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BY BRAD STANEK & PAULINA MATEL CONTRIBUTING WRITERS
Dealers tell us all the time how great their CPA is at preparing returns and telling them how much they owe . But most wish their CPA would be more proactive about ways to reduce their taxes . Well , as Mahatma Gandhi once said : “' If you don ' t ask , you don ' t get it .” To get the ball rolling , don ’ t wait until yearend to start planning . This is something that should be done all year long and should consider all the decisions you ’ ve made while running your business .
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1 . WORKING WITH YOUR ACCOUNTANT AND FINANCIAL PLANNER
It ’ s invaluable for your CPA to know where you want to go over the next year , five years , or even ten years . Do you want to transition it to the next generation of your family or to a key member of your management team ? Do you want to grow your business in preparation for an exit ? By helping your CPA understand your vision , they can provide guidance along the way that they ’ d never be able to provide from a historical perspective . Your accountant can plan to have capital in place for certain structures . They can plan
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to develop a management team and they can implement an incentive plan that motivates owners to build more value in the business .
Bottom line : Don ’ t be afraid to suggest the advisory role to your CPA if you haven ’ t done so already .
2 . MAXIMIZING INCOME , NORMALIZING EXPENSES , AND MINIMIZING TAX IMPACT
Many of you are asking yourselves : “ Is this the year I sell internally or to a third party ?” While some may be wondering how to best find a qualified buyer , all dealers we speak with are concerned about the tax hit .
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When running your dealership , for some the tax goal is to get your income as low as possible to minimize taxes due at tax filing . But when you become a potential seller , it ’ s the opposite . You want to maximize your income so when looking at a multiple of net income , you get the highest possible purchase price .
You will also want to address “ normalizing items ” such as one-time expenses or higher than normal wages paid to owners and officers . You wouldn ’ t expect the new owners to pay for those expenses and you want to get those items in line prior to the sale , that way you don ’ t have to argue with
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AUGUST 2023 VS . AUGUST 2022
Dealerships reported an average revenue increase of 7.0 % in the service department in August , according to composite data from more than 1,700 dealers in the U . S . that use the Lightspeed DMS . The parts and sales departments were down , resulting in a combined revenue loss of 3.7 % for the average dealership . The West ( 4.9 % decrease ) reported the most signifi cant decrease in parts revenue and the average dealership reported a 4.0 % decrease in the parts department . Service revenue was up in every region ,
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led by the Midwest ( 8.4 % increase ) and the Northwest ( 7.9 % increase ). The average dealership reported a 5.1 % decrease in new and preowned sales . The South reported the lowest revenue loss of 1.8 % and the West reported the highest revenue loss of 13.0 % in the sales department .
The South reported the least combined revenue loss , reporting a 1.2 % decline compared to the year ago month . The Midwest ( 1.8 % decrease ) and the Northwest ( 2.4 % decrease ) also reported low combined revenue losses . The West reported the largest combined revenue loss of 10.0 %.
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PARTS SALES Parts sales revenue was up at 765 dealerships and down at 1001 .
SERVICE SALES Service revenue increased at 1040 dealerships and decreased at 667 .
MAJOR UNIT SALES A total of 880 dealerships were up and 706 were down .
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FOR MORE ON THE SAME STORE SALES DATA
For more information on this report and other industry data , contact : lightspeeddms . com
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