Transportation and automotive · Tax · Books · Insurance

Tax, books and insurance for auto repair shops

You fix cars. We make sure parts and labor are taxed correctly, your techs are paid right and the cars in your bays are covered.

Mechanics, collision centers and tire shops work with our office for sales tax on parts, technician payroll, inventory accounting and garage coverage.

Reviewed by Orkun Ozkaymak, CPA, MBA·Clients in all 50 states and abroad

Auto repair and body shops

Parts, labor and customer cars under one roof

Repair shops sell parts, sell labor and hold customers' vehicles, and each piece has its own tax and insurance treatment.

Our office sets up your books so invoices, sales tax, technician pay and coverage all line up, and we are here when a notice or audit arrives.

Special needs

What makes a repair shop different, and how we help

Where shops most often need help.

01

Parts and labor taxed differently

In Illinois, parts are generally taxable while labor that is separately stated is not. Invoices that lump them together can overpay or underpay tax.

How we helpWe set up your shop software and QuickBooks so parts, labor and supplies are taxed correctly and filed on time.

02

Technician pay plans

Flat rate, hourly and commission pay all need to meet wage and overtime rules.

How we helpWe run payroll for every pay plan and keep payroll returns and W-2s accurate.

03

Inventory and cores

Parts on the shelf, core deposits and returns affect profit and tax.

How we helpWe track inventory and cost of parts so your margins and your return are right.

04

Customer cars in your bays

Damage to a customer vehicle in your care is a different risk than your own property.

How we helpOur agency quotes garage coverage built for shops, including protection for vehicles in your care, custody or control.

Calendar

Filings we keep on schedule

The recurring deadlines auto repair shops face most often. We track them for you and send reminders before anything is due.

  1. 20th of each monthIllinois sales taxForm ST-1 for parts and supplies sold.
  2. QuarterlyForm 941 and state payrollWithholding and unemployment for your team.
  3. January 31W-2 and 1099-NECFor employees and subcontracted work.
  4. March 15 or April 15Business returnEntity return with equipment depreciation.

Dates shown are for calendar-year filers. When a due date falls on a weekend or holiday, it moves to the next business day.

QuickBooks Online

Books built for auto repair shops

Your QuickBooks separates parts, labor and sublet work, so you can see real margins on every job.

Our office sets up QuickBooks Online with a chart of accounts designed for your industry and your entity type, mapped line by line to your tax return. Your books are ready for filing season all year.

Questions

What auto repair shops ask us

Do I charge sales tax on labor in Illinois?

Generally not when labor is separately stated on the invoice. Parts and many supplies are taxable. We review your invoices and set up tax codes correctly.

What insurance does a repair shop need?

Most shops need garage liability, coverage for customer vehicles in their care, property, and workers compensation for employees. We quote them together.

How should I pay flat rate technicians?

Flat rate pay is allowed but must still meet minimum wage and overtime rules for hours actually worked. We set up payroll to handle it.

Next step

Let's talk about your business

Request an insurance quote, or start your company with our office. Prefer to talk first? Book a time, virtual or in person.

Call the office773-536-9272Mon to Fri, 9:00am to 5:00pmtax@ozfield.cominsurance@ozfield.com