Legal Disclaimer: This article is written for informational purposes only and does not constitute professional financial advice. Please reference section179.org and a professional accountant for advice on financial planning and filing taxes.
As 2020 comes to an end, you might be thinking about all of this year's expenses and wondering what you might be able to write off on your taxes. You may even be considering whether or not to make a big purchase, weighing the tax deductions you could get if you bought it this year versus next.
Is it worth buying that new lift before the year ends? Or should you put it off until 2021?
What is Section 179?
Section 179 of the IRS tax code allows business owners to write off the entire cost of a piece of equipment, renovations, or other assets in the first year instead of writing off an asset a little bit at a time over a five, seven, fifteen, or thirty-nine year period. To give an example, if a shop owner buys a new tire machine, they could either write off the taxes over a seven-year period, or they can use Section 179 to get the entire deduction in the first year.
What Type of Costs Qualify for Section 179?
Tangible business property, including machinery and equipment
Leasehold improvements
Computer software*
*Is Tekmetric Eligible for Section 179?
Generally speaking, off-the-shelf computer software that has been purchased outright is eligible for Section 179. Because Tekmetric is a web-based software and does not make users sign a contract, it is not eligible for section 179, but it does qualify for a standard tax deduction.
What are Leasehold Improvements?
Leasehold improvements are any repairs or modifications that you make to your building or property, including adding a new roof, installing security or safety systems, and remodeling parts of your building without expanding the footprint. Without Section 179, leasehold improvements depreciate over 15 or 39 years, depending on what the improvements are. With Section 179, you can receive the entire deduction in the first year.
How Often Does Section 179 Change?
Section 179 is typically adjusted every several years. Most recently, Section 179 was adjusted in 2018 when the deduction limit was doubled and more types of purchases were made eligible. Section 179 may change again in the following years.
When Should You Use Section 179?
If you know that you’re going to pay taxes this year, and you have made a major qualifying purchase, then you may want to consider using Section 179 to save on your taxes and free up some cash flow for 2021.
If you financed a major purchase, you may want to consider how soon you plan on paying off that purchase and whether or not you would like to receive a tax deduction in the following years as you pay it off. For example, if you have a loan on a piece of equipment that you plan on paying over five or ten years, you may want to opt for the regular depreciated tax reduction so that you have money to offset those taxes in the following years.
Should You Make a Major Purchase Before the Year Ends to Use Section 179?
It’s not the wisest decision to buy something just to save money. It is true that Section 179, and tax benefits in general, are the best that they’ve been in years, but consider only making a major purchase if it is already in your plan and budget. If it is something that you already planned on buying in the next six months, then you may want to make the purchase before the end of the year to leverage Section 179’s tax deductions.
Talk to the Auto Repair Accounting Experts
Every situation is different. Take a look at what your tax rates are and ask yourself, "Is my income low enough this year where I'm actually reducing taxes at a pretty low rate? What do I think the tax rates are going to be in the future? Or will this benefit me more in the coming years when I think I'll be making more money?"
Talk to your accountant to form a game plan for all of this.
This article was written with the guidance of automotive repair industry CPA Hunt Demarest of Paar, Melis, & Associates, P.C.
Need help planning your taxes for 2020? Contact Paar, Melis, & Associates.
Let’s start off by laying down the foundational launching points for starting your original shop: you found your niche, you got the right advice, you started with the right branding, and you impressed your customers by providing exceptional customer service. But there are four key factors that become extremely important as you go from being a single shop owner to a multi-shop owner.
You’ll want to:
Stay organized as you scale
Create consistency across your locations
Test the performance of each of your locations
Leverage an automotive repair software that will support your team as you grow across multiple locations
To select the management tools that will catapult your multi-shop owner journey, you’ll first need to weigh the pros and cons of each of your shop’s processes and procedures.
From there, you can find a system that will uphold and scale the processes that made your shop so successful in the first place, but now across multiple locations. Later in this article, we’ll specifically dive into automotive repair software like Tekmetric and discuss how it supports you, your team, and your customers as you go from a single shop owner to a multi-shop mastermind.
Here’s how to choose an automotive repair software that makes it possible to grow and easily manage multiple shops.
Breast cancer is the most diagnosed cancer among women in the U.S. after skin cancer. In fact, there are currently more than four million women with a history of breast cancer in the U.S. Most, if not all of us know someone who has been greatly impacted by this disease.
Founded in 2011, Brakes for Breasts unites independent auto repair shops to support people affected by breast cancer and donate to ongoing research for a cure. You may have heard the saying, “prevention is better than cure.” Brakes for Breasts takes that to the next level through the belief that “prevention is the cure.” The organization offers participating shops a chance to raise money for the Cleveland Clinic Breast Cancer Vaccine Fund, supporting the creation of a vaccine that can prevent TNBC (triple negative breast cancer).
Today, Brakes for Breasts has expanded to work with hundreds of shops nation-wide, raising more than $2.1 million. Its founders, Leigh Ann Best and Laura Frank, are both powerhouses in the auto repair industry who established Brakes for Breasts to raise money for breast cancer research and provide a bigger voice to women in the auto repair industry.
In 2024, Tekmetric donated more than $16,000 to Brakes for Breasts. This year, our goal is to donate even more – and we need your help! There are multiple ways to participate:
Sign up with Tekmetric. During the month of October, Tekmetric will donate $50 to the Brakes for Breasts campaign for every new shop that signs up for Tekmetric.
Share the campaign with your customers. If you are a TechNet shop, make sure your customers know that when they come to you for a qualifying brake service between September 1 and October 31, you are offering a rebate on qualifying brake pads that they can choose to donate to the fund.
Donate with Tekmetric's fundraising link. If you want to go straight to Brakes for Breasts without any brakes, use this link to donate any dollar amount to Brakes for Breast. You can choose between a one-time donation or a monthly contribution.
Fundraise at your shop by joining the Tekmetric team. You can register your shop to fundraise for this cause in your community through Tekmetric’s campaign at this link. The shop that raises the most money during the campaign will win a trip to join Tekmetric at the check presentation ceremony in Cleveland in April 2026.
Participate directly. Participating independent repair shops can work directly with Brakes for Breasts by offering customers free brake pads on brake jobs in the month of October, then donating 10% of the labor from that brake service to the fund.
All proceeds will go towards The Cleveland Clinic Breast Cancer Vaccine Research Fund. The end goal is to create a vaccine that can create a world free of breast cancer.
Brakes for Breasts is a tremendous opportunity for your shop to partner with your local community to benefit people affected by breast cancer. Our customer Austin Blanton, owner of Import Auto Shop, experienced this phenomenon first-hand when his shop participated in previous years: “When you’re worried about money and busy dealing with operations stuff, you can lose sight of paying it forward. For example, one of the things we did last year was get involved with Brakes for Breasts.”
As we aim to focus on our customers, we are also happy to be part of initiatives that will transform lives for generations to come. For our customers who have been impacted by this disease, the month of October honors what you have overcome to be here. By promoting further research and support of your journey, we hope to support the creation of better cancer care for all who are impacted by this disease. Let’s hit the brakes on breast cancer and work towards a cure together!
Alex recently sat down with Ratchet + Wrench Radio to discuss a whitepaper she authored on how shop owners can identify inefficiencies in their shops. During the conversation, she discussed how shop owners can recognize these inefficiencies and fix them with shop management software.
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