7 Questions to Ensure Your Auto Dealership’s Financial Strategy Is Solid

Have you recently reviewed your dealership’s corporate structure?

Is your current corporate structure still serving your dealership’s best interests? Whether you’re structured as a C-corp, S-corp, LLC, or partnership, the right setup can significantly impact your tax obligations, profit distribution, and overall financial flexibility. Has your business evolved since you chose this structure, and could it be time to reassess?

Are you confident your inventory cost accounting methods are maximizing your dealership’s financial performance?

Are you using the inventory cost accounting method that best suits your dealership’s operational needs? The choice between LIFO (Last-in, First-out), LCM (Lower of Cost or Market), and Specific Identification methods of accounting for inventory can have a big impact on how and when you expense the cost of inventory. Is your current method helping you optimize cash flow and accurately reflect your financial position, or is there a better option?

How well are you managing State and Local Taxes (SALT) across your dealership locations?

If your dealership operates in multiple locations, are you fully aware of the complexities of State and Local Taxes (SALT) in each area? Are you maximizing your deductions, staying compliant with varying regulations, and taking advantage of any available tax incentives? Could there be hidden opportunities or risks in your current approach?

Are you leveraging depreciation to reduce your dealership’s taxable income effectively?

Have you recently evaluated your depreciation strategy? Are you making the most of tools like bonus depreciation or Section 179 deductions to minimize your taxable income? Could optimizing your depreciation methods help you align your financial strategy more closely with your dealership’s long-term goals?

Are you aware of any tax credits that could apply to your dealership?

While tax credits can be highly specific, have you explored potential opportunities related to energy-efficient vehicles, employment incentives, or state programs that could benefit your dealership? Are you confident you’re not missing out on credits that could reduce your tax burden?

Is your dealership prepared for succession, and have you considered how estate planning fits into your overall strategy?

Have you thought about the future of your dealership and how estate planning could play a role in securing its legacy? Are you utilizing gifting strategies to reduce estate taxes and ensure a smooth transition of ownership? How confident are you that your current plan will preserve your dealership’s success for the next generation?

How well are all these components working together in your auto dealership accounting strategy?

When was the last time you took a step back to see how your corporate structure, accounting methods, SALT management, depreciation strategy, potential tax credits, and succession planning align with one another? Are all parts of your financial strategy working in unison to optimize your dealership’s performance and secure its future?

We Have Your Answers

If you’re unsure about any of these questions, it may be time for a comprehensive auto dealership accounting checkup. Contact our team today to ensure your dealership is on the best path forward.