers. This information is typically recorded in a manual ledger or computerised accounting software. It can be used to generate financial statements, such as profit and loss reports and balance sheets. This can help the business owner make informed decisions about their operations’ progress.
It is also important to keep track of inventory, customer information, and employee records. As such, it is recommended to hire a professional bookkeeper or outsource a bookkeeping subcontractor to keep track of finances, ensure compliance with tax laws and update financial records accurately.
Key bookkeeping challenges faced by mechanics and garage businesses
There are several key challenges that mechanics and garages may face when it comes to bookkeeping:
Keeping accurate records: Recording financial transactions can be time-consuming and requires attention to detail. It can be difficult to keep up with the volume of transactions that occur in a busy garage.
Managing inventory: Keeping track of inventory can be challenging, particularly for garages that sell a wide range of parts and supplies.
Staying compliant with tax laws: Mechanics and garages must comply with relevant tax laws and regulations, which can be complex and time-consuming.
Keeping up with changes in technology: The rapid pace of technological change in the automotive industry can make it difficult for mechanics and garages to stay up-to-date with new tools and equipment.
Cash flow: Cash flow can be a challenge for any business, and mechanics and garages are no exception. Many customers pay after the service is done. As such, the garage may have to pay bills before they are paid, which can put a strain on cash flow.
Managing employees: Managing employees can be a challenge, particularly when it comes to tracking hours worked, overtime pay, and compliance with labour laws.
Lack of expertise: Small businesses may not have the expertise to handle bookkeeping and accounting, it may be difficult but vital to ensure that financial records are accurate and up-to-date.
How can a professional bookkeeping subcontractor help mechanics and garages?
By hiring a professional bookkeeper or accountant, your mechanics and garages business can overcome these challenges and better manage their finances.
Keeping track of finances and inventory: A bookkeeping subcontractor can help your businesses keep accurate records of all financial transactions, including income, expenses, and payments. This can help the business owner generate financial statements such as profit and loss reports and balance sheets. With their guidance and assistance, you can better understand your inventory levels, manage your inventory effectively, and make informed decisions about purchasing.
Improve your compliance and employee management: A bookkeeping subcontractor can help mechanics and garages businesses ensure compliance with all applicable tax laws and regulations. This can help the business avoid penalties and fines for non-compliance. Furthermore, the professional can help the business manage employees by tracking hours worked, overtime pay, and compliance with labour laws.
Improve cashflow management: A bookkeeping subcontractor can help your business manage cash flow by creating a budget, forecasting future financial performance, and monitoring accounts payable and receivable. These professionals have expertise in bookkeeping and accounting, so they can provide the business with the knowledge and skills needed to keep financial records accurate and up-to-date.
Overall, a professional bookkeeping subcontractor can help your business better manage its finances, stay compliant with tax laws, and make informed decisions about your operations. Such professionals can provide valuable advice to the business owners on financial decisions, such as investments, loans, and other financial matters. They can also assist in creating a budget and forecasting future financial performance.
Penny’s Bookkeeping Services have worked with mechanics and garages, we have the experience in terms of what types of challenges this business sector may encounter and can help you to work out an economic way to handle the bookkeeping for you, so you can just focus on running your garages or workshops successfully. Contact us now for any queries you have for your business finance process. We are offering 20-min free consultation, we are happy to answer any questions or challenges you are facing at your business.