We’ve been putting together a series of posts dedicated to answering questions from the small business owners who frequently come to us for advice. Today, we’re going to be shedding some light on the potential deductions for Car Dealership owners and Car Salesmen!
We get it – in your field, sometimes life feels like it’s zooming by, and you’re not sure if, at the end of the day, your brain has enough gas in the tank to figure out exactly what you can and can’t write off of your taxes this year. That’s totally understandable – do us a favor, and let us do you a favor. We’ve compiled some information on write-offs for you to look at, and compile. If after you read this, you find that you have some questions, please don’t hesitate to contact us!
Clothes & Supplies
Let’s kick this off – do you have a smartphone that is specifically for work/communicating with customers? What about an iPad that is primarily geared towards organizing your work-related schedule, or automobile inventory? These may qualify for a deduction, but you’ll have to amortize them over their mechanical lifetime (in the case of something like the iPad/smartphone). Sound complicated? It’s not too bad…but if you’re still confused, there are IRS publications floating around that will help you understand how you can amortize business-related expenditures.
Now, what about clothes? This is a loose one, but if you’ve had to purchase work-related clothes (do you ever have to get under the hood at the dealership? Wear anything special for that?) that you can’t use outside of work, you’ve got yourself a deduction! This may be a tough one for you to swing, but maybe this should serve as a good reminder for you – do you need to pick up any work-specific clothing that you can write off next year?
Asset Depreciation
This is an especially important deduction for you to be aware of as the owner of a car dealership! Why? Because cars depreciate fast…and they don’t quite sell at the same rate! We advise you to keep a close record of exactly when you put each one of your vehicles up for sale, and how long they’ve been on the lot. Depreciation doesn’t just mean regular old wear and tear, and also applies to obsolescence. If there’s one thing that cars tend to do, it’s become obsolete at the start of every year. This is why it’s so important for you to be aware of the way in which your assets are depreciating in value – it could mean a big write off! If you’re interested in knowing more about how depreciation works in the world of the IRS, click here.
Entertainment & Office Expenses
Now, we may be beyond the days of sipping margaritas with the floor manager on a Friday night and calling it a business meal, but we know that sometimes you have to butter up your customers and your distributors. This tends to vary on a circumstantial and year-to-year basis, but generally, business owners are able to have a serious business related discussion during, before, or after the meal/entertainment, and deduct up to 50% of it from taxes.
When it comes to offices/buildings, you may also have some leeway in the realm of tax deductions. For example, the costs that you incur making improvements to your office, or maintaining it are deductible business expenditures. Rent and utilities are included in this!
Another interesting application of this deduction is building acquisition and construction projects. Any building acquisition, construction project, or renovation which exceeds the amount of $500,000 can typically serve as a deference of tax liabilities.
If this post has raised any questions for you, and you want to know more about the deductions that you can make as a Car Dealership Owner, give us a call at 844-841-9857, or schedule a free consultation.