What to Know: Section 179 for Auto Repair Businesses

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Read time: 3 min

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.

Section 179 for Auto Repair Businesses

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.

👉 Ready to grow your automotive business? [Book a personalized Tekmetric Demo Here]

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Tekmetric has remained committed to 2024 as a year filled with product innovation, providing updates that included feedback from our customers to demonstrate our commitment to a customer-centric approach as we continue to grow. From product updates and attending industry events to elevating our approach to data security, the second quarter has built on the first quarter’s momentum, leading to a vibrant first half of 2024.

Supporting Shops by Enhancing Efficiency

Tekmetric is systematically seeking opportunities to better understand the needs of shop owners and how our product can help shops run more efficiently. Building on our commitment to enhancing shop effectiveness, we focused Q2 on implementing updates that significantly bolster operational efficiency across the board.

Having the right technical team is essential, and with our latest update, shops can now assign multiple technicians to a single job, ensuring greater collaboration and efficiency. This update allows more experienced technicians to supervise staff technicians regarding more complex jobs, giving staff technicians an opportunity to experience hands-on learning. Overall, having multiple technicians on a single job improves efficiency by allowing you to align and prioritize your technician resources.

In addition to the multiple technician updates, we also released the Inventory Activity Feed. To ensure smooth operations and profitability, it's crucial to understand the flow of money. Inventory plays a necessary role in this process and with this update, shop owners now have an extra eye to spot inconsistencies in pricing and quantity. This new feature allows shops to monitor key changes made to parts inventory, identify and rectify errors and enhance operational efficiency and employee training initiatives.

As we move into Q3, we continue to strive for further updates that increase productivity within internal operations or streamline the customer experience from the first touchpoint until repair completion and beyond.

Commitment to Education and Learning Opportunities in the Industry

In an industry as complex as auto repair, there is no shortage of learning opportunities to improve your shop or learn how to incorporate customer feedback into our ongoing improvements.

At Tekmetric, we value a commitment to growing our knowledge base and sharing that with our peers at various events, whether it be in-person conferences or through webinars. Our dynamic duo John Phelps and P.J. Leslie attended WorldPac STX in Nashville, Tennessee in late April to share with repair shops key strategies to boost profits through enhanced customer experiences. Their presentation included leveraging digital tools and enhancing the digital buying experience, transforming buyer trends into revenue drivers and customer retention through excellent experiences.

From there, P.J. had two additional speaking opportunities at Thoroughbred Diesel in Winchester, Kentucky and AASPA Tools in Harrisburg, Pennsylvania in the month of May where he presented on How Customer Experience Can Change An Industry. At both events, he shared his expertise regarding digital purchasing experiences, leveraging trends for revenue growth, mastering customer retention strategies, and surpassing expectations of the CX generation. Additionally, John Phelps, made an appearance on the Changing the Industry podcast where he discussed Career Shifts and Setting Industry Standards. At Tekmetric, we believe that the desire to give and improve the lives of our customers is ultimately what will drive your business to reach its full potential.

We participated in the ASI & ASTA Summer Social in Apex, North Carolina which provided an opportunity to network and connect with shop owners and tire dealers from the area. Our participation at these events helps us better understand your needs, fueling our commitment to product innovation and excellence in customer experience.

Tekmetric also aims to support our shop owners in sharing their own insights and lessons about measuring up in today’s industry through the webinars that we host. This quarter, we hosted a webinar entitled “Confessions of A Shop Owner,” which included Travis Troy, owner of Honest Wrenches, along with Ward Myers, VP of Training and eServices at Advance Auto Parts, Gregg Rainville, SVP at Steer, and Ian Miller, Partner Manager at Tekmetric. The key points were all about defining and developing shop culture and leveraging technology to be more efficient in the auto repair space.

Prioritizing Data Security

We recently increased our benchmark in data security by earning SOC 2 Type II compliance. Tekmetric meets the five principles that are required which include: security, availability, processing integrity, confidentiality and privacy. With SOC 2 Type II compliance, we are able to keep any information that you put into Tekmetric secure, from your shop’s data to your customers’ information. This gives us more confidence that as we continue to improve the quality of Tekmetric, we are also ensuring the security of everything that is entrusted to us.

Keeping Our Foot on the Gas

As we close out the first half of the year, Tekmetric aims to use our customer-centric approach as the fuel that ignites our product innovation. Through our commitment to attending industry events and listening to customer feedback, Tekmetric meets its customers where they are, with constant plans to keep innovating and improving. We head into Q3 with our customer-obsessed mentality to continue improving and streamlining shop operations with Tekmetric.

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Maximizing Auto Repair Shop Customer Service: A Guide to Selling Maintenance Work

Training service advisors how to properly sell maintenance work can create more loyal customers.

Drivers typically come in with an expectation of what's wrong with their car, which can make it tricky to sell maintenance work. Drivers might think you're trying to squeeze more money out of them, or may simply have a set budget in their mind and don’t plan on spending extra.

In reality, you're simply trying to go above and beyond and provide them the best service possible. So how do you show that, and which tools will help you transform the way you sell maintenance?

Here’s how to build customer trust while staying true to your auto repair shop’s mission of providing optimal maintenance recommendations.

Why Selling Maintenance Work Can Be a Challenge for Auto Repair Shop Customer Service

According to a survey conducted by AAA, 76% of U.S. drivers said that recommending unnecessary services was the top reason they do not trust auto repair shops. The survey also points out that ⅔ of U.S. drivers have managed to find an auto repair shop that they trust. Whether it’s an independent auto repair shop, or a chain repair shop, trust needs to be at the forefront of the customer experience.

Service advisors may be hesitant to sell maintenance work and only focus on the problem at hand because they don’t want to come off as pushy. But not recommending maintenance work can be a disservice to customers who deserve to know about any and all issues with their vehicle, not just the ones they’ve noticed themselves.

Add a Maintenance-Focused Inspection and Sales Process to Your Auto Repair Shop Customer Service Routine

When it comes to selling routine vehicle maintenance work, it’s important to remember that routine check ups will make a big difference on customer’s cars. Similar to the human body, cars are complex systems. Just like the body has a heart, nervous system, and organs, cars have the engine, the vehicle bus, and the control unit. If one problem is ignored, that could lead to more issues, possibly more serious than the last. For example, if a driver puts off replacing their brakes, it could damage the car’s rotors, which in turn, could lead to loss of braking power. This gets us back to one of the most important benefits of selling maintenance work: it helps your customers stay safe and get as many miles out of their car as possible.

Benefits to Selling Maintenance Work

  1. Regular maintenance makes your customers’ lives easier. It prevents your customers from ending up on the side of the road and prolongs their vehicles’ lifespans.
  2. Customers save money. Maintenance work can prevent car issues from getting out-of-hand, which may lead to spending more on larger repairs in the future. And who doesn’t want to address maintenance work before it becomes a much larger expense?
  3. Providing maintenance inspections helps shops sell more work, which usually means higher ROs and a more profitable repair shop. Also, because maintenance work helps your customers’ vehicles last longer, they’re less likely to buy a new car, which they’ll probably get repaired at the dealership during the first few years.
  4. Maintenance inspections help you queue up more work for the future. Even if they decline the maintenance work, you now have a relationship. You can track those declined jobs, and the service advisor and technician can save time figuring out what all might be wrong with the vehicle and resell that work.
  5. Customers trust you more. When you provide reliable insights into your customer’s vehicles, your like their go-to car whisperer—a trustworthy person who reminds them to check stuff out on their vehicle before anything bad happens

Maintenance by Mileage

Shop owners, we recommend training your service advisors to check customer mileage at each visit and tracking it in your shop's auto repair shop customer service notes. By keeping track of customer mileage on each vehicle, you’ll be able to recommend maintenance work based on how many miles it has been since their last visit.

Mileage Recommended Car Maintenance
Every 3,000 - 7,000 Miles Replace oil and oil filters, inspect various fluid levels and wipers, check tires and lights
Every 15,000 miles Replace air filter
Every 20,000 miles Inspect battery and coolant levels
Every 30,000 miless Replace power steering fluid, inspect coolant levels, brake pads, and suspension components, check radiator hoses and HVAC system
Every 35,000 miless Inspect and replace the battery
Every 40,000 miless Replace spark plugs and wires, inspect ignition system and suspension
Every 60,000 miless Replace brake pads and fluid, inspect radiator hoses, timing belt, HVAC system, suspension components, and tires, check coolant levels, and power steering fluid levels

Mileage aside, a thorough digital vehicle inspection of all vehicle’s essential components should be performed regularly.

HOUSTON – October 31, 2023 – Tekmetric, industry leading automotive repair shop management system, has released Smart Jobs, the industry’s first smart job building feature that quickly builds jobs in just one click to help streamline the creation of repair orders. In just one click, shops can quickly build an estimate with parts and labor, check on-hand inventory levels and shop at preferred vendors right in Tekmetric. This revolutionary feature enables service advisors to focus on customer service while simultaneously reducing workload.

"When it comes to running an independent auto repair business, efficiency is paramount," said Sunil Patel, CEO of Tekmetric. "With Smart Jobs, shops have the opportunity to respond to customer needs quickly and accurately, saving time and hassle for everyone. This is a game-changer for our industry, and we are confident that it will revolutionize the way shops operate and deliver customer service."

With one click in Tekmetric, service advisors can now build a job based on the vehicle selected, and Tekmetric will automatically:

● Create a job title

● Add the relevant labor line and apply a labor matrix

● Add the necessary parts, filters and fluids and apply a parts matrix

● Check inventory for all parts, then fetch them from your favorite vendors if not in stock

● Apply a locked package price to the entire job

● Apply any necessary fees

In addition to building repair orders more efficiently, Smart Jobs also accelerates the parts ordering process. Not only can the feature automatically apply the correct quantity of parts, filters and fluids to the repair, but it also shops for out-of-stock items and prepares an order within Tekmetric. For quick jobs, like cabin air filters, Smart Jobs has been able to save approximately one minute per job, adding up quickly throughout the day. Smart Jobs can also help new employees to begin building jobs faster. This can lead to improved productivity and reduced errors, helping employees to produce high-quality work earlier in their training.

Smart Jobs will be available to Tekmetric customers in 2024. To request pricing or schedule a demo visit https://www.tekmetric.com/feature/smart-jobs.

About Tekmetric

Tekmetric, a Houston-based auto repair technology company, offers a cloud-based platform that enables auto repair shop owners to enhance productivity and increase profitability through its streamlined workflow management processes. Designed by a former shop owner, Tekmetric’s platform drives shop efficiency through real-time data, a customizable user interface and customer-centric communication tools. Since its launch in 2016, Tekmetric has disrupted the industry with its robust fully-integrated system, developed with an emphasis on customer transparency and user collaboration. For more information, visit www.tekmetric.com.

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