If you own a gas a station you likely already have plenty of responsibilities. Bookkeeping is probably not at the top of your list but it should be. Your bookkeeping is the compass of your gas station business. It guides you and helps you make better business decisions. Are certain types of gas selling better on certain days? Are promotions effective? Is your profit margin increasing or decreasing? These are questions that you can only answer if you are on top of your bookkeeping.
Gas Station Bookkeeping
Most gas stations sell more than just gas. Auto repair services, car washes and convenience store items are just some of the other offerings that a gas station can provide. In fact, according to Convenience.org, 80% of convenience stores in the U.S. sell gas. In the best case scenario customers can come into your store and purchase higher margin items. You need to know which areas of your business are profitable and which ones are not. Your bookkeeping should clearly show this.
The sale of different types of services and products makes your bookkeeping that much more important. Convenience stores typically sell cigarettes, alcohol, lottery tickets, food and more. The sale of these items mean that you will have to be compliant with local authorities. Cigarette and liquor licenses need to be acquired; Inspections need to be done.
Convenience Store Bookkeeping
Convenience store owners need accounting even more than the average business. There are a lot of moving parts. Cash or checks are received daily. Payments are made to various vendors.
Payroll is processed and in other cases payments are made to independent contractors. Either way tax forms need to be given for these payments that were made during the year. Sometimes an independent contractor will refuse to provide a W-9 which will require that you follow certain rules.
It is not uncommon for point-of-sale (POS) systems to track activity that is outside of the accounting software. Inventory must be maintained and monitored. Also, there are multiple bank accounts, bills and commissions are just a sample of the incoming and outgoing transactions that a gas station needs to keep track of.
Taxes for a Gas Station
Bookkeeping serves another function in that it helps you file accurate taxes. After all, the numbers on your tax return come from your bookkeeping records. The last thing you want is to pay more tax than you need to because your bookkeeping was completely wrong. If you end up underpaying on your taxes you could be hit with a penalty. Not many gas station owners realize that underreporting your income on your tax return could result in an accuracy-related penalty which is an additional 20% on the underpaid amount!
If you sell cigarettes and other snack items you will have to collect and/or report the tax on those items. You must maintain proper records to do this.
Calculating Your Fuel Profit Margins
The gas station business is competitive. Drivers may go to another gas station if it’s even a few pennies cheaper. Fuel prices fluctuate on an almost daily basis. Retailers purchase Regular and Premium gas at two different prices and these are blended to provide Plus fuel. With several types of gas purchased it is important to know your exact costs in order to calculate your profit margin.
As you can see what seems like a simple business from the outside can quickly become complex and overwhelming. However, with proper bookkeeping you can make your gas station a profitable success.