Auto repair shops, garages and mechanics
Bookkeeping for auto repair shops and garages
A repair shop can be booked out for weeks and still wonder where the money went. The books should show what the shop earns on parts and what it earns on labor, every month.
Matthew Coleman, QuickBooks ProAdvisor, accounting and finance degree. Cranford, NJ. Start with a free health check of your books. You get a quote after we review your books, before any work starts.
Why repair shop books get messy
Parts come from several suppliers on account, some with core charges and credits. Labor is sold by the flat-rate hour and paid by the clock hour. Fleet customers pay on terms, retail customers pay by card, and a big job may start with a deposit. When all of that lands in one income account, nobody can say which part of the shop makes the money.
Parts and labor, kept apart
We set up separate income lines for parts and labor, with the cost of parts matched to the parts you sell. That shows the margin on each. Shop supplies, sublet work such as machine shop or towing, and tire or battery disposal fees get their own accounts, so they do not hide inside the parts line.
Cores, returns and warranty
Core charges, core credits, returned parts and warranty claims are tracked as they happen, so a month with a lot of returns does not make parts margin look better or worse than it is.
Supplier statements
Parts distributors send monthly statements. We reconcile each one to the bills in your books, so a missed credit or a double-billed part shows up while you can still dispute it.
Technician pay and payroll
Whether technicians are paid hourly, flat-rate or a mix, we tie the books to the reports from your payroll provider and check them every month. Whether a worker is an employee or a contractor is a legal question, so ask your tax professional or attorney. We do not run payroll.
Sales tax
Sales tax collected belongs to the state, not to the shop. We keep it in its own account so it never looks like income. Which parts, labor and fees are taxable is set by the NJ Division of Taxation, so confirm the treatment with them or your tax professional.
What a month looks like
Bank and card feeds are reconciled, parts bills are matched to supplier statements, income is split into parts and labor, payroll is checked against your provider's reports, and you get a short report. We work from your shop management system's reports or exports, in your own accounting file.
Related
- Auto repair shop bookkeeping guide
- Vendor statement reconciliation
- Signs a job is losing money
- Bookkeeping health check
- Bookkeeping guides
- Bookkeeping projects
General information, not legal or tax advice. Rules change; confirm with the agency, lender or your professional. Updated October 2026.
FAQ
Common questions
Can you show profit on parts and on labor?
Yes, once income and cost of parts are set up on separate lines. That setup is the first step.
Do you work with my shop management software?
We work from its reports or exports, and confirm the approach when we scope the work.
Do you handle payroll?
We keep the books for payroll your provider runs and check them against its reports. We do not run payroll.
Can you catch up books that are months behind?
Yes. Cleanup brings past months up to date and reconciled before regular monthly service begins, with a written quote first.
Do you only work with shops in New Jersey?
No. The work is done online, so location does not limit it. New Jersey sales tax and payroll questions are where local knowledge helps most.