5 Questions Operators Should Ask to Prepare for Tax Season

Most quick lube shop operators enjoy keeping customers’ vehicles maintained and road-ready. But taxes are usually outside a shop operator’s lane of interest.

While a good accountant can help make the tax process bearable, there are still key things new owners and operators must consider and handle to set themselves up for a smooth ride each year and throughout every tax season.

Here are five key questions new shop operators should ask themselves on the front end to make sure their business taxes are done right on the back end—on time and with less sweat.

#1: Do you have your business license—and other required licenses?

“Before you open your store, (make certain) you have the right licenses to operate your store,” says George Trantas, Durham, North Carolina-based vice president of sales accelerators for Avalara, a company that offers software that connects into shops’ point-of-sale systems and helps keep tax requirements in check.

Trantas says his company’s software has a repository of every city, every zip code, and every locale in the U.S., along with the knowledge of what licenses operators need to be in the oil and lube industry.

Quick lube businesses must also deal with hazardous materials, and that requires a license.

Some additional questions it’s wise to throw into the mix are these: Do you have a standard certificate of occupancy? And do you need to have disposal licenses?

#2: Did you register for sales tax?

It sounds like a no-brainer, but before a new quick lube business collects sales tax, it must be registered for sales tax—and this is something many new business operators miss.

So, Trantas advises, “After securing all the proper licenses, make sure you’re registered to collect sales tax—the No. 1 thing a small business sometimes forgets.”

Consider this: Collecting sales tax before registering to do so can actually put a shop operator in collision with the law.

“If a business starts collecting sales tax but they’re not registered for it, in certain states that can be a felony,” Trantas cautions.

#3: How will you keep on top of your state’s tax nuances?

Oftentimes, software can expertly do what quick lube operators would rather not. In many cases, things like tax records, tax rates, tax codes, and sales tax that must be collected every month—even the new shop’s mandatory registration for it—can be handled automatically and kept in compliance with local codes and requirements through the use of software.

Software can also help quick lube business owners stay on top of important legislative changes in their states and locales.

Trantas says it’s important for the left hand to know what the right hand is doing when it comes to local laws, but sometimes it’s not readily apparent. As he puts it, “States will create laws on how they want to tax something, but they don’t always think about the consumer.”

For example, he notes, “Let’s say the tax rate is 9%, but there are additional surcharges in fees, waste disposal fees—especially relevant in lube and tire businesses—and (other) core charges.”

#4: Do you have an accountant in place?

Having a trustworthy accountant who is well versed in the quick lube industry can help prevent headaches at tax time and drive peace of mind for a shop operator all year long.

A good accountant, for example, can help handle all the requirements and nuances that come with taxes—tax records, tax rates, tax codes, etc.—in additional to preparing and filing state and federal income tax returns.

If a quick lube operator isn’t sure of any in their area, resources like Zoominfo.com provide business contact directories that can help pinpoint professional accountants and related services all around the country. Word-of-mouth from other shop owners is also a wise way to find a good accountant.

Quick lube business partners and vendors can also help operators find a reliable local accounting partner.  As Trantas puts it, “We can make a recommendation of a local partner among thousands of accountants across America.”

#5: Do you know how to file and remit your taxes each season?

Software can do the filing and remitting for quick lube businesses, which can be a major pain relief. That takes the labor off quick lube operators, so that tax is collected, filed, and remitted while you work on serving customers, building relationships, and getting their vehicles in and out as quickly as possible.

Trantas adds that Avalara has products for small businesses that take the tax that’s collected daily, pulls it out of a business’s bank, holds it, files it, and then remits it so that owners don’t have to worry about putting the money aside.

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To recap: There is expert support out there to help make tax time less taxing—and much less stressful—for quick lubes. And for new shop operators, in particular, once the answers to these five questions are thoughtfully considered, they’re just about ready to roll.