Communication and Trust Are Key in Choosing A Valuable Business Advisor

Tips For Finding A CPA

A certified public accountant (CPA) can provide a wealth of services to your company, including business advice and technical assistance. And, with the right CPA, you can also save money and become more profitable.

A certified public accountant (CPA) can provide a wealth of services to your company, including business advice and technical assistance. And, with the right CPA, you can also save money and become more profitable.

The key is selecting the right CPA for your needs. Start by making a list of prospective CPAs in your area and contact them. Talk to colleagues at similarly sized businesses. You can also contact your state’s CPA society or the local Chamber of Commerce.

When screening potential candidates, make sure to ask about:
• Level of experience and number of years in practice;
• Educational background and any additional training attained;
• Areas of expertise and specialization — especially any that pertain to a business like yours;
• Names of current clients for references.

These questions are necessary to help determine the competence level of each CPA under consideration.
It’s also important to determine which firm is the right size for you. You might be most comfortable with a sole practitioner. If your company is a little larger with diverse operations, a bigger firm with many CPAs might be more appropriate.

A CPA should have sufficient staff to allow work to be done without demanding all of his or her attention, although a large staff adds up to higher fees.

Once you’ve decided on an accountant, establish what services you can expect to receive. The options may include:
• Audit of financial statements or inventory;
• Tax compilation, preparation and review for individuals, corporations, partnerships and other business entities;
• Bookkeeping services;
• Cash flow and tax planning;
• General business advice and consulting;
• Estate planning;
• Insurance services;
• Portfolio assistance;
• Establishing relationships with financing resources; and
• Small-business retirement plans.

Keeping your budget in mind, evaluate which services are essential to your shop’s growth.

The fee will be contingent upon what services are provided, what your business requires and how sophisticated the service. Get clear information on whether or not the CPA charges by the hour (and at what rate), the frequency of the billing and what you will be charged for specific services (preparing tax forms, management reports, etc.).

When working with a CPA, that person or firm can become a valuable advisor for your business, so communication and trust are key. If these things are missing, you’ve got some more shopping to do.

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Shop Equipment ROI – Tooled for Profit

Understanding how to calculate ROI can help your purchasing decisions.

I’m not a financial scholar by any means, but I know what return on investment (ROI) is. It’s a mathematical formula that yields a representation of the profitability of any type of investment. In the automotive repair industry, we primarily associate this with equipment. Admittedly, I’ve never used the term much, more often approaching things from the standpoint, “Am I making money with this or not?” As technicians and shops, our typical thought process centers on each individual job, how much time and money we have into it, so we’re used to thinking profit or loss, and also pretty good at knowing if we made money, or if we lost our “back quarters.”But over time I’ve learned that the thought process alone is not always the best approach, and making money doesn’t necessarily mean a good ROI. Even if you don’t go crazy with an exponentially long, complicated equation, if you understand the basic idea and process of calculating ROI, it can help you make good purchasing decisions. The base calculation would be dividing your net profits by the cost of the equipment. That’s your ROI. Then, if you want to take it further, you can divide that number to get a time-based ROI average.Let’s look at a basic calculation. You buy something for $10, then sell it for $14. Your profit is $4. Divide profit by investment, ($4/$10) and you get an ROI of 40%. Not bad, but if it took two years to make this profit, then your ROI would be 20% annualized, which is not as impressive. You can use this basic formula to compare products you sell as well, and it may help you decide what’s best to keep in stock or not.Now let’s try something with equipment. You have an old tire machine that’s paid for. You average one set of tires per week and it takes 1.5 hours to complete the job. You decide to buy a new tire machine that is much quicker and more efficient but it cost you $20,000. Now the same job only takes one hour. Based on the cost of technician salary, you calculate that it saves you $30 per job with this new equipment. In this case you would use the formula: savings (additional profit)/investment. At one set of tires per week, that works out to $1,560 per year. $1,560/$20,000 equals an ROI of approximately 8%. That’s not too good. It will take you almost 12 years to pay off the new machine.On the other hand, if you average five sets of tires per week, then your additional profit for the first year is $7,800. $7,800/$20,000 equals an ROI of 39%. That’s pretty good. A general rule of thumb is to pay off any piece of equipment within two to three years. This puts you right on track.But now, here is the problem. This is where we throw the proverbial wrench into the plans. Equipment is tricky. You should also calculate in installation and maintenance costs, as well as the cost of training for the new equipment, and factor in how long the equipment is going to be relevant. This is an especially important factor when considering a scan tool, the required updates and how long before it’s potentially obsolete. In the case of a tire machine, you can also calculate in savings from other benefits of a new machine, such as no more damage to wheels or tire pressure monitoring system (TPMS) sensors, which the new machine can eliminate.Some of this can be overwhelming, and it makes me realize why it’s easier just to fly by the seat of your pants and wonder, “Am I making money or not?” It’s an important business aspect, however, to know what is behind the idea because it can benefit you in so many ways. Even without math, you can almost visualize the numbers in your head.I’ll try it by leaving the formulas out to decide whether it makes sense to buy a dedicated TPMS tool when you already have a full-function scan tool with TPMS ability.If you get a TPMS problem every day and you use your full-function scan tool to diagnose it, most likely it takes much longer to boot and longer to navigate to the function. Even then, it may not cover all you need. Because there’s such a vast amount of information that a full-function scan tool has, it simply takes more for the manufacturer to keep everything current. Plus, you often must still rely on service information for certain procedures and then, if it’s the only scan tool for your shop, it ties it up for use in other diagnostics.Now, let’s compare that to a dedicated TPMS tool. Built with only one function in mind, they can make the process much quicker, have greater coverage, boot quicker and quickly walk you through all steps of any required TPMS resets. When you factor in the savings in time and the fact that your primary scan tool isn’t tied up, you can prove the value of a dedicated TPMS tool through ROI calculations. On the other hand, if you rarely work on TPMS systems, you can prove it wouldn’t make sense at all, since you do have the function on your primary scan tool.While you haven’t done any calculations, you’ve thought of it in that manner and can picture where the calculations might end up. If you’re on the fence, the math will give you the answer. Ultimately, your accountant could take the idea even further, with an undoubtedly more advanced knowledge of ROI, and almost certainly a way to calculate depreciation into the formula. That’s where I sign off, but you get the idea. It’s a great concept that represents fundamental business financials.

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