The automotive aftermarket industry, whether it is an independent shop or national company, spends a tremendous amount of money each year on all its various training courses, seminars and information programs. The purpose of these actions are to increase the employees’ and management’s knowledge required to maintain today’s vehicles in a safe and reliable condition, understand new products and enhancements, and continue with ongoing business management and employee development.
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These types of training opportunities build employee and management knowledge of understanding, which in turn, when all is performed correctly over time, makes everyone more productive. Effectively executed productivity leads to enhanced company profitability, which in turn leads to higher wages for all. This ongoing knowledge development is very necessary as it is designed to secure the company’s future.
I believe most people would agree with this very basic analysis.
The industry also spends a great deal of money on various types of physical shop/company equipment required to execute its day to day business professionally. This is also a very necessary outlay of cash a business must plan for. Up-to-date equipment does increase productivity as well, which in turn, when executed properly, as does the above mentioned training, increases profits and eventually wages of the company.
I believe most people would also agree with this basic analysis.
The problem with both examples is that under today’s business accounting rules, they are treated very differently. Consider the following:
Training courses, seminars and information programs of any kind that are for business purposes, as mentioned above, are treated as an immediate expense for “accounting purposes” which means they are written off completely in the year that they are incurred. For example, if the shop/company spent $5,000 or $25,000 on training in one year, these monies are an immediate expense. This means the shop/companies net profits are immediately reduced.