Running a car dealership is exciting—but let’s be real—it can also be overwhelming. Between managing sales, inventory, employees, and customer relationships, one critical piece often gets pushed to the side: dealer accounting.
If your financials are in chaos or you simply don’t know where to start, you’re not alone. In this article, we’ll break down dealer accounting in plain English, give you a step-by-step guide, and show you how to keep your dealership running smoothly—financially and otherwise.
✨ Real quick: If you’re looking for professional help, check out Perfect Accounting PTY Ltd, your go-to team for expert accounting services for car dealerships in Australia.
What is Dealer Accounting?
Put simply, dealer accounting is the specialized financial process used by businesses that sell cars—new or used. It helps keep track of:
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Inventory
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Sales and cost of goods sold (COGS)
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Floor plan financing
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Payroll
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Tax reporting
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Profit margins
Unlike general accounting, dealer accounting focuses on the unique needs of car dealerships. If you’re selling vehicles, you’re dealing with large dollar amounts, lots of paperwork, and a mix of sales, service, and financing all under one roof.
For example, imagine you sold a car today. That transaction isn’t just about money in the till—it involves sales tax, loan balances, commissions, and inventory adjustments. Get one thing wrong, and your books could be a mess.
Why Is Dealer Accounting Important?
Let’s tell you about Josh.
Josh owns a used car dealership in Melbourne. He’s great at sales but had no clue about accounting. One year, he missed key tax deductions because he didn’t track his floor plan financing correctly. It cost him thousands in overpaid taxes.
Don’t be like Josh.
With the right accounting setup, you can:
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Stay compliant with ATO regulations
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Understand your real profits (not just what’s in the bank)
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Make smarter business decisions
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Reduce risk of audit or penalties
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Save time and money during tax season
Key Components of Dealer Accounting
Here are the main things every dealership should be tracking:
1. Inventory Management
You’re not just selling products—you’re managing a lot of high-value assets. Each car on your lot represents a big investment.
Use inventory accounting software like Xero or QuickBooks to track:
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Purchase cost
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Reconditioning costs
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Date received and sold
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Sales price
2. Floor Plan Financing
Most dealers don’t pay for every vehicle upfront—they use floor plan financing, a type of short-term loan. You need to track interest costs and payoff dates to avoid surprise expenses.
Learn more about floor plan financing here
3. Cost of Goods Sold (COGS)
This tells you how much it costs you to sell a car—including the vehicle, repairs, labor, and fees. Knowing your COGS helps you price cars correctly and protect your profit margin.
4. Revenue and Gross Profit Tracking
Track every revenue stream—sales, service, finance commissions, extended warranties—and match it to expenses so you know what’s truly making money.
5. Tax Compliance and GST Reporting
Australian dealerships must be on top of BAS statements, GST, and income tax. Falling behind on this can trigger hefty penalties.
Step-by-Step: Setting Up Dealer Accounting
Let’s make it actionable. Here’s a beginner-friendly path to get your dealer accounting in shape:
Step 1: Choose the Right Accounting Software
Pick software that supports dealership-specific needs like inventory tracking, multi-location reporting, and floor plan integration.
Good options:
Step 2: Separate Your Bank Accounts
Open a separate business bank account (and credit card if needed). This keeps your personal and business finances clearly apart—critical for accurate accounting.
Step 3: Set Up a Chart of Accounts
A chart of accounts is like a roadmap for your accounting. Customize it for your dealership to include:
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Vehicle sales
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Parts and services
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Floor plan interest
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Employee wages
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Marketing expenses
Step 4: Reconcile Weekly
Each week, reconcile your sales, expenses, and floor plan loans. This helps you stay on top of cash flow and catch any issues early.
Step 5: Work with Experts
If you’re not a numbers person (or just don’t have time), hire an accounting firm that knows dealership accounting.
Perfect Accounting PTY Ltd offers specialized services for dealerships, including:
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Monthly bookkeeping
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BAS and GST reporting
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Payroll and superannuation
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Profit and loss analysis
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Cash flow forecasting
Tips to Make Dealer Accounting Easier
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Go digital: Paper receipts are outdated. Use scanning apps or cloud accounting.
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Automate where possible: Set up automatic bank feeds and reminders.
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Train your staff: Everyone should understand how financial decisions impact the business.
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Review financial reports monthly: Don’t wait for the tax deadline.
What Happens If You Don’t Do It Right?
Let’s go back to Josh. After two years of sloppy books, the ATO hit him with a surprise audit. Because his records weren’t up to date, he had to pay a consultant $10,000 just to clean up his books—and still ended up with penalties.
Now he works with Perfect Accounting PTY Ltd, and he says, “I finally sleep at night knowing my books are in order.”
Why Choose Perfect Accounting PTY Ltd?
They’re not just number-crunchers. They’re strategic partners who understand the dealer accounting landscape in Australia. With industry experience and a focus on long-term success, they help you grow with confidence.
You’ll get:
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Transparent pricing
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Custom accounting solutions for your dealership
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Support from real humans, not just software
Final Thoughts
Dealer accounting isn’t just about staying legal—it’s about unlocking your business’s full potential. When your finances are in order, everything runs better. You can make smarter decisions, grow with confidence, and finally get ahead.
So, whether you’re just starting your dealership or have been selling cars for decades, don’t overlook the numbers.
