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End-of-Year Updates Every Auto Shop Owner Should Know

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As the year winds down, it’s time to take stock of some important updates that could impact your auto repair shop. In episode 148 of the Business by the Numbers podcast, Hunt Demarest, CPA with Paar Melis & Associates, shares insights on the Beneficial Ownership Information (BOI) report, interest rate trends, and the latest on the Employee Retention Tax Credit (ERTC). Here’s a breakdown of what you need to know to prepare for 2024.

1. BOI Report: What’s the Deal?

If you’ve heard about the BOI report but are still unsure what it means for your shop, here’s the gist: this report was designed to combat white-collar crime by requiring LLCs and other entities to disclose ownership information. It’s been a hot topic since its passage in 2019 but has faced delays due to COVID-19 and legal challenges.

The deadline for BOI reporting was set for the end of 2024, but as of now, enforcement is on hold due to a Supreme Court ruling. This means:

Hunt notes that this report is likely government overreach, but it’s still worth keeping an eye on, especially if the appeals process brings it back into play.

2. Interest Rate Trends and What They Mean for Your Shop

Interest rates have been a rollercoaster in 2024, with two cuts already this year and another expected in December. So, how does this impact your auto repair business?

Lower interest rates mean borrowing costs could drop, which is great if you’re planning to expand or upgrade equipment. However, Hunt warns that rates may not stay low forever, so:

  • Avoid locking in long-term loans unless the terms are highly favorable.
  • Consider variable-rate financing options to take advantage of potential rate decreases in 2024.
  • Monitor key dates like December 11th and 12th when financial reports are released, as these could influence future rate changes.

While falling interest rates can stimulate the economy, they’re often a response to economic slowdowns. Keep this in mind as you plan for the year ahead.

3. ERTC: The Never-Ending Story

If your shop claimed the Employee Retention Tax Credit (ERTC), you’ve likely experienced the frustration of IRS delays. As Hunt explains, the IRS is sitting on a massive backlog of claims, and it could take years to process them all. Here’s what to know:

  • What to Expect: Checks are trickling in, but there’s no rhyme or reason to the order of processing. Some shops have received partial payments, while others are still waiting.
  • IRS Requests: Be prepared for follow-up documentation requests. The IRS may ask for proof of eligibility or calculations to verify claims.
  • Realistic Outlook: Hunt advises shop owners to expect nothing and hope for the best. While the program is technically alive, the IRS’s slow pace and budget constraints mean it’s a waiting game.

If you’re considering hiring a third-party service to “unfreeze” your ERTC funds, Hunt suggests caution. There’s no shortcut to speeding up IRS processes, and these services often promise more than they can deliver.

How to Prepare Your Shop for 2024

With these updates in mind, here are a few actionable steps to help your shop stay ahead:

  1. Keep Records Organized: Whether it’s for the BOI report or ERTC follow-ups, having accurate and up-to-date records will save you time and headaches.
  2. Plan for Financing Needs: If you’re thinking about borrowing, monitor interest rate trends and be strategic about the terms you choose.
  3. Stay Informed: Follow industry news and updates to ensure you’re aware of changes that could affect your shop.
  4. Communicate with Your CPA: Don’t go it alone. A knowledgeable CPA can help you navigate these updates and make informed decisions for your business.

Final Thoughts

The end of the year is always a busy time, but staying informed can make all the difference. From BOI reporting requirements to interest rate changes and ERTC delays, these updates aren’t just numbers—they’re opportunities to position your shop for success.

For more insights, check out episode 148 of the Business by the Numbers podcast, where Hunt goes into greater detail on these topics. As always, feel free to share this blog with fellow shop owners who might benefit from the information. Here’s to a successful 2024!

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