Running an automotive repair shop means juggling customer repairs, parts management, staff, and more. It’s easy for bookkeeping to take a backseat — but that’s when mistakes creep in, causing headaches and potentially costing you money.
In this post, we’ll dive into the 5 most common bookkeeping mistakes I see in automotive repair shops and practical tips on how to fix them. Getting these right will save you time, reduce stress, and improve your bottom line.
One of the biggest bookkeeping pitfalls is using the same bank account or credit card for personal and business spending. This makes it difficult to track your true business expenses and complicates tax time.
Fix it:
Open a dedicated business bank account and credit card. Make it a rule to only pay business expenses from those accounts. If you need to reimburse yourself for personal expenses, track those separately and document them clearly.
Check out my previous blog post for a higher level overview "Why Cash Flow Feels Like a Mystery in Business"
Automotive repair shops deal with lots of parts and materials, but many don’t track these costs properly. Without accurate inventory records, it’s impossible to know your true cost of goods sold, which impacts profitability.
Fix it:
Set up a simple inventory tracking system—either within your bookkeeping software or a separate spreadsheet—that records parts purchased, used, cores and returns. Update it regularly to keep your numbers accurate. Parts that are eligible for returns that don't get returned can really add up.
Waiting months to reconcile your accounts can lead to mistakes, missed transactions, and even fraud going unnoticed.
Fix it:
Schedule time monthly to reconcile your bank and credit card statements. Reconciliation confirms that your books match your actual bank accounts and helps you catch errors early.
Misclassified expenses can distort your financial reports and lead to missed tax deductions or budgeting errors.
Fix it:
Create clear, consistent expense categories relevant to your business — like “Inventory Purchases", "Non Inventory Purchases", & Supplies,” “Tools & Equipment,” and “Shop Rent.” Many bookkeeping tools allow you to set up rules to automate categorization.
Many business owners only glance at their financial reports during tax season — missing out on insights that could help improve cash flow and profitability.
Fix it:
Make it a habit to review your profit and loss statement and balance sheet monthly. If numbers confuse you, consider working with a bookkeeper or accountant who can explain key metrics and trends.
Bookkeeping mistakes don’t have to hold your automotive repair shop back. Fixing these common issues will give you clearer insights into your finances, reduce stress, and set your business up for growth.
If you’re feeling overwhelmed or want a fresh set of eyes on your books, I offer a Financial Foundations Paid Review to dig deep into your financials and give you a clear roadmap forward.