Accounting Articles > Auto Body and Repair:

Controlling inventory in the body shop industry

Generally inventory is not a huge problem in the Auto Body Shop Industry of Chicago.

Most people don't maintain large inventories because they don't actually know what to carry in the first place. If you are a general auto body shop, then you probably just carry paint supplies, bulbs, and general items. Any other inventory that you have are parts left over from other jobs that you couldn't return for whatever reason. The inventory that you carry would be minimal.

But if you are a specialty body shop, such as one that works primarily on vintage cars, then you probably try to gather as much inventory as you can. Why? Because it can be a source of larger profits. It also becomes a source of accounting difficulties and headaches.

A perfect example would be a front end for a 1956 Jaguar whatever. This part came out of a car that you worked on ten years ago, and has been gathering dust for the past decade. How do we value this for inventory purposes? Let's say that the only expense in acquiring it was getting it sandblasted and in shape so that it can be resold in the first place. So, you're into this piece for maybe $500.

But let's say that all of a sudden someone from Nowhere-ville North Carolina sends you an e-mail and is in desperate need of this part. All of a sudden its worth plenty. What is this inventory item actually worth?

As highly recommended CPA's and EA's in the Chicagoland Area that specialize in auto related industries, we have developed several solutions for this problem. Don't try to handle this yourself. Call Chris Amundson at (773) 267-7500 today. If you get audited, and your inventory is off, you could be liable for extreme amounts of tax, interest, and penalties. The Special Accounting Packages section of this page may have what you need. Whether you have a new business, an audit, need returns filed, or just a second opinion, we can help. Call or e-mail Accounting Solutions today.