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Posted
1 hour ago, Joe Marconi said:

We are almost into the 4th quarter of 2022, which means that you need to consider your 2022 tax return. Many shops are having a very good year, which means there may be more taxable income at your bottom line.

What do you do to plan for and minimize paying taxes, while still maintaining a cash reserve? 

 

Great reminder!  Because my wife is an accountant, she handles all accounting functions.  She has a 2-year degree in accounting and a Bachelors in Economics.  Lucky me, huh?  We met online and married in 2006.  Even with all that, she impressed upon me that we still need a CPA to double-check the tax liability amount.  So, we hired a CPA with whom we became great friends.

He told me the most common bookkeeping error he sees in small business is misclassifying employees.  Businesses will hire someone and claim they are a subcontractor and no withholding in their paychecks.  At the end of the year, the employee is shocked to get a 1099.  Often times that would trigger a tax audit.

As our CPA was telling the story, I felt like he knew my history because that's EXACTLY happened to me in 1986-87.  I was audited by the Texas Tax Commission only to discover I owed $50K in payroll taxes to the IRS.  It took me 5 years to pay that off.  Even as I write, a cold chill comes over me just thinking and writing about it.  My tip:  There's no such thing as a 1099 employee.

 

  • Like 1
Posted

Speaking of taxes...

There has been a lot of controversy over the student loan bailout program.  Whether a person is for it, or against it, it's costing tax payers money.  Here's a tidbit of tax information few, if any, think about.

I'll start off with a hypothetical scenario.  Let's say a person gets $10,000 in loan forgiveness.  That's a taxable event.  The person that gets a $10K in loan forgiveness still owes the tax that would be due on the $10K.  Yes, they owe state and federal income tax on $10K because loan forgiveness is viewed in the same light as if it were income.

IMHO, if a person can't afford to pay off their student loan, they would be hard pressed to have the money for the taxes due on $10K worth of loan forgiveness.  Think about it...

  • Like 1
Posted
21 minutes ago, Joe Marconi said:

You bring up a great point.  How did they get into this situation to begin with?   What would they do if there were no bail out?  All good points. 

 

They got into that situation because nobody has thought that far ahead to think of it, Joe.  Biden promising a $10K bailout just compounded the problem.  I was never good at paying bills with HOPE.  Assuming 2 different $10K of student loans are paid 2 different ways.  One is loan forgiveness and one other way is the old fashioned way of simply paying your bills.  

In both cases, you're going owe the tax due on $10K either way.  You're going to owe taxes on $10K to pay toward the loan you took out.  And in the other scenario of $10K of loan forgiveness, you're going to owe taxes on $10K to pay toward the loan on your student debt because it's a taxable event.

Further assume both parties are in the 23% tax bracket.  That ends up costing either party $2,300 in taxes on the $10K.  So... the student loan  pay off is really just $7,700 worth of effect debt paid.  If it's still unclear, post me a response.

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Posted
1 hour ago, Joe Marconi said:

You should work for the government as an advisor.  I get it, and you make sense. 

People need to go back to old fashion values and be accountable for their actions. Not looking for a bailout. 

Our Democrats, both inside and outside the White House, always look for a government bailout.  Did you hear President Biden just promise Florida and Florida residents that the Federal Government will cover the costs of Hurricane Ian?!?!?   Oh, brother...

Posted
27 minutes ago, Joe Marconi said:

Not to get political, but we need to move from a mentality of entitlement to a mindset of accountability. That is not to say that if people need help, we should help them, but moving forward we need to define clearly what the government should do, and not do. 

I understand your position on politics.  There's always debate on certain topics and politics top the list followed by religion and what's the best motor oil. 🙂  I also agree that the average Joe American needs to move from a mentality of entitlement to a mindset of accountability.  Me, personally, have never had a dollar I didn't work for.  To me, that's my bailout money if you want to call it that way.  Accountability is the best word for that.  

There's good Democrats and bad Democrats and the same can be said of all other parties as well.  Our country wasn't founded on bailouts.  It was founded on accountability and freedom.   I hope to do my small part to keep it that way.

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  • Have you checked out Joe's Latest Blog?

         0 comments
      The Technician Shortage Is Our Fault, And It's Time We Own It
      Nearly every day, I hear shop owners complain: "There's a technician shortage. We can't find qualified people. There's no one out there." If that's true, then who's to blame?
      The industry? The schools? The government? I don't know how you feel, but who promised us an endless supply of qualified technicians?
      Another common complaint is that young people do not want to work in the trades. Well, if that were true, then why are other trades such as HVAC, electrical, and plumbing growing? What are they doing that the automotive industry is not? 
      Here's the reality we need to face: We do have a problem, but we shouldn't look for someone or any entity to rescue us. Not the government. Not the trade schools. Not the recruiting companies. No one owes us a workforce. If we want great people in our industry, it's up to us. At some point, we need to own up to the truth: Building a pipeline of qualified technicians is our responsibility.
      In this blog article, I will break down the key reasons we are in this situation today and what we, as an industry, can do to solve the technician shortage. Are you ready to look in the mirror?
      Have We Pushed Technicians Away?
      Let's take a look at flat-rate pay. True flat rate, which pays a technician only for the hours they produce, is a controversial pay plan that emphasizes high production levels and creates a competitive work environment that, if not properly controlled, can lead to increased mistakes and a decline in morale and team spirit. Additionally, the stress and physical demands placed on technicians as they age are not favorable to long-term employee retention. What do we do with technicians as they grow older into their fifties and begin to slow down? 
      I have heard all the arguments and pros and cons of flat-rate pay, and I am not going to judge any pay plan. Let the facts speak for themselves. True flat rate has changed in most areas around the country and has evolved into a pay plan that gives technicians some pay guarantee.
      Many shop owners have learned that team morale, along with the opportunity to earn income, is important to technicians and to the company's long-term success. But let me ask you: how many technicians have left or been pushed out over the years because of the old flat-rate pay system?
      Another issue is the workplace environment. I remember being grateful to be hired as a young technician at a local repair shop. While very thankful, the work environment was not ideal. The shop owner kept the bay doors open year-round (I am from New York) unless it rained or snowed. He felt that if the bay doors were closed, customers might think we were closed for business. We had no heat and no hot water. Many of the jobs were done outside, year-round,  in all types of weather. The starting pay was minimum wage, with no benefits, sick days, or vacation pay. 
      Now, again, I need to point out that I was truly grateful for the opportunity this shop owner gave me. I learned a lot working there, and the experience was pivotal in my career. But looking back, I wonder how many people were discouraged by these working conditions?
      While the physical demands of the repair workplace are daunting, perhaps even more critical is the culture. Too many of my generation shop owners preached the mindset of "my way or the highway." We were the business owners, after all. We started our companies, took all the risks, and provided jobs. Why shouldn't we be the ones to set the ground rules our way?   
      Many of us found over the years that the "my way or the highway" mentality was a sure way to isolate employees and make them more likely to look over the fence for greener grass. In other words, it led many technicians to seek employment elsewhere, where they felt they could be appreciated and recognized for their hard work. The issue, however, was that there wasn't much green grass around. Disappointment after disappointment, bouncing from repair to repair shop, eventually led to despair. So, I ask you: were workplace conditions a contributing factor in today's technician shortage?
      Another factor that we are all well aware of is the complexity of the modern automobile. When I started, the work was mostly physical, and you were required to master essentially three vehicle models: General Motors, Ford, and Chrysler. Let's fast-forward to today. The evolution of automotive technology, along with the extensive training and tools required, has outpaced the typical technician's pay compensation, with no clear career path. Again, leading to frustration and insecurity about the future.
      Here is the bottom line: people don't leave their job; they leave their experience. We must do a better job. 
      The News Isn't all Bad; Your Next Steps to Fix the Technician Shortage
      To fix the technician shortage, it will take a combined effort from everyone in the automotive industry, particularly automotive shop owners. Shop owners are in the perfect position to make the greatest impact, not only on their businesses but also on the future automotive workforce.
      First, shop owners must become better leaders and understand that their ultimate success is directly dependent on the people they assemble around them. Any shop owner who mistakenly believes they can build an empire solely on their abilities is destined for serious disappointment. Business owners who think like this will eventually plateau. Without the collective contributions from a team of qualified people, your business will stall; it will not continue to grow.
      Create a workplace that attracts top talent: a clean, professional, well-equipped facility designed to support productivity, teamwork, and a career, not just a job. Build a great reputation in your community by getting involved locally. Become the auto repair shop that people take notice of as "the" place to work.
      Next, shop owners must become more financially knowledgeable. Knowing your numbers and what you need to achieve for a strong bottom-line profit is essential to paying technicians the money they need and deserve. Profit will also allow you to compete with other trade industries by providing a benefits package that has real take-home value and security.
      When it comes to culture, this is where the rubber hits the road. People crave recognition, praise, and a sense of purpose. Despite what you hear, people are not just money-motivated. Once people feel secure in their financial situation, retaining and motivating technicians can only be achieved by connecting with them on an emotional level. You cannot show enough appreciation. Give out praise for a job well done as if your business depended on it, because it does.
      As technicians age, we need to have a place for them. Expecting a 58-year-old to perform like a 35-year-old is unrealistic. We need to be more focused on career pathing. Provide training, skill development, and coaching to develop leaders and mentors within our older workforce. While their bodies may have slowed, the knowledge they have gained is priceless. 
      Our future is dependent on young people entering our industry. We need to give more young people opportunities. Every shop owner across the country should consider hiring an apprentice, then build an apprentice training plan and career path for them. If every shop did this, we could solve the technician shortage within five years. Get involved with the trade schools and high schools in your area. Look into the NAPA Apprenticeship Program. Don't sit on your hands with this one. Do it today.
      Lastly, don't get left behind. Commit to ongoing training for all your employees. Keep up to date with tools and equipment tailored to your business model. Don't try to be all things to all people and all vehicles. Identify your core profile customer and the vehicles they drive, and become an expert on those vehicles and the services you offer.
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