Dealer Insights - September October 2014 - Dealer Digest
Year end tax planning strategies abound
It’s not too early to start thinking about ways you can lower your 2014 tax bill by making some shrewd tax moves before the end of this year. Here are a few strategies to consider:
Time income and expenses. Deferring income into next year may reduce this year’s net profits, while accelerating expenses into this year may yield additional deductions. Both of these moves can reduce this year’s tax bite.
But if you think your dealership might be in a higher tax bracket next year, you might consider the opposite strategy. This could increase your taxes in 2014, but result in less tax paid in the long run.
Plan your inventory carefully. If you use the last-in, first-out (LIFO) method of inventory accounting, keep a close eye on your new vehicle inventory stock at year end. While low inventory levels could save floor plan interest costs, they also could result in LIFO income recapture, which could increase your tax bill. If you anticipate significant LIFO income recapture this year, it might be worth considering discontinuing the use of LIFO.
Review your repair and maintenance expenses. Re-examine your accounting methods to see if you can benefit from the flexibility offered by the final repair and maintenance regulations issued by the IRS, which apply to tax years beginning on or after Jan. 1, 2014. The regs clarify that tangible property costs can be expensed and deducted in the current year if they’re devoted to incidental repairs and maintenance.
Contact your CPA regarding which year end tax planning strategies are best suited for your dealership.
Sales strategies: The first 60 minutes
Most dealership salespeople are well trained in how to greet customers walking into the showroom. But what about the next 59 minutes? The first hour spent with a customer will usually play a large role in whether a sale is made. Give your salespeople this list of three main tasks to accomplish during the critical first hour:
- Help the customer select the vehicle that’s right for him or her.
- Convince the customer that yours is the dealership he or she should buy from.
- Gain the customer’s trust and assure him or her that you are the salesperson he or she should buy from.
Conversely, there are a few things a salesperson shouldn’t do during this first hour, including negotiating price and bringing in a third party, like a sales or finance manager.
Dealer Insights - September/October 2014