Auto repair shops
Bookkeeping for auto repair and service shops
A repair shop sells two very different things through the same door. Parts and labor have separate margins, and books that merge them cannot manage either.
Parts carry a cost of goods and a markup. Labor carries a wage cost and an hourly rate. They behave nothing alike, and a shop that reports one combined revenue figure has no way to tell whether a soft month came from slow work or from parts pricing.
Add core charges that come back, warranty work billed to a manufacturer rather than a customer, and sublet jobs sent to a specialist, and there are several kinds of money moving through the shop that each need their own treatment.
Where the books go wrong
What we look at first
Parts and labor in one revenue line
Two different margins averaged into one number that describes neither.Core charges treated as sales
A core charge is a deposit that usually comes back. Booked as revenue, it inflates sales and leaves an untracked obligation.Warranty and sublet work recorded like retail jobs
Warranty is billed to a manufacturer on different terms; sublet passes through to another shop. Both distort margin when treated as ordinary sales.Technician productivity invisible
Hours billed against hours paid is the core efficiency measure in a shop, and it does not exist unless the books are set up to produce it.
What we do each month
- Parts and labor revenue recorded separately, each against its own cost
- Parts inventory recorded as an asset and relieved as used, with obsolete stock written down honestly
- Core charges tracked as a receivable until the core is returned
- Warranty and sublet work recorded on their own lines
- Technician hours paid reconciled against hours billed
- Shop supplies, equipment finance and bank accounts reconciled
Setting up QuickBooks for it
Separate income and cost of goods accounts for parts, labor, sublet and warranty are the foundation; almost every useful report depends on that split.
Where a shop management system handles work orders and parts, QuickBooks Online receives summarized figures from it rather than duplicating the ticket detail.
Core charges sit in their own account so the balance outstanding can be seen at any time instead of being discovered at a count.
Carey is a QuickBooks Online Advanced ProAdvisor, so a file can be set up, cleaned up or migrated as part of the same engagement — see QuickBooks services.
Reporting
The numbers worth watching
Parts margin and labor margin, separately
The two halves of the business, each measured on its own terms.Effective labor rate
Labor revenue against hours actually billed, which is usually below the posted rate and worth knowing by how much.Technician efficiency
Hours billed against hours paid — the measure that explains most of the gap between a busy shop and a profitable one.
Questions we are asked
We already use a shop management system. Where does bookkeeping fit?
The shop system runs the work: tickets, parts, technician hours. It is not a general ledger. Bookkeeping takes summarized figures from it into QuickBooks, reconciles the bank and card accounts, keeps the parts asset and core charges straight, and produces financial statements. The two work together rather than one replacing the other.
Can you help us set the labor rate?
We can give you the numbers the decision needs — effective labor rate, technician efficiency, what labor actually costs per billed hour. Setting the price is yours to decide, and it depends on your market as much as your costs.
Start with a conversation
Let's look at your books together
Tell us about your church or business and where your bookkeeping stands. Carey will follow up to arrange a consultation, and you'll receive a written scope before any work begins.